What does the future hold for the youth? Most 24-year-olds in debt

It was the first democratic president of South Africa, Nelson Mandela, who said, “The youth of today are the leaders of tomorrow.”

However, in a period when most of the youth are battling with a high level of debt, unemployment, and limited asset ownership, does the idea that the youth will lead still stand?

A report by Eighty20 has revealed that many individuals between the ages of 18 and 24 are defaulting on their credit repayments, while some are not credit-active at all.

Eighty20’s National Segmentation was published earlier this month. It utilises a combination of strategy, analytics, research, and development capabilities.

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Debt among the youth

Andrew Fulton, Director at Eighty20, said those aged 24 and younger make up 44.5% of the population, which raises the question of whether this generation can break the cycle of financial exclusion that currently defines their prospects.

Eighty20’s National Segmentation showed that only one million of the 6.7 million youth aged 18-24 are credit active. This can be reasonable, given that most of these individuals are still in university or are still seeking employment.

However, the alarming thing is that among the one million that are credit active, nearly half have defaulted on their loans.

“With an average monthly income of R3 400 (less than half the national average of R7 000) and a youth unemployment rate of 62.4%, financial strain is widespread in this age group.”

The debt burden

Fulton highlighted that 85% of the credit-active youth hold store accounts. This is followed by personal unsecured loans, with 17% of the youth and 9% holding credit cards.

“Youth represent approximately 4% of South Africa’s total outstanding debt, carrying R10 billion in combined obligations.

“However, their credit performance is worse than the national average, with R1.1 billion, or 11% of their total debt, currently overdue. This elevated delinquency rate signals particular financial stress within this age segment.”

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Credit score

“A credit score serves as the gateway not only to lending products and favourable terms, but to essential services across multiple sectors.

“A healthy credit profile enables access to cell phone contracts, rental agreements, and can even influence employment opportunities,” highlighted Fulton.

He emphasised that expanding credit access among young adults represents both individual economic empowerment and broader development of the formal economy.

A further challenge, however, lies in the performance of those with credit: approximately half of young borrowers default early in their credit journey, with most maintaining high-risk credit scores.

“This pattern highlights the urgent need for enhanced financial education and for individuals in distress to seek debt counselling early.”

The side hustle economy

Youth unemployment is at crisis levels, with fewer young people in formal employment now than in 2008. Most young people rely on side hustles to make ends meet.

“BrandMapp, a survey of South Africans in households earning more than R10 000 monthly, shows a notable shift: in 2021, 55% reported having no side activities that create extra income, but this dropped to 49% in their most recent survey.”

The survey asks for details on these activities, and the percentage of people who say they are running small businesses as a side hustle, or taking second jobs in their primary field, has grown by 50%.

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