By Regan Adams, CEO of RCS
There has been a noticeable shift in the tone of conversations about South Africa over the past year, with the national narrative moving in a more positive direction. From a macroeconomic perspective, 2025 was characterised by heightened uncertainty, which has become the new normal. The challenge is therefore no longer whether uncertainty exists, but how consumers and businesses learn to operate within it.
Despite this volatility, the reality was more resilient than many expected. Even with widespread concern around tariffs and global trade disruptions, most developed economies still recorded growth in 2025. In several cases, economic fundamentals held up better than anticipated.
Against this backdrop, 2025 became something of a wait-and-see year for South African consumers. In the first half of 2025, interest rates remained higher for longer than expected, keeping pressure on household budgets – though SARB rate cuts later in the year provided some welcome relief. At the same time, demand for credit continued to grow, with applications increasing steadily. However, responsible credit providers had to remain prudent and rejection rates were around the 70%-80% mark. The challenge is compounded by the fact that service fee caps under the National Credit Act have not been adjusted for inflation, limiting appetite for lending and pushing more consumers towards informal or unregulated sources of credit.
As South Africa enters 2026, there is a palpable shift in sentiment around the country’s economic prospects. The rand has strengthened, the country has been removed from the FATF grey list, and GDP growth has exceeded 1%. Whilst these gains may appear modest, they represent genuine progress. However, unemployment remains a major challenge – sitting north of 30% – and we’re going to need sustained, higher growth to be able to solve this.
Challenges that require attention
Despite these positive developments, there are emerging challenges within the credit landscape that require regulatory attention and industry collaboration to address.
1. The BNPL visibility gap
Buy-now-pay-later (BNPL) products have grown rapidly, with millions of South Africans now using these services. Limits given to customers have increased significantly – from a few thousand rand to between R20,000 and R50,000 in some cases. However, this credit remains largely unregulated and unreported to the credit bureau.
BNPL providers draw on credit bureau data to make their own lending decisions, yet don’t contribute back to it. This imbalance undermines the integrity of the information available to every other lender in the market. The bureau system was built on a principle of reciprocity; it works precisely because every participant both shares data and benefits from it.
“The concern isn’t that BNPL exists – it’s that we have no visibility,” Adams explains. “When someone applies for formal credit, we can’t see their BNPL obligations. When they enter debt review, those commitments aren’t included. This creates incomplete information for both lenders and consumers.”
RCS believes that bringing BNPL into the regulated framework – through mandatory bureau reporting and affordability assessments – would benefit both consumers and the broader credit ecosystem by providing transparency and enabling more informed lending decisions.
2. Online gambling and financial wellness
The rapid growth of online gambling platforms represents another area of concern. Digital accessibility has made gambling highly convenient, with small, frequent bets creating the perception of low risk whilst total spend can accumulate rapidly.
Regulations that allow for greater transparency in online gambling are needed. However, with high profile endorsements and large advertising budgets, online gambling continues to grow.
3. Digital fraud: An evolving threat
RCS is seeing increased risk in 2026 linked to their consumers being scammed and losing their hard-earned money to digital fraud. Whilst South Africans continue to use and rely on credit, rising default rates – with three-month arrears accelerating sharply in Q4 2025 – are a clear sign that household financial pressure has not fully eased.
Against that backdrop, the last thing consumers need is to lose hard-earned money to digital fraud. Fraudsters are becoming more sophisticated, using advanced technology and AI to exploit vulnerabilities.
“Cybersecurity, enhanced verification, and ongoing consumer education have become critical priorities,” Adams notes. We’re investing heavily in these areas because the digital fraud landscape is evolving so quickly.”
Credit as a catalyst for entrepreneurship
With unemployment remaining above 30%, increasing numbers of South Africans are creating their own opportunities through side hustles and self-employment. There has been a shift in demand specifically for tools of trade, such as laptops for freelancers and equipment for home-based businesses.
This represents a fundamental change in the purpose of credit – from consumption to income generation. When used responsibly and strategically, credit becomes a tool for building financial independence rather than creating dependency.
“In 2026, we need to ask ourselves: are we funding consumption, or are we funding income generation?” Adams notes. “The difference between a R10,000 loan for a laptop used for online gambling versus a laptop used to run a digital design business is everything. One creates dependency; the other creates wealth.”
Proof of concept: The SEF partnership
RCS’s conviction that credit can be a wealth-creation tool is reinforced by its partnership with the Small Enterprise Foundation (SEF). Through SEF’s solidarity group lending model – rooted in the Grameen Bank approach – nearly six million loans have been disbursed to women to support the development of sustainable small businesses.
The SEF model is based on group lending, where cohorts of women apply collectively for loans to start small businesses. The results speak for themselves: delinquency rates below 2% (compared to industry averages well above this). Clients build their own savings, held in bank accounts either individually or through their groups, and are encouraged to save an amount equivalent to 2% of their monthly instalment, in addition to their loan repayment. This helps create a buffer against shocks and supports responsible progression to larger loan sizes.
“This demonstrates what’s possible when credit is combined with education, accountability structures, and a clear productive purpose,” says Adams. “The model proves that when lending is oriented towards empowerment rather than simply consumption, it works exceptionally well.”
Three trends shaping 2026
Looking ahead, RCS anticipates three key developments that will shape South Africa’s credit landscape in 2026:
1. Greater regulatory clarity for BNPL – Momentum is building towards bringing BNPL products within the regulatory framework, either through mandatory bureau reporting or inclusion under the National Credit Act. This would enhance consumer protection whilst maintaining innovation.
2. Accelerated digital transformation – The transition to embedded finance and digital wallets will accelerate, with physical cards becoming less relevant for younger consumers. Credit increasingly lives inside mobile payment platforms, with the physical card becoming less relevant than the tokenised facility enabling digital transactions.
Credit providers will need integrated digital offerings to remain competitive.
3. A split between consumption and productive credit – The market will increasingly distinguish between consumption credit (which remains constrained by regulatory caps) and productive credit that supports income generation. Lenders who can identify and support entrepreneurial activity will find growth opportunities.
Whilst some further rate relief may come in 2026, the SARB’s tighter inflation mandate means cuts are likely to be modest, and households should plan accordingly rather than wait for significant relief.
“South Africans need credit – that’s not in question,” Adams concludes. “The question is how we, as an industry, can ensure that credit serves as a tool for empowerment and wealth creation rather than financial strain. The opportunity exists to get this right, and 2026 could be the year we make meaningful progress.”
