SA’s youth owe R10bn as debt becomes a survival strategy

South Africa’s youth are entering adulthood at a time when credit is increasingly being used as a monthly survival tool rather than a strategic financial lever.

A new financial assessment released by Old Mutual on 17 June 2026 highlights a structurally constrained youth credit market.

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Of the country’s 6.7 million young people aged 18-24, only about one million are currently credit active. However, nearly half of these young borrowers have already defaulted on their loans.

Faced with high youth unemployment, rising living costs and average incomes that sit far below national norms, this cohort carries a combined R10 billion in outstanding debt obligations.

The anatomy of a R10bn debt trap

According to industry research cited by Old Mutual, young people account for approximately 4% of South Africa’s total outstanding debt.

The structural composition of this credit exposure reveals that it is overwhelmingly linked to short-term consumption rather than wealth creation.

Retail credit makes up the largest share, sitting at 85% of total youth credit exposure. This is followed by personal unsecured loans at 17%, and credit cards at 9%.

John Manyike, group head of financial education at Old Mutual, notes that the core issue is often a reflection of systemic economic pressures rather than simple financial irresponsibility.

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Many young South Africans must navigate informal work, unemployment and inconsistent income streams, often relying on side hustles to supplement their primary earnings.

Drawing a sharp boundary between productive and non-productive borrowing, Manyike emphasises: “Debt is not inherently bad, but what matters is whether it is used to build your future or simply to fund consumption that has no lasting value.

“The reality, however, is that many young people are already in debt, and much of it is not the productive kind. The question now is how we help them stabilise, recover, and rebuild confidence in their finances.”

He classifies “good debt” as borrowing earmarked for long-term financial stability including skills development, education or assets that appreciate over time.

Conversely, “bad debt” is short-term, consumption-driven borrowing used to bridge lifestyle gaps, such as store accounts for non-essential items or loans taken out without clear repayment structures.

Structural awareness, early intervention

To counter these financial drains, Old Mutual is encouraging young borrowers to establish basic structural habits that build resilience against economic volatility.

Manyike warns that even where individuals manage to secure multiple income streams through side hustles, a lack of financial structure can still trigger instability if spending is not properly managed.

He advises starting with a simple monthly budget that clearly separates core needs, non-essential wants and active debt repayments: “The first step is awareness, because you cannot manage what you do not track. Small deductions often feel harmless in isolation, but together they can erode a person’s income significantly.”

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For young borrowers already under active repayment pressure, Old Mutual cautions against ignoring lenders.

With nearly half of the active youth credit market in default, early intervention through professional debt counselling is seen as a critical step in averting long-term financial harm.

“If debt is becoming unmanageable, the worst thing you can do is ignore it,” Manyike states.

“Engaging a debt counsellor early can prevent a temporary problem from becoming a long-term financial setback.”

Pragmatism and survival in a difficult economy

Despite the high level of defaults, the assessment notes that the current generation is leveraging digital connectivity and entrepreneurial side hustles to adapt to systemic pressures.

Old Mutual emphasises that addressing the youth debt crisis requires financial institutions and experts to view these borrowing patterns through the lens of economic reality rather than moral judgment.

“We are not dealing with irresponsible behaviour, we are dealing with survival strategies in a difficult economy,” Manyike says.

“If we meet young people where they are, and give them the right tools, they can still build financially stable futures.”

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