With the Covid-19 nationwide lockdown in its sixth week, South Africans spending patterns over the past weeks mirror the changes in the 38 days ending 3 May 2020 with daily transactions peaking in March then dropping by 49% more recently.
“As we see in our data, consumer transactions were down by half of the usual transaction volumes tracked by BankservAfrica’s Point-of-Sale (POS) and ATM transactions over the corresponding period in 2019,” says Shergeran Naidoo, head of stakeholder engagements at BankservAfrica.
The volume of POS and ATM transactions in 2020 as a % of the same day in 2019
Source: BankservAfrica and Economists.co.za
A breakdown of consumer spending
To get a full picture of South Africans and their shopping patterns, our graph above tracks spend against the significant developments in South Africa. These were:
- Point A – announcement of the first Covid-19 case in South Africa
- Point B – the first massive coronavirus-linked stockpiling that was mostly driven by mid-month salary earners
- Point C – South African President Cyril Ramaphosa announced the nationwide lockdown would commence on 27 March 2020
- Point D – represents the highest spending day (24 March) in the 24-26 March 2020 period. The massive spending over these three days resulted in transaction volumes averaging at 148% above the norm
“In comparison, April’s month-end was 48% below the norm,” says Naidoo.
He adds: “The actual drop in the month-end transaction volumes between March and April was 58%, which reflects a slower start to the April pay month so far. The actual same period in 2019 had a 20% increase in transactions.”
This is a far cry from the average daily spend by consumers that is usually higher at the start of the pay month.
However, since 1 May 2020, when level 4 restrictions were applied, the average number of transactions processed by BankservAfrica increased slightly to 58% of the usual transaction spend. But indications so far suggest May 2020 will also be below the norm.
“Still, the small growth in May provides a glimmer of hope for a gradual increase in spending over time. This should continue if the lockdown levels are eased further,” says Mike Schüssler, chief economist at economists.co.za.
Lockdown levels and the SA economy
With declining transactions, the impact on the economy is evident. Household spending makes up about 62% of the expenditure in the SA economy while POS retail makes up an estimated 50% of household spend (for retail, restaurants, fuel, personal services etc).
“One must also remember that retail purchases for higher-priced items from vehicles and furniture to building repairs and residential property are not likely to have occurred. Some activity such as water and lights and other contractual payments would have continued. Overall, one expects that household consumption expenditure could decline significantly on an annualised basis if the lockdown continues,” says Schüssler.
Despite the drop in consumer spend for Q2 2020, South Africa could potentially make up for some of the loss in the next quarter as consumer spending increases as lockdown levels are eased further.