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10 February 2021

Consumer Financial Vulnerability
Index: Q4 2020

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Consumer financial vulnerability levels improve, but their finances remain under pressure.

Some of the financial strain that several consumers had to endure during the initial lockdown periods early in 2020 dissipated during the fourth quarter of 2020 (Q4 2020). This is evident from the Momentum-Unisa Consumer Financial Vulnerability Index (CFVI), which recovered to 47.5 points in Q4 2020 from 43.5 points in Q3 2020. This means that the index improved to a similar level before lockdown. The improvement follows two very difficult quarters during which the index deteriorated to the highest level of financial vulnerability since inception in 2009.

During Q4 2020 the four sub-indices of the CFVI all showed an improvement, but remained rooted in the very exposed category on the index scale:

  • Income vulnerability decreased as the sub-index improved from 44.1 points in Q3 2020 to 47.7 points in Q4 2020. This suggests that more consumers were able to earn or increase their income. The strong improvement since Q2 2020 suggests a recovery in employment.
  • Expenditure vulnerability decreased as the sub-index increased from 45.9 points in Q3 2020 to 49.2 points in Q4 2020. This sub-component is close to the mildly exposed category and was, among others, supported by the recovery in employment.
  • Savings vulnerability also decreased as the sub-index score moved from 43.1 points in Q3 2020 to 47.3 points in Q4 2020. This can be attributed to both the improvement in income and less spending (due to some regulations restricting the full opening of the economy).
  • Low interest rates contributed to consumers being less vulnerable in terms of debt servicing as the index score increased to 45.8 points in Q4 2020 from 40.8 points in Q3 2020.


A review of the average annual scores of the CFVI and its sub-components shows that consumers suffered greatly during 2020. The average annual score indicates that consumer financial vulnerability was at its lowest level since inception of the index, dropping to a low of 43.4 points. The main contributor to the low score was a significant increase in debt servicing vulnerability. This sub-index declined from 48.7 points in 2019 to 40.9 points in 2020, on the brink of the very vulnerable category of the index scale. This means that the inability to service debt made the largest contribution to consumers’ financial vulnerability.

The key informants were asked to provide reasons for the financial difficulty that consumers experienced during Q4 2020. COVID-19 and the impact of lockdown on personal finances and job retention remain core reasons as retrenchments, salary cuts and price increases affected consumers’ ability to work and earn an income. Key informants also provided insights into worrisome consumer behaviour during Q4 2020, namely that some consumers did not live within their means and did not demonstrate self-control when spending. Another troublesome observation was that consumers are in several ways limited in expanding their incomes. This could be due to the economy’s inability to create sufficient jobs coupled with limited opportunities to start their own businesses due to a struggling economy.

Key informants reported little hope for a quick recovery in consumer finances due to, among other things, COVID-19 and lockdown. This is evident from the following views:

  • 69.6% of key informants are of the opinion that it will take 18 months or longer for consumer finances to recover from the impact of COVID-19 and lockdown;
  • 57.8% of key informants noted a decline in consumers’ perceived levels of control over their financial situations (i.e. personal empowerment) during the past few months; and
  • 36.3% of key informants noted that consumers attach a high value to their finances, but they also attach a high value to staying safe against COVID-19, while 27.5% of key informants believed consumers are more focused on their finances than on staying safe against the virus. The remaining 36.3% believed that consumers were more worried about staying safe against COVID-19 than their finances.

Overall, the Q4 2020 CFVI results show that despite an improvement in the index, consumer finances will remain vulnerable for some time to come as a sustainable economic recovery is expected to take years rather than quarters. Therefore, key informants are of the opinion that consumers need to empower themselves with appropriate skills, financial and otherwise, and adjust their behaviour if they hope to restore their financial situation and stimulate economic recovery.

As part of Momentum's Science of Success campaign, the Index is produced in partnership with Unisa. It aims to provide South Africans with information and strategies on how they can accelerate their journey to financial success. The CFVI is compiled from the views of key informants (researchers, bankers, insurers, retailers, government, economists, analysts, etc.) who deal with consumers daily.

Please click here to download the full report.



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