James Williams
Chief Marketing Officer
Wonga
According to the seventh annual Summer Spending Survey by short-term lender Wonga, South Africans are projected to spend over R284 billion this festive season. This is a notable increase, with individuals planning to spend an average of R6,832 each, up from R5,707 in 2023—the highest figure since 2018.
James Williams, Chief Marketing Officer at Wonga, attributes this spike in spending to factors like inflation and recent interest rate cuts. However, Williams also expressed concern that some individuals are withdrawing from their retirement savings to fund holiday expenses, partly due to the introduction of the two-pot retirement system. Despite this, it’s encouraging that 37% are opting to spend less and save more during this period.
The 2024 statistics reveal that only 26% of South Africans have planned and saved throughout the year to cover holiday expenses, a decrease from 36% in 2023 and significantly lower than the 42% who saved in 2019. “It is concerning to see the saving figure drop below 30% for the first time,” said Williams. This aligns with the Old Mutual Savings and Investment Monitor’s findings, which indicated only three in ten working South Africans prioritize saving for a vacation.
Interestingly, the survey shows that 22% plan to use the money invested in stokvels to cover festive expenses, a drop from 31% in 2023 and the lowest since the survey began in 2018. On a positive note, reliance on credit has reduced; only 20% of consumers expect to turn to credit providers to cover year-end expenses, down from 24% in 2023.
Williams also highlighted spending disparities across income levels: “As seen in previous years, the percentage of monthly earnings versus festive spend declines through each income band, the lowest of which is for those earning R50,000 per month and above.” However, it is concerning that those earning R2,999 or less expect to spend an average of R3,200, potentially leading to increased reliance on lenders in January.
Food and beverages are expected to account for just over a third of festive spending, with an average of R2,756 per person—up from R1,907 in 2023, driven by high inflation and rising food and fuel prices. Transport will make up 17% of the average festive budget, with most travel by car, bus, or taxi—notably, 10% plan to travel by plane, a rise from 4% in 2023.
Gifting constitutes 14% of the expected budget, with money and shopping vouchers topping gift lists. Holiday accommodations represent nearly 13% of expenses for those vacationing away from home.
Online shopping has dipped in popularity, with under 18% choosing it this year. This is a significant drop as over 70% prefer in-store purchases, market visits, or crafting their own gifts. This trend may be driven by minimum spend requirements, high shipping fees, complex return policies, or a desire to avoid impulse buying.
Williams concludes, “Our key takeaway this year is the impact of the high cost of food and essentials, alongside fuel price hikes in 2024. Households have been under pressure, finding respite in a slowdown of CPI and interest rate cuts. Despite 2024’s challenges, over half of our respondents are optimistic about the year ahead.”