Factors contributing to over-indebtedness of black South African females.

Abstract

As a country, South Africa is still bedevilled by racial and gender inequality, more than 20 years since the advent of political suffrage, according to a 2014 FinScope report. The report singles out black South African females as the most likely overindebted segment of the population, a fact that does not bode well for the democratic government’s equality and poverty alleviation efforts. The purpose of this research is to confirm the factors that contribute to overindebtedness in black South African females, and from the factors so identified, make recommendations that contribute to the managing, reducing and eventual eliminating of over-indebtedness in black females. The research data was obtained from black South African females living in Johannesburg using a 5-point Likert scale questionnaire. The questionnaire was distributed both electronically as well as face-to-face, in order to include those respondents with no email access. A total sample size of 72 respondents was obtained and the results of a stepwise regression analysis reveal that financial behaviour principles (financial orientation) and the need for additional income are the factors with the biggest impact on the over-indebtedness of black females. The study found that just over 70 per cent of the respondents, the majority of whom are young and upwardly mobile, confirm being at risk of over-indebtedness. Furthermore, being unmarried raises the risk of over-indebtedness, a concerning discovery given the increasing number of female-headed households in South Africa. Although black females acknowledge the requisite financial conduct necessary for financial wellness, their need for additional funds far outweighs their conviction to comply with same. The elimination of over-indebtedness requires a collaborative effort between individuals, employers, and government, where individuals exercise financial selfdiscipline; financial services providers adopt a consumer lifetime value orientation; and government offers incentives to encourage fair lending practice by financial services providers.