Although saving should be the goal of every South African -- at least according to National Treasury's Olano Makhubela, many South Africans are still not saving. Makhubela was speaking in Sandton on Wednesday, at the launch of Savings Month (July).
Yet, for a great number of South Africans, it's not because they don't want to save, they simply cannot afford to -- something industry experts at the launch acknowledged. The Financial Services Board's Lyndwill Clarke aptly asked: "How do you talk about saving to a person receiving a grant?
Inkunzi Investments' Owen Nkomo concurred. "How much can you really save with a minimum wage of R3 000" he asked, "when there is rent, children to support, food, transport?"
Group Head of citizenship at Barclays Africa, Sazini Mojapelo says reasons for people not saving are indeed far more complex. "Persistent unemployment and the rising cost of living, made worse by historical spatial development patterns means the average lower income household faces greater pressures than many of us imagine."
In the face of these challenges, The Financial Planning Institute of Southern Africa's, Godfrey Mnti believes there needs to be a firm commitment to financial literacy in the country -- a sentiment echoed by industry experts at the launch.
Clarke believes this literacy should start at the school level. Nkomo, who went further to suggest that financial literacy replace Maths literacy, agreed, "If we don't start at the bottom, we will struggle."
Further, speaking to people about saving and investments in a simplified language they can understand, instead of 'bond and equity speech' can help, suggested Barclays Africa's Vusi Ndwandwe. Mnti also pointed out that there are not enough savings products aimed at the lower end of the market, except funeral policies, and this also needs to change.
However, financial literacy and simplified savings products cannot be the only and ultimate solution, cautioned Clarke. "If not done within a program of social development, it will fail," he said.