ECONOMIC REALITIES
Part of the reason why households
are unable to save is that their debt
levels are very high.
Lullu Krugel says a low
domestic savings rate
means the country must
rely on foreign money to
finance growth.
a reduction in life expectancy in the past few decades, diminishing
the impact of this incentive. Furthermore, the means test component
of the state old-age pension creates a disincentive for those on low
incomes to save.’
AN INCENTIVE TO SAVE
With 11 million of the population’s 48 million receiving grants, it’s
crucial that government finds ways to make saving money more
attractive. As Nene has pointed out, ‘Low levels of individual saving
adds to the burden on government to provide retirement assistance
and increase the need to raise taxes for this purpose. Building a
culture of savings in South Africa is vital in ensuring that higher
economic growth is sustainable.’
But how? Field believes the process of saving should be
streamlined, especially for the poor who are paid in cash: ‘While
banks have made significant progress with cellphone banking, there
is a substantial portion of the population who are still unbanked,’ he
Nhlanhla Nene maintains
that low levels of individual
saving adds to the burden
on government to provide
retirement assistance.
says. He points out that the habit of saving, no matter how small, is
as important as saving itself.
Mantshimuli’s advice is for consumers to get a handle on their
debt in order to save. ‘Since inflation is beyond anyone’s control,
the first thing to do is to reduce your debt to manageable levels.
That way you can use the income freed up to cushion yourself from
higher prices.’
Van Zyl adds a different perspective: Visualise what it is you want
to save for. ‘Savings can be a tedious subject and [this] loses its value
in the long run,’ he says. ‘But it is still a subject that needs to be
taught, as it forms part of the marathon planning process to become
an investor and, ultimately, financially independent.
‘The root of this problem is that the knowledge and skills to invest
are not being shared in our educational system and even less within
our working environment. I believe people cannot bank their success
into a savings vehicle without knowing what they are ultimately
saving for.’ ■
Edition 2
THE BANKER
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