File: According to a recent survey by YouGov, 59 percent of South Africans are more determined to make saving their main priority this year.
JOHANNESBURG - The South African Savings Institute (Sasi) kicked off its annual July Savings Month activities by encouraging South Africans to come up with innovative ways to save.
Sasi chairperson Prem Govender introduced the monthlong initiative as an opportunity to generate awareness about savings issues and contribute to the financial wellbeing of local consumers.
The latest savings statistics make for grim reading.
Sasi noted that the household savings rate had plunged from an already poor 0.4 percent of gross domestic product last July to negative 0.5 percent this year, effectively labelling South Africa as a nation of dissavers.
And while levels of household debt have improved slightly from 82 percent of disposable income five years ago to 71.9 percent today, there are concerns that this improvement is due to a tougher lending environment rather than improved consumer financial behaviour.
This dissaving trend contrasts starkly with the experience in emerging economies like India and China which boast household savings rates well into the double digits, despite average incomes being up to three times lower than locally.
South Africa faces an uphill battle to bolster its ailing savings culture at a time when economic hardship is making it increasingly difficult to save.
"Lacklustre economic growth, rising unemployment (particularly among the youth), cost of living increases and a rising tax burden all helped to turn our poor savings culture into a systemic developmental issue," said Govender.
"We believe South Africans can save and invest more locally for the betterment of our economy domestic savings can be a driver of internal economic growth."
She added there was a growing need to equip the youth with savings knowhow to directly impact their earning power wealth creation abilities and access to basic comforts.