Pathetic! South Africans can’t just save, even a cent


It is foolhardy to expect consumers to save when you give them ease of access to secured and unsecured lending, reasons Standard Bank’s head of deposits and payments, Michael Daniels, explaining that it’s no wonder South Africans still have a dismal saving culture.

With the anticipated interest rate rising cycle over the next three years, the situation won’t improve any time soon, as consumers will be more financially stretched, says Daniels. “As the prime lending rate starts to increase, disposable income and deposits might also be under pressure.”

Daniels observes that South Africa has a high a high ratio of household debt to disposable income, which is currently sitting at “75% and starting to pick up.

The level of savings has been in terminal decline in the past three decades. Since 1980, savings to GDP, which was nearing 35%, has seen a decline and is now below 15%.

It’s no exaggeration to call the poor national savings record as a crisis. That explains why the Treasury has proposed a tax-free savings account to encourage household savings and retirement planning. The government incentive is expected to come into effect in March 2015.

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