The number of financially included South Africans has grown considerably, from 28.7-million in 2012, to 30.7-million this year, the latest FinScope South Africa survey shows.

The study, released by FinMark Trust on Tuesday, attributed the growth in the number of financially included individuals – those who use financial products or services from the formal or informal sector – to an increase in borrowing, banking and insurance.

The number of people who have formal credit or loans increased to 14.2-million this year, compared with 13.1-million in 2012, with the number of people borrowing from banks having increased to 6.5-million this year, compared with 4.5-million people the year before.

The number of individuals borrowing money from other formal institutions, such as retailers and insurance and microfinance institutions, or using other formal credit mechanisms, increased from 7.1-million last year to 7.8-million this year.

Simultaneously, there had been a decrease in informal borrowing from 2.1-million people in 2012 to 1.5-million people.

However, while the number of people with secured loans increased to 5.1-million, up from 3.4-million the year before, the number of people with unsecured loans doubled over the year.

The majority of people with unsecured loans took these loans for “developmental” reasons, such as to build or renovate their homes or for education; however, 19% took out unsecured loans to pay bills, monthly fees or for unexpected personal expenses.

FinMark Trust further warned that about five-million of the 14.2-million credit active adults in the country were showing signs of over-indebtedness.

Meanwhile, the number of “banked” South Africans increased to 75% in 2013, up from 67% in 2012, as an additional 3.5-million people signed up for products or services provided by a commercial bank this year.

The FinScope study revealed that the increase was driven by the roll-out of the South African Social Security Agency system and organic banking growth.

Further, the proportion of people using cellphone banking increased to 10.3-million this year, compared with 8.9-million in 2012. The study highlighted that, of those who made use of cellphone banking, 84% used it to buy airtime, while 54% used it to check bank balances.

Only 15% of individuals using cellphone banking did so to pay bills and only 12% to remit money by cellphone, suggesting that the concept of mobile banking did not yet have strong uptake.

SAVINGS
Meanwhile, there had also been a slight year-on-year decrease in the number of people who have formal savings products, from 7.8-million last year, to 7.7-million.

However, the FinScope study found that there had been some positive shifts that suggest that those individuals who do have formal savings are taking up additional products. These include an increase in individuals with provident funds, from 3.7-million to 4.4-million; those with pension funds, from 4.3-million to 4.8-million; and those with education policies, from 879 000 to 1.6-million.

The number of adults saving informally also decreased.