New data from listed technology group Altron’s financial technology (fintech) unit shows that the average household in SA is now better able to manage and incur debt than before the pandemic.
Altron on Wednesday launched a new index, called the Altron Fintech Household Financial Resilience Index (Afhri), which was created in partnership with Roelof Botha, an economic adviser to Optimum Investment Group.
The index is meant to provide insight into “the financial state of households by assessing the state of micro-lending from the perspective of the ability of borrowers to repay loans”, the group says.
Speaking at a media briefing on Wednesday, Botha said the key finding of the inaugural study is that “the average household is better able to incur and manage debt than before the Covid-19 pandemic began”, and the long-term upward trend in the index is likely to continue in 2021 and 2022.
Johan Gellatly, Altron Fintech’s MD, said the Afhri is premised on the fact that income is ultimately required to repay debt.
“Without income of some kind, individuals are not able to qualify for loans that allow for expanded access to the full range of goods and services that comprise private consumption expenditure, as well as the funding of working capital required to sustain or expand small and micro businesses.
“In an attempt to provide clear and quantitative guidance on the disposition of SA households, on average, to engage in viable borrowing activities, it was decided to design a composite index that portrays their financial resilience.”
The Afhri is the first of two indices developed by Altron Fintech. A second index, developed by economist Keith Lockwood from the Gordon Institute of Business Science, will be launched in September. That index aims to unpack “the economic impact of short-term credit in SA”.
The Afhri is made up of 20 different indicators, weighted according to the demand side of the short-term lending industry and calculated on a quarterly basis, with the first quarter of 2014 as the base period, Altron said.
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