In January, 46% of consumers who were signed up with earned wage access financial technology (fintech) company Paymenow and were requesting advances in their salaries, were trying to cover commuting costs to work. By comparison, only 23% of disbursed payments were used for food.

“This trend continued through February and March, where workers were spending 48% and 45% of advances on transport costs, respectively,” says Paymenow CEO and co-founder Deon Nobrega.

“Ultimately, South African workers will not be able to cover all their basic costs if input prices continue to drive inflation in the prices of basic goods. In a country with a poor savings rate and an economy under pressure, those without early access to their wages stand the greatest chance of falling into a debt trap and potentially losing their jobs as a result. This will be a disaster for the country,” he states.

“Historically, not being able to meet transport costs has been a key driver of employee absenteeism and churn in South Africa, where the majority of those in our economy who have a formal job are blue-collar workers and financially vulnerable.”

Compounding the issue is that, according to minibus taxi fleets finance company Transaction Capital, taxi fares have increased by more than 9% a year since 2013. This outstrips growth in salaries over the same period by some distance.

In a country with insufficient and vandalised rail infrastructure, the majority of the country’s workers commute to work by road, with taxis ferrying most to their jobs and homes.

For an industry with overhead costs, such as vehicle finance, lockdowns related to Covid-19 have placed pressure on taxi operators to increase profitability now that restrictions have eased, meaning stable or decreasing fares are highly unlikely, Nobrega points out.

Further, the price of petrol in South Africa is expected to approach R24 a litre in April, as global petroleum supply is affected by Russia’s invasion of Ukraine and sanctions imposed against Russia as a result.

“The average price of petrol around the world over the last year was R26.15 a litre, but this is no consolation for local workers whose buying power has been whittled away in a low-growth economy,” Nobrega says.

He notes that the South African government is yet to announce measures to help consumers amid the rise in fuel costs.