Finding #crazywaystosave can make you happier this July Savings Month

July is Savings Month in South Africa, and this year the focus is going to be firmly placed on engaging our country’s youth with a theme of “#crazywaystosave.” The South African Savings Institute (SASI), with support from Absa and the IDC, launched July Savings Month 2019 today, with discussions sparking a national conversation on how everyone can find ways to save.

Facilitated by financial journalist Arabile Gumede, the breakfast featured leading voices in personal finance personal including finance coach Mapalo Makhu from Women and Finance; award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from TNC Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and SASI acting CEO and My Money author Gerald Mwandiambira to provide tangible savings insights.

SASI Chairperson Prem Govender says, “There is an urgent need to equip young people with the savings know-how that can directly impact their earning power, wealth creation abilities and happiness. South Africa’s household saving rate has declined to -0.5% of GDP, while our household debt as a percentage of disposable income is currently 71.9% – meaning that for every rand earned, nearly three quarters is spent on debt.”

Govender cites low levels of financial literacy as a reason behind South Africa’s low savings rate and growing credit addiction. “The young tend to save less and spend more. With 20 million people aged between 15 and 34, South Africa has a young population that are increasingly relying on credit. We can blame issues such as black tax, high unemployment, a rising tax burden and inflation – but we also must fundamentally stop living beyond our means and drive a savings culture to break the cycle of inter-generational debt.”

According to Thami Cele, Head of Savings and Investments at Absa Retail and Business Banking, the ‘Crazy Ways to Save’ idea was born out of a need to engage the youth and approach savings differently to get better results. Cele highlighted ABSA Happiness Index research which has identified a direct correlation between savings and the levels of consumer happiness. “We have been studying the underlying factors that ‘make us save’ and the impact that saving can have on overall well-being and happiness.”

The ABSA research found that top factors that improve South Africans’ overall happiness include:
• 92% – having confidence that my family is provided for
• 92% – the ability to afford the necessities in life
• 92% – leading a healthy life
• 91% – saving for the future

“Simply stated, being financially prepared for the future, staying in control of their savings and being satisfied that their families are well provided for are the key drivers to happiness,” says Cele. “Ultimately, 45% of South Africans who are currently saving are significantly happier than their counterparts, whilst 71% of South Africans who claim to have 4 or more months’ salary saved are happier than their counterparts.”

Gerald Mwandiambira, SASI acting CEO, says, “Saving when you’re already under financial pressure can often seem like an impossible task. While you may come up with many crazy ways to save money, from making your own laundry soap to stocking up on condiments at the fastfood store to literally freezing your credit cards – the fundamental truth of compound interest is that money makes money and it’s vital to have a short, medium and long-term plan, to be educated about the tools you can use and to put your savings to work to ensure your financial stability and happiness.”

According to Mwandiambira, saving is not necessarily dependent on income; it is largely dependent on willpower and discipline. “Hiccups in your commitment to saving, if you don’t plan this out carefully, will lead to a feeling of failure. Talking to a financial adviser early to help simplify the complexities around saving and investing will help you to plan your financial future while pointing out any gaps in your plan.”

Mwandiambira concludes that it’s important for South Africans to move away from negativity around our savings rate and look towards developing innovative savings alternatives and reinforcing positive savings behaviour – which the Happiness Index shows leads to a happier nation. “Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of SASI and our dedicated partners. Savings Month has been designed to remind consumers to strive towards financial freedom and move away from remaining continuously vulnerable. Let’s find the #crazywaystosave!”

(ENDS)

Saving step by step – advice from SASI experts and partners

Step one: Set clear financial goals.
You need to plan your short-term goals (less than five years) where saving money is more important than growing it. This can be settling debt and putting an emergency fund in place or saving for an overseas holiday. Your medium-term goals (five to ten years) require you to balance the security of your money with growing its returns. This may include making provision for your children’s education or buying a car. Your long-term goals (more than ten years) are where the returns on the money you have accumulated count most – here we’re talking retirement planning or settling your homeloan.

Step two: Track your spending and create a realistic budget
You must have a very clear picture of how much money you earn, what you spend it on and how much can be saved. It also helps you cut expenses. Part of this budget exercise is to face the harsh reality of the dent debt makes in our cashflow situation.

Step three: Get rid of toxic debt.
As far as expenses in your budget go, there is a huge difference between a food bill and debt repayment. Hopefully, your debt had a very relevant purpose initially, but repaying it at a high interest rate makes an ugly dent in a monthly budget. Focus on one debt at a time, focusing first on those with the highest interest rates.

Step four: Plan for risks.
Build up your savings by having an emergency fund available for the next time you face some unexpected nasty financial surprise. This is where insurance also becomes a critical tool in your financial plan: it gives you the opportunity to transfer the risk.

Step five: Start saving and find your #crazywaystosave
You have identified your goals, used your budget to determine and free up excess funds by getting rid of debt and managing your expenses, and covered your risks as best as possible. Now the only thing left is to do is invest your surplus funds to reach your financial goals and dreams.

#Crazywaystosave from SASI

1. Financial Wellness Days: Ask your employer to give mandatory time off to review your finances with a Financial Planner once a year. Regular meetings with a Certified Financial Planning Professional will help you remain in control of your finances.
2. Automated Savings: Debit orders to Savings Accounts allow automated saving. You can set up debit orders Tax Free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
3. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the Festive Period and New Year expenses without major impact on your finances.
4. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
5. Group Savings: Start of Join a Stokvel or Investment Club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
6. Savings Buddy: Ask a friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
7. Have the money discussion with your partner: Some people are conservative while others are free spirits when it comes to managing money. The truth is that talking about money makes many people feel uncomfortable, and couples may be inclined to avoid financial discussions because they fear the disagreements that may arise. However, by talking openly and honestly about money, couples can establish common grounds despite their differing money styles.
8. Baby Gifts: You can seed a child’s future savings by requesting baby gifts of cash to deposit into TFSA or even taking out a Retirement Annuity (RA) for a baby.
9. Children: Open Tax-Free Savings Accounts for all your children to maximize the benefit they receive from these accounts. Set up debit orders to contribute to these accounts as they grow up together with cash gifts they receive on birthdays etc. You can encourage grandparents and other family to also contribute regularly.
10. Domestic Help: Set up a Savings account or Retirement Annuity for your domestic helper. These important members of our families are often forgotten in future planning.
11. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.
12. Financial Products and Insurance: Shop around and use a financial institution that rewards consistent savers either through a high savings interest rate or cash back for no claims.

SASI July Savings Month 2019 – Spotlight falls on crazy ways to save this July Savings Month

 

Simple tools to make savings a source of happiness for all

 

July is Savings Month in South Africa, and this year the focus is going to be firmly placed on our country’s youth.   The South African Savings Institute (SASI), with support from Absa and the IDC, will use July Savings Month 2019 to focus on driving awareness around how savings relates directly to happiness, as well as encouraging the development of vital entrepreneurial abilities that will allow young people to create business opportunities to sustain their financial independence.  The core theme will be “#CrazywaystoSave.”

 

Gerald Mwandiambira, SASI acting CEO, says, “South Africa has 20 million young people aged between 15 to 34, but with a whopping unemployment rate of 52.4%, which is the highest in the world for this population group, the time has never been more critical to urge our youth to save and focus on entrepreneurship.   However, South Africa’s youth are faced with a frustrating lack of available guidance on the most basic of financial information.  South Africa’s household saving rate, which according to Trade Economics slumped from 0.40% to 0.20% in the third quarter of 2018, is a stark indication that parents are ill-equipped to teach their children how to save and create wealth, given their own struggles.”

 

The Savings Month Launch breakfast on 26 June 2019, facilitated by financial journalist Arabile Gumede, will feature a host of leading voices in finance education in a vibrant panel discussion to spark a national conversation on how everyone can find ways to save.  SASI has partnered with personal finance coach Mapalo Makhu from Women and Finance;  award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from TNC Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and SASI acting CEO and My Money author Gerald Mwandiambira to provide tangible savings insights.  Usually attended by media, government and financial industry leaders, the launch will for the first time include members of the public via a social media invitation lottery. Social platforms will also host a competition to find South Africa’s most creative and crazy ways to save.

 

Mwandiambira says this year SASI will also be aligning with the Financial Sector Conduct Authority’s (FSCA) Consumer Education Department (CED) which is rolling out a Youth Financial Campaign in June.  Workshops will be hosted at roadshows in Gauteng, the Eastern Cape and Mpumalanga to grow awareness on financial management and encourage better financial decision-making amongst our youth.

 

“At the end of July 2019 it is hoped that South Africans will have developed a stronger awareness of the urgent need to begin equipping young South Africans with basic savings knowledge that can have long-lasting and substantial effects on their happiness, wealth creation abilities and earning power,” says Mwandiambira. “As US economist and Nobel laureate Paul Romer said while attending a conference in South Africa recently, the under-utilisation of South Africa’s youth talent is nothing short of a “human catastrophe”. SASI and its partners are sending a clear message – let’s work together to turn this around.”

 

(ENDS)

Rethink Black Friday: It’s not what you think it is – CAPITEC

More than R2.4 billion worth of transactions are expected to take place in a single day on Black Friday.

If you’re preparing to take advantage of Black Friday deals, think again. Consumers are advised to be cautious of “never before seen” deals offered by retailers, and especially taking credit for items they may not need.

Building upon the launch of an advertising campaign, featuring Vusi Thembekwayo, South Africans are asked to rethink credit as part of responsibly realising their dreams.

Capitec Bank advises South Africans to carefully consider Black Friday and to ensure they use credit for the right reasons. To help consumers, the bank has put together a list of myths and tips to help you during the retail frenzy called Black Friday.

Myth #1: You can’t beat Black Friday prices

False. The festive season is around the corner and retailers have a month left to lure consumers into their shops with attractive deals. On Black Friday, stores have so-called doorbusters – those are the big discount deals being advertised to get you into the shop – but the discounts on the majority of the products are much smaller.

Myth #2: It’s a once-off opportunity for consumers

False. If you think Black Friday was planned for your benefit, think again. It’s intended to get you to spend money. Retailers have not reduced prices to be kind to you, rather it’s a chance to drive sales and increase profit before year-end. They want to sell their goods and it won’t be at a loss.

Myth#3: Everyone is doing it

False. The hottest trend is minimalism. It’s all about decluttering and moving towards simplicity. Buying things won’t make you happy. The more you own, the more worries you have. Think experiences rather than stuff.

Top 5 tips for Black Friday:

Tip #1: Buy smart

Don’t let Black Friday become an excuse to buy things you don’t really need and spend money you don’t have. Think it through and be smart. Ask yourself: “will this purchase help me to live better and realise my dreams?” Electronics, clothing and flashy accessories quickly become old, but a new computer for your business or a vehicle to transport your kids to school stand the test of time. It’s all about long-term utility over short-term happiness.

Tip #2: Credit can be useful

If you spot a deal on an item you really need, and that will help you live better in the future, credit can be a useful tool. When buying things on credit make sure that the value of the item will outlive the repayment plan. Most importantly, look at all the costs of taking credit, including initiation fees, monthly fees and any insurance payments required. Avoid store credit as interest rates are usually very high versus the Capitec credit card that offers interest rates as low as 10%. On the Capitec website, you can check what you could qualify for. Make sure you have all the other documentation you need to apply.

Tip #3: Pay off what you owe first

If you’re still paying off a student loan, your car and have existing debt on credit cards, Black Friday is probably something to avoid. While most of South Africa’s credit-active consumers are in “in good standing”, if you fall behind on loan payments it could compromise your credit rating.  Before considering more shopping, make paying off what you owe a priority.

Tip #4: Make a list, check it thrice

Consider what you need, rather than what you want. List your expenses according to your needs, not your wants. This will help you to cut out non-essential spending. It’s the difference between buying a fridge rather than five kilograms of the latest flavour of frozen desserts.

Tip#5: Sales days attract thieves

The increase in people drawing cash means there’s a higher risk of cash theft and card swapping at ATMs. Rather use your card for purchases. With a Capitec debt card, you pay zero fees and don’t have to carry large amounts of cash.

* This article was published in partnership with Capitec.

GMW Money Box Challenge

Piggy banks and money boxes have been around for thousands of years! The origins of the name ‘piggy bank’ dates to the Middle Ages when Pygg, an orange colored clay, was used to make pots to store money. The name pygg jars evolved to be known as ‘Pig Banks’, and the rest is history!

How to join?
Step  Print out GMW Logo/s under the ‘Resources’ section on www.globalmoneyweek.org
Step  Take a photo of your money box and place GMW logo next to it. You can add your country flag, wear national clothes, hold balloons, etc.

Suggestions
The Money Box can be designed or created in ways that:

  • It reflects a country’s culture/ currency.
  • Represent things that children and youth are saving for e.g. if you are saving for sweets then the box is covered by sweet wrappers.
  • It has a photo or drawing of what you are saving for.

Step  Share and post it on  using all of the following hashtags #GMW2018 #GlobalMoneyWeek #GMWChallenge
Step  Encourage your friends, family, communities and institutions to share your post. The winner is the photo with most likes!

Timeline:
The competition opens: Monday, 12 March 2018
The competition closes: Sunday, 18 March 2018
The winner will be announced on our GMW Facebook at 14:00PM (CET) on Friday, 30 March 2018.

Focus on alternative savings during July Savings Month

The 2017 SASI (South African Savings Institute) July Savings Month was launched today in Sandton by Orlano Makubela, Chief Director of Financial Investments and Savings at National Treasury, and Sazini Mojapelo, Group Head of Citizenship at Barclays Africa, with a focus on encouraging alternative savings solutions. A panel of industry experts discussed developing alternative mechanisms to help South African consumers, already under pressure and over-indebted, to save.

Absa partnered with the South African Savings Institute (SASI) to launch National Savings Month, joining anchor sponsor the IDC and other long term partners across the financial services industry. Mojapelo says, “Our decision to partner with the South African Savings Institute echoes our commitment to Shared Growth through which we use our resources, the talents of our people and our expertise to make a positive difference in society. One of our commitments in this regard is Financial Inclusion, which includes financial literacy training, and looks to encourage South Africans to recognise the importance of saving and to save.”

SASI Chairperson, Prem Govender, says that following South Africa’s ratings downgrade and subsequent effects on the economy, consumers will increasingly be under financial pressure and need to improve both knowledge and attitudes to saving. “Savings Month has been designed to remind consumers, via the media and other channels, to strive towards financial freedom or remain continuously vulnerable. Cultivating a culture of savings and promoting alternative savings solutions in all spheres of life is our focus for 2017.”

SASI believes employers can also play an important role.  “Many South Africans are struggling to save not only due to income challenges, but also the lack of willpower and commitment. In terms of alternative savings solutions, we are involving employers this year and suggesting ways to facilitate or automate the savings process for those with an income, such as garnish savings options into a tax free saving account and 13th cheques structured as a savings tool.”

Gerald Mwandiambira, SASI acting CEO, emphasized the importance of people having a savings buffer in tough economic times. “Research shows that savers with a buffer enjoy improved emotional wellbeing, greater resilience to external market shocks and, importantly, an increase in productivity at work. We need employers to get involved in the savings process by assisting with automated savings programmes, especially considering that financially stable employees make productive employees.”

Mojapelo agreed, saying, “Persistent unemployment and the rising costs of living, made worse by historical spatial development patterns, means the average lower income household faces far greater pressures than many of us imagine. For those that can save, it is important that they use all the instruments available to improve their long-term financial sustainability. The responsibility for enacting these critical behavioral changes is a shared one, and we see a role for individuals, financial services providers but also for employers and HR professionals. Employers have a significant role to play in guiding their employees to make those small behavioral changes. HR professionals should be recommending tweaks to employees such as regularly reviewing and adjusting their pension fund contributions. They should also be educating employees to start building a savings buffer in case things go wrong.”

SASI has been dedicated to developing a robust culture of saving in South Africa since 2001. Govender says, “According to South African Reserve Bank (SARB) figures, in the last 16 years we have seen a decline in our savings rate, reaching a record low of -2.70 in 2013. However, we are now seeing small increases off a very low base, with the Household Saving Rate in South Africa increasing to -0.30 percent in the first quarter of 2017 from -0.50 percent in the fourth quarter of 2016.”

Govender further highlights that we are starting to see an overall reduction in household debt. The SARB bulletin for the first quarter of 2017 shows that, on an annual basis, growth in household debt slowed from 4.6% in 2015 to 3.9% in 2016, and the ratio of household debt to disposable income edged lower from 76.9% to 74.4% over the same period. “Recent improvements in the debt rate can be attributed to The National Credit Amendment Act 2016, which has imposed more stringent affordability requirements on borrowers, as well as a Nation that has simply used up all available credit,” says Govender. “Young South Africans are increasingly relying on credit to provide for basic needs, and there is a growing culture of people living way beyond their means and getting trapped in a cycle of short-term debt. Financial literacy education from an early age is vital to counteract this trend.”

Govender believes that we need to move away from negativity around South Africa’s savings rate to developing innovative savings alternatives and reinforcing positive savings behaviour. “Every Savings Month we work with our partners, including the large financial institutions that play such an important role in sharing knowledge, to find ways to educate and empower South Africans to save more. The household savings agenda is a key national priority. We believe that South Africans can save and invest more domestically for the greater good of our economy. As we sit in a technical recession, it is a fact that domestic savings can be a driver of internal economic growth. There has never been a better time to save than now.”

Alternative Savings Methods – Tips from SASI to help you save

Saving is not only dependent on income, it is largely dependent on willpower and discipline.
These solutions allow savers to have willpower and discipline by passing it on to others.

  1. Set a Target: The reason why many of us do not save is because we do not have set targets. It is important to set and write down important savings targets such as an Emergency Fund, Holiday Fund and other targeted savings. Do you know your targets?
  2. Automated Savings: Debit orders to Savings Accounts allow automated saving. You can set up debit orders Tax Free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
  3. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the Festive Period and New Year expenses without major impact on your finances.
  4. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
  5. Financial Wellness Days: Ask your employer to give mandatory time off to review your finances with a Financial Planner once a year. Regular meetings with a Certified Financial Planning Professional will help you remain in control of your finances.
  6. Group Savings: Start of Join a Stokvel or Investment Club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
  7. Savings Buddy: Allow your partner or friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
  8. Baby Gifts: You can seed a child’s future savings by requesting baby gifts of cash to deposit into TFSA or even taking out a Retirement Annuity (RA) for a baby
  9. Children: Open TFSA Accounts for all your children to maximize the benefit they receive from these accounts. Set up Debit orders to contribute to these accounts as they grow up together with cash gifts they receive on birthdays etc. You can encourage grandparents and other family to also contribute regularly.
  10. Domestic Help: Set up a Savings account or Retirement Annuity for your domestic helper. These important members of our families’ are often forgotten in future planning.
  11. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.
  12. Financial Products and Insurance: Shop around and use a financial institution that Rewards consistent savers either through a high savings interest rate or cash back for no claims.

(ENDS)

www.savingsinstitute.co.za

#celebratesavers

Photographs: https://app.box.com/s/4w4q54wxqfdame9i19skn2wn97mqocbf

Speeches: https://app.box.com/s/4w4q54wxqfdame9i19skn2wn97mqocbf

  • Orlano Makubela, Chief Director of Financial Investments and Savings at National Treasury
  • Sazini Mojapelo, Group Head of Citizenship at Barclays Africa

For more information contact:

Tamaryn Brown on behalf of SASI
Plato Connect
Tel: 084 3510560
Tamaryn@platocomms.co.za

Obakeng Nyokong on behalf of Absa, Fleishman Hillard
Tel: 079 684 3623
Obakeng.nyokong@fleishman.co.za

 

SASI July Savings Month 2017 Launch

The South African Savings Institute (SASI) will launch its traditional Savings Month Campaign at a breakfast event in Sandton on Wednesday 28 June 2017 where the Minister of Finance, Malusi Gigaba, will deliver the keynote address.

 

“Savings Month is SASI’s national savings awareness campaign, and the theme for this year’s drive, which runs during July, is “Alternative Savings Solutions,” says Gerald Mwandiambira, Acting CEO of SASI.

 

Savings Month has been designed to remind consumers, via the media and other channels, to strive towards financial freedom or remain continuously vulnerable. “Cultivating a culture of savings and promoting alternative savings solutions in all spheres of life is our focus for 2017.” The Minister’s keynote address will be in response to these alternative savings solutions and SASI’s vision to improve individual savings in South Africa.

 

At the event, Barclays Africa CEO Maria Ramos will also share her thoughts on the state of savings in our country, after which a panel of industry experts will discuss ideas and thoughts on a blueprint to encourage individual saving in South Africa.

 

“South Africans generally don’t have a savings pool to tap into in times of emergency and tend to cash in their retirement savings when times are tough. For this reason, National Treasury introduced vehicles such as the Tax Free Savings Account in 2015 to encourage household savings. SASI welcomes this strategy and is encouraged to pursue this mandate even more aggressively. Hence a key focus of this year’s savings campaign will be to promote savings literacy,” says Mwandiambira.

 

SASI will be implementing a number of initiatives during July, aimed at instilling a culture of saving.

 

“As responsible South African corporate citizens, we want to demonstrate our commitment to economic sustainability and to promoting the financial well-being of all South African consumers. We believe the Savings Month activities will further the spread of the savings message across the country and provide the necessary information to assist consumers to make informed savings decisions.”

 

Events planned for 2017 Savings Month Awareness Campaign include:

 

 

Event Date Venue Audience
SASI Savings Month Launch Breakfast 28 June 2017 Sandton VIP Guests
Media Campaign 1 July – 5 August National Radio & TV Public
Communities Campaign 6 July – 30 September National Selected Communities
Varsity/TVET Campaign 6 July – 30 September National Selected Campuses

 

 

Savings tips to survive 2017

 

  1. Resist SALE, think SAVE! Clearly distinguish between needs and wants.
  2. Have a clear budget for your requirements in every month. Create a budget using the SASI budget tool or phone apps, available at NO COST.
  3. Use free online tools to track your spending and debt and know where every cent of your income goes.
  4. Pay cash for all purposes and don’t be trapped by easy credit – in fact, cut up those store credit cards!
  5. Visualise what you want to save for and start saving more.
  6. Service your debt and stick to the payment terms. If you cannot service your monthly debts discuss your situation with your credit providers before it is too late. Consumers can seek assistance from  a  registered  debt  counsellor  by  contacting  the  NCR  on  0860   627 627.

6 Challenges to Financial Inclusion in South Africa

South Africa is a country of well-known promise and peril.

Despite being the largest economy on the African continent, the nation is plagued by high levels of unemployment, a poor education system and staggering income inequality.

Underscoring the country’s struggle to translate its rich natural resources and other assets into social benefit, South Africa is ranked 149th out of 162 in its ability to convert wealth into well-being, according to a recent assessment by Boston Consulting Group.

While financial inclusion – the adoption, usage and sustainability of financial services – is generally linked to socioeconomic development, it faces numerous challenges in South Africa.

BCG recently carried out research into the state of financial inclusion in the country, which revealed some of the key reasons why South Africans are not big on banks.

1. PERCEPTIONS OF HIGH FEES LIMITS THE USAGE OF BANKING SERVICES

The fee structure of South African banks is up to four times higher than countries such as Germany, Australia and even India.

However, this is partly due to the high operating costs of banks and the proliferation of cybercrime.

In 2015, cybercrime cost South African businesses approximately R5.8 billion ($450 million), and while all businesses have taken proactive measures to combat this threat, banks spend three times as much on IT security as non-financial organisations of the same size.

Notwithstanding that more than 70% of adults have transaction accounts, only 24% make more than three monthly transactions such as withdrawals, deposits or card swipes.

Many people are willing to run the risk of loss and theft associated with cash to avoid the fees, resulting in more than 60% of all purchases being paid for in cash.

2. THERE IS A GENERAL SENSE OF MISTRUST IN BANKS’ MOTIVES

People on low incomes have a deep mistrust of the formal financial sector, which is rooted in fears of exploitation. Past abuses, such as the inappropriate marketing and selling of financial products, have shown that poor people are highly susceptible to rapacious commercial interests.

For example, South Africa recently started paying social grants directly into bank accounts, which prompted financial institutions to target grant recipients with products such as funeral coverage and micro-loans, whose costs were automatically deducted from the recipients’ accounts.

Many grant recipients were left with very little to survive on, causing a public outrage and subsequent investigation into the legality of the financial institutions’ activities.

South Africa’s poor are particularly vulnerable due to widespread financial illiteracy, exacerbating the sense of mistrust and levels of exploitation fostered by these practices. Unfortunately, this is a systemic education problem within South Africa that cannot be addressed in the short-term.

3. CONCERNS OF FRAUD NEGATE THE CONVENIENCE OF CASHLESS TRANSACTIONS

While some people in the low-income bracket do not utilise mobile and internet banking simply due to lack of familiarity, the fear of fraud involving ATMs and mobile/internet banking was cited as the number one reason for preferring to transact in cash.

This group also expressed a preference for transacting face-to-face because in the event of any issues, they feel there is better chance for recourse, versus using digital technology.

4. PEOPLE VALUE A SENSE OF COMMUNITY WITH TRUSTED ADVISORS

More than 40% of South African households use trust-based models such as “stokvels”, according to the National Stokvel Association of South Africa.

A stokvel is a savings or investment society in which members regularly contribute an agreed amount which is then divided amongst them, according to the method agreed by the members. For many South Africans, stokvels are more than a mechanism to save money – they provide a safety net for emergencies and offer an aspect of social interaction for the purpose of entertainment or advice.

Especially for the lower-income population, community-based organisations such as these still provide the flexibility and support structure that is perceived as lacking in the banking industry.

5. BANKS REQUIRE TOO MUCH PAPERWORK AND RESPONSE TIMES ARE SLOW

The financial services industry has created substantial barriers for individuals to access products such as loans.
Banks require payslips and bank statements, and approval can take a long time. This is restrictive to people in the low-income segment that often need money on the same day and do not have access to these documents.

When borrowing money to get to work or buy food, flexibility and near immediate response times are the key factors in determining the channel used. Despite the progress that has been made by formal financial institutions in these areas, regulatory requirements make it difficult for them to compete and therefore, in a pinch, many South Africans turn to community loan sharks (known as mashonisas), or friends and family.

6. A SIGNIFICANT AMOUNT OF BUSINESS IS CONDUCTED INFORMALLY

According to the last survey conducted by Statistics South Africa in 2013, more than 1.5 million people were running small, informal businesses in the country.

These informal businesses do not easily satisfy the requirements of the formal financial sector.

Banks require proper registration in order to open business banking accounts and offer loans, but registration fees are often prohibitively expensive for small business owners, limiting the use of such services by these businesses.

THE WAY FORWARD FOR SOUTH AFRICA

Bringing more people into the financial system has the ability to enhance GDP growth, reduce poverty and create new market opportunities for the private sector.

Achieving financial inclusion is therefore a critical milestone on the path towards realising the promise of the Rainbow Nation.

However, a more innovative approach to financial inclusion is required in South Africa.

While regulation by the government can act as a catalyst, financial institutions will need to work together with the public and private sectors.

At the same time, stakeholders need to understand the preferences and unmet needs of consumers, as well as the barriers they perceive in accessing financial services. Importantly, digital technology is not a silver bullet; many different levers need to be pulled to achieve this goal.

Written by Adam Ikdal, a senior partner and managing director at BCG South Africa.

This article was republished courtesy of the World Economic Forum.

Savings Institute FAQ

  1. What has changed since the campaign began 15 years ago?

The SASI July National Savings Month was launched as it is around 2008, what has changed is that from being a SASI initiative, July is now widely accepted as Savings Month. The broader financial services community has embraced our concept and South Africa now actually takes time to take stock of it’s savings behavior every July specifically. SASI does however run campaigns all year round and not just in July. Our other key period is a Festive Season campaign from October to January every year. All our initiatives are however dependent on donor and partner support as a Non Profit Company and SASI is always seeking new partnerships.

  1. From your research and experience, what’s preventing South Africans from saving?

South Africa is a consumer driven economy. The need and desire for instant gratification and satisfaction far exceeds the future plans of most consumers. This is largely a result either of lack of financial education or awareness, or the heavy media around consumerism we face daily. Another saving challenge is so-called black tax, however, this can often again be overcome by financial education. Saving and investing by in large is all about willpower. Like losing weight, many South Africans still lack the willpower to save. However, a tough economy often forces many people to reconsider and start saving , just as a doctors warning on the dangers obesity affects a person’s eating habits. We prefer people to however choose to save than have it as an emergency measure.

  1. What age groups which struggle the most with savings? Or is it a general South African problem? Any stats in this regard?

There are no stats to this regard I can readily rely on but older people tend to save more as they approach retirement. This is because they are aware of impending income loss. However, the savers best friend is time and saving is ideally suited to young people. It is better to start early than leave it late. It is however better to start late than never start at all.

  1. What is new in this year’s campaign and anniversary?

The theme this year for Savings month is simply “Celebrating Savers and Savings”. SASI will discuss the current successes in Savings and evolution over the last 15 years.

SASI are moving away from more negative messaging such as “South Africans can’t save or Are Not Saving” to exploring positive savings behavior reinforcement messages. SASI also celebrated organizations and individuals who have excelled in educating and empowering South Africans to save over the last 15 years.

  1. Any concrete plan in place to drive the message home so it achieves the desired result?

We hope to get savings testimonies and share successful savers. This is because when people see real examples of success it tends to hit home that it can be done. This is opposed theory based education which often many people resist. This is the same reason many people enjoy reality television. This with positive reinforcement messages we hope will yield better results. SASI is also re engaging the wider financial services community as it seeks new partnerships to promote savings and demonstrate that it is possible.

SASI launches 2016 Savings Month Campaign at its 15th Anniversary

Sandton, 30 June 2016 – The 2016 SASI Savings Month Campaign was launched today at the Industrial Development Corporation (IDC) by Ismail Momoniat ,Deputy Director-General: Tax and Financial Sector Policy on behalf of the Deputy Minister of Finance Mcebisi Hubert Jonas.

The South African Savings Institute (SASI), an independent non-profit organisation dedicated to developing a robust culture of saving in South Africa, also celebrated its 15th Anniversary at the event.

When SASI was launched in April 2001, then Finance Minister Trevor Manuel expressed his hope that South Africa’s poor savings rate; disparate living standards, lack of financial literacy and poor economic growth would be mitigated by a stronger savings culture in all sectors of the South African population.

This year, SASI celebrates a milestone of service to the South African public in Savings Education, Financial Literacy, Advocacy and Research.

Apart from founding the National Savings Month campaign, which has led to general acceptance of July as savings month, SASI also co-founded with the Banking Association of South Africa (BASA) the Teach Children to Save campaign, now known as Starsavers, the largest initiative to educate children on saving in South Africa.

SASI Chairperson Prem Govender applauded all partners for their dedication and support. “Very early in our existence we realised that we could not succeed without joining forces with other like-minded organisations,” she said. “So, we formed partnerships to promote the importance of building a strong savings culture in South Africa.”

A panel of experts and partners including Mr Cas Coovadia, MD of the Banking Association of South Africa (BASA) and Basil Maseko of National Treasury, and Janina Slawski, Director of Marketing and Distribution at Old Mutual Investment Group, discussed the evolution of savings in South Africa over the last 15 years and noted successes, challenges as well as possible future interventions.

SASI’s Acting CEO Gerald Mwandiambira noted that SASI also launched what was at the time the first index to track savings, the SASI Savings Barometer. “This tool highlighted the need for further savings data and research and many current indices were indeed inspired by our barometer.”

The Old Mutual Savings & Investment Monitor research is one such credible data resource, keeping influential players and the market abreast of the attitudes and behaviours of working metropolitan households when it comes to savings and investing. The next update of the Old Mutual Savings & Investment monitor research findings will be released to the market on 5 July 2016 and can be accessed at www.oldmutual.co.za/savingsmonitor.

Old Mutual’s Janina Slawski said: “Our partnership with SASI is a valuable endorsement of all our financial education efforts, and we believe that together we’re in a strong position to continue to improve the country’s savings habits, for the benefit of individuals and the economic future of South Africa.”

John Manyike, Old Mutual Head of Financial Education, shared: “Recent statistics reveal a shocking 214% increase in consumers aged 21 to 25 applying for debt review from 2014 to 2015.

“These statistics highlight the fact that young South Africans are increasingly relying on credit to provide for themselves and their families’ basic needs, and indicate a growing culture of people living way beyond their means.  This credit-funded lifestyle, promoted by popular culture, exposes people to the risk of getting trapped in a cycle of short-term debt from an early age. A key reason for the increase in credit addiction is the low level of financial literacy among young South Africans. To break the cycle of generational debt and a low savings culture in SA, it is imperative that financial literacy be entrenched in our population from as young as possible,” said Manyike.

“At Old Mutual we believe that the first step towards financial empowerment is being able to access the right financial education. That’s why we’re committed to playing our part in positively transforming our country, and its people, through the effective sharing of financial knowledge.”

The theme this year for Savings Month is simply “Celebrating Savers and Savings”. The SASI 2016 July National Savings Month launch will be celebrated throughout the month of July with various events and media communications, including online, print, radio and television.

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Contacts

Thembi Makhaye                                                        Victor Sibeko

Cell. 061 107 7881                                                     Cell. 081 311 4276

Email: thembisilemakhaye@gmail.com                      Email: victor.sibeko@buhlebethu.com

For more information on the breakfast launch please contact the above.

For more information, please contact:

 

KEDIBONE MOLOPYANE |Communications Manager

Old Mutual Emerging Markets Group Communications

+27 (0)11 217 1755 (telephone)

+27 (0)11 217 1950 (fax)

kmolopyane@oldmutual.com (email)

071 364 3479 (cell)

 

SASI Reflects’ on 15 Years and launches SASI July Savings Month

The South African Savings Institute (SASI) is an independent non-profit organization dedicated to developing a robust culture of saving in South Africa.
At SASI’s launch in April 2001, then Finance Minister, Trevor Manuel, drew attention to the poor savings rate; disparate living standards; lack of financial literacy and the poor growth of our economy. He noted that these concerns may all be mitigated by an improvement in savings culture by all sectors of the South African population.
15 years later SASI is set to celebrate milestones of service to the South African public in Savings Education, Financial Literacy, Advocacy and Research, SASI will be looking back at its successes and challenges.
SASI Acting CEO Gerald Mwandiambira says “Over the past decade and a half, SASI has played a role in shaping South Africa’s savings landscape, first by launching what was at the time the first index to track savings, the SASI Savings Barometer. This tool highlighted the need for further savings data and research and many current indices were indeed inspired by our barometer.”

SASI also founded the SASI July Savings Month campaign which has led to general acceptance of July as savings month as well as co-founding with the Bankers Association of South Africa (BASA), Teach Children to Save, now known as Starsavers. The largest initiative to educate children on saving in South Africa.” The 2016 Savings month will be on 30th June 2016 at the IDC, in Sandton and will be attended by the Deputy Minister of Finance, the Honourable Mcebisi Hubert Jonas who will render the keynote address.
A panel of experts representing Bankers Association of South Africa (BASA), National Treasury, Old Mutual, Nedbank and will deliberate on the evolution of savings in South Africa over the last 15 years and note successes, challenges as well as future possible interventions. Furthermore new savings products made available over the years including the successful Retail Bonds and Tax Free Savings Accounts will be highlighted. Considering the current rate of unemployment possible interventions will be explored in this regard.
The theme this year for Savings month is simply “Celebrating Savers and Savings”. We will discuss the current successes in Savings and evolution over the last 15 years. We are moving away from more negative messaging such as “South Africans can’t save or Are Not Saving” to exploring positive savings behavior reinforcement messages. SASI will also be celebrating organizations and individuals who have excelled in educating and empowering South Africans to save over the last 15 years.
The July Savings Month 2016 launch will be on Thursday, 30th June 2016 at 07:00 till 10:00 at The IDC Auditorium, 19 Fredman Drive, Sandton.
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Contacts
Thembi Makhaye  & Victor Sibeko
Cell. 061 107 7881 Cell. 081 311 4276
Email: thembisilemakhaye@gmail.com Email: victor.sibeko@buhlebethu.com
For more information on the breakfast launch please contact the above.