Altron FinTech Index signals modest household recovery, but affordability gap persists

South Africa’s middle- and low-income households are showing signs of financial resilience, according to the latest Altron FinTech Household Resilience Index (AFHRI), but the post-pandemic economic rebound is still lagging in key areas.

The AFHRI, developed in collaboration with economist Dr Roelof Botha, showed a second consecutive quarterly improvement in Q4 2024, rising by 1.1% compared to Q3. While this points to gradual progress, the index remains 4.3% below its pre-COVID high, underscoring a slow and uneven recovery.

The AFHRI is a data-driven tool designed to track the financial health of working households in South Africa. It combines ten weighted indicators—including real household income, debt costs, employment trends, and inflation-adjusted salaries—to provide a composite view of financial resilience.

“It’s encouraging to see consistent upward movement in the index, particularly driven by a real increase in disposable income,” said Botha. “But the cost of living and subdued employment recovery continue to weigh heavily on households.”

What’s driving the improvement?

Among the most significant contributors to the Q4 uptick were:

• A 1.6% real increase in per capita household disposable income, bolstered by inflation slowing to below the South African Reserve Bank’s (SARB) target range.

• An uptick in total remuneration for employed South Africans, suggesting some wage growth despite economic headwinds.

• Declining debt-servicing costs, due to marginally lower interest rates and improved credit profiles.

The AFHRI data also aligns with broader economic signals, including:

• A stronger S&P Global Purchasing Managers’ Index (PMI) for South Africa, indicating improved business conditions.

• Rising value in approved building plans across metros, suggesting growing investment confidence.

The affordability squeeze remains

Despite the positive momentum, households are still under pressure. Credit extension remains tight, and average salaries—when adjusted for inflation—have not returned to pre-pandemic levels. Furthermore, debt as a percentage of disposable income remains a critical constraint.

“What this index tells us is that while there are green shoots, the roots of economic inequality and affordability challenges are still deep,” noted Botha.

Implications for fintech and innovation

The AFHRI serves as a crucial touchpoint for fintech entrepreneurs, investors, and lenders. As Altron FinTech continues to promote financial inclusion through digital innovation, the index provides valuable insights into market conditions for credit products, savings platforms, and income-smoothing tools.

For startups and venture capital players, understanding the granular shifts in household financial stability is essential for product-market fit and risk forecasting.

“Our goal with the AFHRI is not just to track economic trends, but to empower financial service providers—especially innovators in fintech—with the insights needed to build sustainable, user-centric solutions,” said Altron FinTech Executive Leanne Goott.

As 2025 unfolds, the focus will likely remain on structural reforms, inflation management, and employment recovery. Fintech companies that adapt to this evolving landscape stand to make the biggest impact—both commercially and socially.