South Africa still has a savings mountain to climb, but progress is being made

While South Africa still has a long way to go before it can call itself a nation that saves sufficiently, there are encouraging signs that financial literacy programmes and initiatives aimed at developing a sustainable savings culture are starting to take

With July – officially National Savings Month – drawing to a close, Letlape believes that efforts by organisations such as the South African Savings Institute (SASI), the Teach Children To Save campaign and a wide range of financial institutions are helping to improve the national savings outlook.

“We are also seeing provincial politicians, such as Kwazulu-Natal’s Finance MEC, Ina Cronje, getting involved in promoting and coordinating financial literacy and savings efforts that are so important for the future of our country,” she said, adding that national Finance Minister, Pravin Gordhan, has also called on adults to show young people how to set aside money “for a rainy day” to finance their goals, objectives and eventual retirement.

“Although there is a long road ahead to get South Africa and South Africans up to a more acceptable level of savings, it is encouraging to see what is taking place throughout the country to increase levels of financial literacy and improve financial habits.”

At around 16% of GDP, South Africa’s savings rate is woefully short of nations such as China (52%) and India (37%) and needs to be pushed well above 20% to underpin ongoing economic growth and development...

Echoing a statement by Prem Govender, chairperson of SASI, that “people need to take charge of lives by saving”, Letlape said Sanlam endorses all activities aimed at increasing financial knowledge and stimulating savings patterns amongst South Africa’s growing population.

Sanlam’s own initiatives include working in conjunction with the Operation Hope organisation to teach high school learners about the basics of banking, credit, budgeting, investment and entrepreneurship. The group has also helped the Nelson Mandela Metropolitan University in Port Elizabeth to establish a BCom Financial Planning degree, providing bursaries for students and even find jobs for some graduates. On 25 July the group will also release its annual Benchmark pension industry research which offers a comprehensive look into the state of SA’s retirement savings among the formally employed sector.

As one of the country’s leading financial institutions, Sanlam is intimately involved in providing South Africans with solutions to meet their short, medium and long term savings and assurance needs. It is also a major player in the reform of the retirement industry in association with other leading financial services companies and the national Treasury.

“The bottom line is that it is up to all sectors of society including national and provincial government, financial institutions, commerce and industry, schools and tertiary education institutions as well as parents to champion the closely linked notions of financial literacy and saving,” said Letlape, adding that the positive sparks generated during National Savings Month need to be kept alive throughout the year to build a virtuous cycle of faster capital accumulation, job creation and technological advancement.

“Significantly, a better financial future starts with a financially literate society, so it is vital that financial education is firmly embedded in the school curriculum from as young an age as possible and continued right through to matriculation.”

According to Letlape, a model for other provinces to consider emulating could be the Kwazulu-Natal Financial Literacy Association, which provides an umbrella structure that coordinates public and private sector financial literacy projects and efforts towards making meaningful progress in this vital area. Initiatives include a bi-monthly financial education newsletter for the provincial government employees, a Grade 11 school speech contest, a household survey and efforts to stimulate entrepreneurship and small business development.

She believes that there is considerable scope for other public-private partnerships to enhance financial literacy and engrain a savings culture across all walks of society.

“It is critical for South Africa’s future well-being that the adults of tomorrow have a firm grasp on the difference between needs and wants, the necessity for budgeting and the imperative for everyone to live within their means inside some sort of savings framework,” said Letlape, stressing that while financial education does exist in the current schooling system it is mainly found in high schools subjects such as Economics, Accounting and Life Orientation.

“Internationally it has been recognized that long-lasting consumer and financial literacy education has to start at early school level. Poor financial literacy skills can lead to lower standards of living, lower productivity and greater reliance on social welfare.”