Educating our country about money matters Financial education empowers people and communities

COMMENT

Mohale Ralebitso

The events at Marikana horrified the nation, but as investigators and the media peeled back the layers of cause and effect, they found disturbing evidence that financial exclusion played a crucial role in the tensions that led to the tragedy.

The National Credit Regulator found that only two of the 12 micro-lenders inspected in and around Marikana complied with the law. It found rampant abuse of the miners' financial rights.

The Mail & Guardian reported that these included "illegal retention of consumers' bank cards and identity documents, illegal fees charged, a lack of — or inadequate — affordability assessments, reckless lending and the signing of blank process documents by consumers that allowed lenders to implement unlawful deductions directly from consumers' salaries".

These shocking revelations are a symptom of a more serious and more general problem. As a nation, it should deeply concern us that so many South Africans are financially orphaned.

The most recent update of the Old Mutual Savings and Investment Monitor shows that 38% of those surveyed have neither a provident fund nor any retirement annuity, a worrying statistic because the respondents to the survey are working South Africans who live in metropolitan areas.

This means that even people who earn decent salaries now will have no means of providing for themselves when they retire.

It is critical for responsible financial companies to work closely with government and community organisations to promote financial literacy and financial inclusion.

Last week, FinMark Trust released the findings of its 2012 FinScope Consumer Survey. The study found that 67% of South Africans do not save, meaning only 33% of South Africans do save.


And of the 33%, 6% use informal platforms such as savings groups and 5% keep all their savings at home. We need to encourage these South Africans to use responsible financial services that comply with the principles of good governance, transparency and accountability.

This way they can be protected from unscrupulous and unregulated lenders, and get professional advice on managing financial risks better. By bringing them into the mainstream we also give our economy added impetus for growth. Thulani Sibeko, group executive for marketing, communications and corporate affairs at Nedbank, said that although many people in South Africa remain unbanked, it is encouraging to see the survey's finding that South Africa's banked population has grown by 1.3-million to 22.5-million in 2012.

Developing relevant offerings

He said that through Nedbank's ongoing engagement with all consumer segments, including the entry-level market, the bank conti-nues to gain great insights that result in the development of rele-vant offerings such as the Nedbank Ke Yona.

"We've also launched the youth proposition, Nedbank 4me 'My Future, My Bank', ensuring we instill principles of financial fitness from an early age — as part of our commitment to making banking more accessible to all in South Africa."

Nedbank has been operating in the personal loans business for over 10 years and ensures that its lending policy and processes are underpinned by world-class risk management practices that support responsible lending.

To assist clients in managing their finances and building financial fitness, Nedbank invests in various programmes to empower clients to make informed financial decisions.

The Finscope Survey also found that a little over 50% of the adult population has no risk cover and 17% of the country's adult population relies on only burial societies.

Not having risk cover can have a negative impact on your financial health. It is important that people put aside money not only for burials, but also for the risk of being disabled, car accidents, property da-mage and lengthy hospitalisation.

This is where popular programmes such as On the Money and Fin360, both initiated by Old Mutual, can play an important role.

To help South Africans to manage, grow and protect their money better, the On the Money programme uses the survival instincts and behaviours of our Big Five animals — lion, elephant, leopard, rhino and buffalo — to illustrate good financial habits. It teaches the basics of sound money management in a clear, vivid way that is easy to understand and remember.

The need for advice and the struggle of those at the so-called lower end of the market is evident from the Majority Report, issued by the UCT Unilever Institution of Strategic Marketing, which found that most of the 36-million people in this sector are broke before the end of the month.

Most rely on family and friends or the credit offered by spaza shops and micro-lenders and some simply face hardship. The recent Indebtedness Summit heard that 23% of South Africans went hungry and 21% went without electricity because of lack of money.

The challenge extends to South Africans who are ostensibly comfortable financially but in fact in dire straits. More than nine million of the country's 19-million credit-active customers have impaired credit records on the 60-million credit accounts they hold.

Unisa's finance research unit found that unsecured lending is also being driven by middle-class consumers who borrow money for basics such as food, transport and electricity.

Many simply feel they have no choice but to get into debt, risk defaulting on that debt and are un-able to capitalise on the current low interest rates. All this underpins the need for an intensive financial education drive.

Apart from the overarching need to develop enterprise and drive economic growth, as a nation we need to reinvent our relationship with money, and the first step toward that is financial education. Individual financial stability drives prosperity, education and development for families, communities and national economies, and demands priority. This then is an urgent call to action on effective financial education.

Join some of the top minds from business, government and civil society as they unpack the need for financial inclusion for sustainable economic growth.

Mohale Ralebitso is the director for marketing, communication and corporate affairs at Old Mutual. Old Mutual and Nedbank have partnered to discuss and drive financial inclusion at the Mail & Guardian Critical Thinking Forum to be held at SABC Radio Park in Auckland Park, Johannesburg, on November 12 2012, and broadcast live on Radio 2000

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

ConCourt settles the law on the public protector and interim...

The Constitutional Court said it welcomed robust debate but criticised the populist rhetoric in the battle between Busisiwe Mkhwebane and Minister Pravin Gordhan

Small towns not ready for level 3

Officials in Beaufort West, which is on a route that links the Cape with the rest of the country, are worried relaxed lockdown regulations mean residents are now at risk of contracting Covid-19
Advertising

Press Releases

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

Obituary: Mohammed Tikly

His legacy will live on in the vision he shared for a brighter more socially just future, in which racism and discrimination are things of the past

The best local and international journalism

handpicked and in your inbox every weekday