Consumer credit multinational Experian South Africa’s local consumer default index is a highly accurate tool to assess the economic pressures on different segments of the population, says Experian South Africa MD Simon Russell.

The index functions as a business and policy formulation tool, and meets the same international standards as Experian’s monthly US consumer default index. The index will be released every few months and will have a lag of two months, Experian South Africa chief data officer David Coleman explains.

Russell says the information will be made available to public- and private- sector partner institutions. “This detailed and granular view of credit information is what Experian can do to support South Africa. This index is accurate enough to serve as a definitive measurement of credit data, especially because it uses more data than any other credit index in South Africa.”

The index relies on many datasets, including census data, public credit information, private-sector lending and credit information, property deeds and ownership data, as well as those of Statistics South Africa, says Experian South Africa market solutions head Riona Naidu.

“Experian’s clients use the index to tailor their products, communications and exposure to different segments of the market, while public sector and consumer credit organisations can use the data to identify groups that are under pressure and determine where best to target information and education drives.”

Naidu adds that the Mosaic tool, which is a data exploration toolset used to manage the index data, enables users to view the data in myriad different ways, for example, by age, geographic region and/or income, as well as view the changes in the data over time.

The tool provides many different data overlays and filters, including behavioural and geospatial overlays to analyse the data in different ways, confirms Coleman.

The index found that R13.45-billion in consumer debt value across home, vehicle and personal loans, as well as credit card accounts, defaulted for the first time between May and July.

“Reducing credit defaults by improving responsible and well-informed lending, combined with targeted credit education drives, will help to lower the indebtedness of and defaults by various segments, which will also improve their financial positions and help to support increased saving,” says Russell.

Asset accumulation at consumer and company level is an important contributing factor to higher economic growth. Lower losses to lenders – as a result of more accurate consumer credit information and more informed consumers – will help to lower average lending rates and improve lending. More productive credit use will also support the economy, he explains.

“The index, which is based on more than one-billion points of data, is one of the most detailed views available in an emerging market. It will help clients to create the right interventions in terms of how and to whom they are lending. It will also help to improve industry-lending practices and consumer borrowing habits, owing to the more accurate and detailed information,” concludes Russell.