Credit is good, but not good when too much. Analysis of indebtedness and over-indebtedness in the SADC region using FinScope Surveys

A.B. Fanta, K. Mutsonziwa, B. Berkowitz et al. | FinMark Trust

A third of adults in SADC are indebted and with access to credit from either a formal or informal lender, while a quarter of adults exhibit signs of over-indebtedness which implies that three quarters of those that borrow fall into the trap of over-indebtedness. However, studies on over-indebtedness in the sub-region are scant. Therefore, this paper aims at casting light on indebtedness and over-indebtedness of adults in the region through cross-country comparisons. It also examines factors affecting indebtedness and over-indebtedness, and assesses the link between over-indebtedness and poverty. The authors find that over-indebtedness is mainly driven by lack of credit literacy and borrowing from multiple sources. Interestingly, lack of income is not the main cause of over-indebtedness suggesting that behavioural rather than economic reasons explain over-indebtedness in many countries in the region.

Zimbabwe, Zambia, Tanzania, Swaziland, South Africa, Seychelles, Namibia, Mozambique, Mauritius, Malawi, Madagascar, Lesotho, Democratic Republic of the Congo, Botswana, Angola, Access to Finance, SME Finance & Leasing, Financial Capability
Year of publication:
External Document: