3 Ways South Africa is Trying to Boost Financial Literacy
South Africa is a nation of debtors. In recent months, fresh figures from 2014 have come to light which reveal that, in the same year, South Africa’s citizens borrowed more money than those of any other nation. Over this period we collectively owed R1.63 trillion to our creditors, with 86% of us taking advantage (or indeed disadvantage) of some form of credit from 2013-14.
It also appears that we are not responsible borrowers. While 12.8 million South Africans are in good standing with their creditors, over 21.5 million are not. 10.5 million have impaired credit records, while an even more shocking 11 million+ are considered to be “over indebted”.
Perhaps this should come as no surprise in a nation where a recent survey conducted by Wonga.za revealed that just 43% of the 18,000 individuals polled knew what a credit report was. The survey also revealed more significant gaps in our national financial literacy. 77% of respondents stated that, when making use of credit products, they did not check for fees or interest rates – instead taking on debt blindly. Meanwhile, 32% admitted to saving no money whatsoever on a monthly basis. The full survey data is downloadable via this blog post.
Of course, the ability to save money does not rest solely on an individual’s financial wherewithal. Indeed, in a country with one of the widest income inequalities in the world, it’s incredibly difficult for those at the lower end of the pay divide to save at all – let alone regularly. Yet, with such high levels of personal debt and such shocking statistics coming to light via Wonga, it’s clear that financial literacy is a factor in our personal financial health as a nation.
The Government is paying some attention to the dearth of financial acumen amongst the general population, but is it doing enough to help rectify the situation?
Back in 2014, National Treasury chief director of financial sector development, Ingrid Goodspeed, spoke to The Guardian, claiming that a lack of education in financial matters made it difficult for South Africans to assess financial products and make shrewd decisions about which to use and which to avoid. This, she claimed, led to many falling victim to financially harmful situations like pyramid schemes, predatory lending practices and astronomical penalty fees. The result? A population plagued by limited savings and high levels of debt.
So what is being done to tackle our financial literacy problem?
1) A tax on lenders
In 2012, the Treasury decided it was time that financial service providers started chipping in to help raise financial literacy in South Africa. From national banks to independent lenders, all financial service providers much now contribute 0.4% of their post-tax net profits towards financial education.
2) The National Consumer Financial Education Strategy
The tax on financial service providers was just one aspect of a wider National Consumer Financial Education Strategy which, also launched in 2012, is targeting 16-29 year old black Africans particularly to raise the level of financial literacy in the country. The strategy hopes to have fully integrated finance into the national curriculum by 2017.
It’s not just the Government working for the cause. A number of non-government initiatives have also been set up. Banking Association South Africa are funding Teach the Children to Save, while a sister project called Operation Hope aims to teach individuals “financial dignity”, giving them the tools they need to manage their finances more successfully.
Is this enough? Will the Government’s 2017 target for the national curriculum be met? Have your say in the comments section below.http://www.dailynewsz.com/3-ways-south-africa-is-trying-to-boost-financial-literacy/http://www.dailynewsz.com/wp-content/uploads/2016/12/financial-literacy.jpghttp://www.dailynewsz.com/wp-content/uploads/2016/12/financial-literacy-300x300.jpgBusinessEducationworld newsfinancial literacy,south africa