South Africa’s youth are borrowing more to survive rising living costs, but experts warn that limited income and high unemployment are creating a fragile financial future.
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As South Africa marks Youth Day this month, new research paints a sobering picture of the economic reality confronting millions of young people, with high unemployment, constrained incomes and mounting credit pressure shaping the financial future of an entire generation.
According to the latest Credit Stress Report by consumer strategy and analytics business Eighty20, South Africans under the age of 24 account for about 43% of the country's population, yet represent less than 2% of active credit users by number and under 0.5% by value.
While their current footprint in the credit market remains relatively small, analysts believe they will determine the future of South Africa’s financial sector.
“For businesses, this cohort presents a paradox: negligible right now, but disproportionately important for the future. The FSPs who successfully engage them early stand to gain a lifetime of customer value,” Eighty20 said.
The report warns, however, that the conditions under which young South Africans are entering the credit market raise serious questions about whether they can build sustainable financial futures.
The backdrop is a challenging economic environment. South Africa’s unemployment rate stood at 32.7% during the first quarter of 2026, but among young people aged between 18 and 24, unemployment exceeded 60%.
Adding to the pressure, more than 250 000 people between the ages of 15 and 34 lost their jobs during the last quarter alone.
Chief Impact Officer at Harambee, Sharmi Surianarain, said the deterioration reflects a combination of global economic pressures and local employment challenges.
“Youth unemployment climbed this past quarter, shaped by global shocks and seasonal slowdowns, particularly seen in the retail sector, which is a high absorber of youth,” she said.
“This quarter also saw the absence of large scale public employment programmes, which have previously buffered young people from economic strain.”
For many young South Africans who are employed, work opportunities are concentrated in lower income sectors such as retail, hospitality and elementary occupations, offering limited earning potential and little long term security.
The report also highlighted the growing importance of higher education as a pathway to employment, noting that university graduates experience unemployment rates between 10 and 15 percentage points lower than the national average.
However, access to education remains uncertain for many students due to ongoing challenges at the National Student Financial Aid Scheme.
“For many students, NSFAS is not just a funding institution, it is the difference between being able to access education, complete their studies, and meaningfully transition into work opportunities in an economy already marked by mass youth unemployment,” said Buhlebethu Magwaza of Youth Capital.
Eighty20 argued that the data points to a deeper structural problem.
“These realities point to a structural constraint: youth are income constrained before they are credit constrained,” the report states.
The findings reveal a sharp divide between affluent and less affluent young consumers.
Among the approximately 950 000 less affluent credit active youth, average monthly income stands at just R4 315, while around 72 000 more affluent young consumers earn an average of R26 504 per month.
The financial stress gap between these groups is substantial.
Less affluent youth have a default rate of 47%, compared with 30% among their more affluent counterparts. They also account for R832 million in overdue debt balances, more than double the R368 million recorded among wealthier young consumers.
Credit usage patterns also differ significantly.
For less affluent youth, retail credit dominates their borrowing profile, with 86% holding retail accounts and only 9% having access to credit cards.
Vehicle and home finance remain virtually inaccessible.
By contrast, 40% of more affluent youth have credit cards, 22% have vehicle finance and nearly half of their total credit exposure is linked to vehicle asset finance.
Despite these differences, both groups showed signs of pulling back on new borrowing during the first quarter of 2026 following the festive season spending surge.
New loan uptake fell by 18.5% among less affluent youth and 16.1% among more affluent youth compared with the previous quarter.
However, on an annual basis, new credit issuance to less affluent youth increased by 18%, suggesting many are increasingly relying on credit to bridge the widening gap between income and the rising cost of living.
Eighty20 believes financial institutions face both a challenge and an opportunity in supporting this generation.
“Success will depend on designing products and strategies that reflect their reality: volatile income, limited buffers, and high sensitivity to economic shocks,” the report said.
The report closes with a reminder of the importance of investing in the country's youth, quoting former president Nelson Mandela: “Our children are the rock on which our future will be built.”
For many young South Africans, however, that foundation is under increasing strain, and strengthening it may require far more than simply expanding access to credit.
It may require creating the economic conditions that allow them to use it sustainably.
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