Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
January 30, 2025

Private Sector Credit Extension (PSCE)

December 2024

In 2024, South Africa saw a 4.0% increase in credit extended by financial institutions, with December demand rising by 3.8%. While credit demand remains low, the 50-basis point interest rate cut should boost property and fixed asset purchases, enhancing disposable income and overall demand as we progress into 2025.

In 2024, credit extended by financial institutions in South Africa increased by 4.0% for the year, with demand for credit growing by 3.8% in December, following a 4.2% rise in November. Despite this growth across most sub-categories, overall credit demand remains low, even after the interest rate reduction in November.

Mortgage advances and credit for fixed asset purchases are sensitive to interest rates, and the 25-basis point cut in November has not yet significantly affected property demand. The overall interest rate reduction of 50 basis points for 2024 may take time to impact the market, with benefits likely to become apparent later in 2025 as disposable income for households and businesses improves.

In December, instalment credit sales rose by just 0.2%, following a 0.7% increase in November, with an annual increase of 6.1% for December 2024. Over the past two years, consumers have increasingly relied on short-term credit to navigate financial pressures and rising living costs, evidenced by a 4.5% increase in loans and advances in December after a 4.6% rise in November.

Growth in property and fixed asset purchases remains modest, with mortgage advances increasing by only 3.2% in December 2024. The slowdown in mortgage growth rates in late 2023 is largely due to the impact of rising interest rates on the property sector. However, the recent 50-basis point interest rate cut and the potential for another 25-basis point reduction in January 2025 may enhance demand for properties and fixed assets in the coming months. As lower interest rates improve disposable income for consumers, overall demand for goods and fixed assets could also rise as we move into 2025.

Back to News

More Coverage

The Core Dilemma: Demand vs. Supply and Interest Rates

The case for holding interest rates is strong, as South Africa’s current inflation is being driven by global supply-side pressures like fuel prices, not excessive local spending. Raising rates now would place additional strain on already struggling consumers and businesses without addressing the real cause of inflation. With the Rand strengthening, oil prices stabilising, and diesel costs expected to decline, natural inflation relief is already emerging. Since inflation remains within the SARB’s target range, increasing borrowing costs could unnecessarily slow economic growth and job creation.

A view on Demand in the Economy: Retail Sales performance – March 2026 Data

Amid a turbulent economic backdrop, South Africa’s retail sales surged by an unexpected 2.6% in March 2026, outpacing forecasts and signalling a fragile yet persistent recovery in the consumer market. While interest rate cuts have bolstered household spending, challenges such as rising inflation, potential interest rate hikes, and geopolitical tensions loom large. Despite these hurdles, sectors like “other retailers” and general dealers have notably contributed to this growth spurt, raising questions about the sustainability of this recovery. With business and consumer confidence indices displaying mixed signals, the future of South Africa’s retail strength hinges on international relations, fuel costs, and policy decisions. Explore the dynamics and implications of these developments in our detailed report.

Consumer Inflation Rate – 2026

In an insightful analysis of South Africa’s economic landscape in April 2026, the report delves into the notable 4.0% year-on-year increase in the Consumer Price Index, accentuated by surging costs in housing, utilities, transport, and financial services. Amid rising inflationary pressures fuelled by global uncertainties, including the Middle East conflict and climbing oil prices, the South African Reserve Bank faces critical decisions on interest rates to balance inflation and economic growth. As households grapple with diminished purchasing power, the precarity of reliance on short-term credit looms large, while international factors such as US-imposed tariffs and potential BRICS trade tensions threaten market stability. The report provides a comprehensive look at the delicate dance South Africa must perform to maintain price stability and safeguard the Rand amidst a challenging global backdrop.

The SARB’s High-Stakes Tightrope: Balancing an Inflation Breach Against a Jobless Crisis

Next week’s SARB decision could define South Africa’s economic trajectory: facing an external oil shock and runaway electricity tariffs that threaten to push April inflation past the central bank’s 4.0% ceiling, policymakers must weigh a technical inflation breach against a staggering surge in unemployment and collapsing investment, a choice between credibility and survival. With joblessness spiking and GDP growth stagnant, aggressive rate hikes would risk choking off the private investment the country urgently needs, while inaction could dent the new inflation-targeting framework. Read the full report for a detailed breakdown of the shocks driving this dilemma, the likely “hold” outcome from the May 28 MPC meeting, and what it means for businesses, households, and markets.

Mining Production and Sales for March 2026

In March 2026, South Africa’s mining sector showed promising growth, with activity up 2.5%, driven primarily by substantial increases in platinum group metals (PGM) and gold production. This article delves into the remarkable statistics, including a staggering 113.5% surge in platinum sales and a robust 30.2% increase in nominal mining sales, highlighting the industry’s crucial role in generating employment and foreign exchange for the economy. However, amid positive growth trends, the sector faces significant challenges, including geopolitical tensions, tariff measures, and the potential impacts of a changing global market. Discover how these dynamics affect one of the country’s key economic contributors and the overall outlook for the mining industry as South Africa navigates through a complex landscape of opportunities and hurdles. Read on for an in-depth analysis of the mining sector’s performance and its implications for South Africa’s economic future.