The state of savings in South Africa
21 July 2016
In 1994, with much fanfare and great excitement, South Africa held its first truly democratic elections. The affectionately named ‘Rainbow Nation’ was born, so named for its rich mix of different ethnic groups, languages and cultures. The last remaining international sanctions were lifted and the future seemed rosy. With political liberation, came financial liberation and millions of people previously marginalised, suddenly had almost unlimited access to finance in the formal sector. Financial liberation soon became a double-edged sword. Instead of overall financial wellness and stability increasing, credit quickly became viewed as an alternate source of income with no heed being given to saving. Dissaving became the norm and national and personal debt levels rose dramatically. The average household currently owes 78% of each unit of currency earned. Unemployment is at an all-time high and the nation is labouring under the strain of poverty with large portions of the population surviving hand-to-mouth on social grants. Welfare has become one of the government’s fastest growing expenses.
