WHAT is the savings situation of Mzansi and what does it say about our money?
FinMark Trust’s 2016 FinScope South Africa Survey on Financial Inclusion found 38,2 million adult South Africans – 89% of all adults – have some type of financial account. This includes both formal and informal accounts.
More than three-quarters of all Mzansi adults (77%) have a bank account.
What is interesting is that this proportion was increased substantially by South Africa Social Security Agency (Sassa) card holders. If Sassa-card holders are excluded, then FinMark found that only 58% of South African adults are banked.
Andrew Wood, managing director of financial-services company The Unlimited, said that figure of 58% is closer to the 51% of Mzansi adults who are indebted by borrowing from various sources.
Wood said these findings look like a big hint that we risk being tricked by national financial-inclusion statistics.
“That kind of financial inclusion is all about the ability to save or the ability to recover from the shock of unpredictable events. It’s also all about affordability of the product itself, not just the cost of doing business such as saving with a bank and the costs of its fees.”
He said that savings levels have stagnated year-on-year.
“It’s said that 33% of all South African adults are savers and while one in three doesn’t sound too bad, it is still just less than one in three (29%) who are saving through banks and formal financial institutions.
“About 8% are informal savers using stokvels and burial societies.
“When you exclude funeral policies, only 22% of South African adults have broader insurance cover. That means four out of five adults are increasing their life risks without the cushion of insurance to help them survive the hard knocks.
“We know that in the real world, people want hospital and car insurance, but many feel getting insurance is a hassle.”