South Africans don't save enough, says SA Savings Institute (SASI) chairperson Andrew Bradley. "We have a culture of debt, rather than savings."
The SASI was founded to try to change that. Its aims are to promote and improve financial literacy and facilitate the development of a vibrant savings culture.
It has a long way to go. Savings in SA as a percentage of GDP has just reached 16%. The world average is 25%.
"We're one of the worst in the world," he says. Malaysia is among the best, at 48%; Chile is average, at 25%; even Mauritius manages 24%. The rate in the US is 15%, but Americans can rely on a strong economy and a strong investment market, so "even in the disastrous savings state they're in, they're slightly better than we are; having a small percentage of a huge pie is not so bad. In our case, we've got a small percentage of a shrinking pie."
Savings are crucial for the capital accumulation that is critical for growth. "If we can get a savings rate of more than 20% of GDP it will facilitate growth of 3% or more in our GDP. As soon as you have that percentage, the knock-on effect is immediate.
"We believe that it's attainable. In the past year, both the pie and the percentage have been growing. This puts us in a much better position. We'd like to think what we've done in the past two years has had a slight effect."
The SASI was founded by the Industrial Development Corp (IDC) and Bradley's international financial planning company, ipac SA. Its board includes leaders in a variety of fields, including financial, among them IDC public-private partnership head Loyiso Jiya, former Reserve Bank governor Chris Stals, Mervyn King of the King Report on Corporate Governance, ex-Registrar of Banks Christo Wiese and Financial Services Board CEO Jeff van Rooyen.
The institute's efforts to inculcate a culture of savings in a country wedded to spending at all levels - governmental, corporate and individual - has not been easy. "There's a great deal of ignorance in many different spheres, including the most sophisticated. We've seen low financial literacy among the most educated people.
"What we try to do is promote financial literacy across the board, from the most basic - What is a bank account and what is interest?' - up the sophistication curve to people understanding how equity markets work - What risks are involved in the bond market?' or How can you buy a share in a shopping centre or an office block?' "
Those kinds of investment are defined as saving: investing in the property, equity or bond market, starting your own company, or saving in a money market instrument such as a savings account. Putting cash under the mattress is also saving, but it is not encouraged because it's risky - the money loses value and is not used to provide income plus some capital growth.
The SASI has put together financial literacy programmes for corporates and government departments and it is talking to universities. There's also a national savings week every year, when organisations such as retail, government departments and educational bodies develop programmes using advertising campaigns, promotions, seminars, leaflets and competitions.
That's one facet of the SASI's work. Another is research. The SASI publishes articles from independent sources in an annual Savings Review. It has launched an annual competition to encourage research on savings. The SASI publishes a quarterly ipac/IDC Savings Barometer, which tracks and analyses changes in the percentage saved by government, corporates and households and in the savings environment.
The SASI also lobbies government to improve the savings environment.
The SASI's main event every year is the national Savings Symposium, which has as its slogan: Saving for a Better Life. The symposium attracts people and organisations across the political and ideological spectrum.
This year the symposium's list of speakers included deputy Reserve Bank governor Gill Marcus and Anglo American Chairman's Fund chairman Clem Sunter, Durban marketing magnate Hixonia Nyasulu, Micro Finance Regulatory Council CEO Gabriel Davel and Bill Boler, a consultant to the British government and the UK NGO Business in the Community on turning around deprived areas.
"The symposium provides a forum for people to exchange ideas about savings," says Bradley. "At the symposium a year ago we had the SA Communist Party general secretary Blade Nzimande agreeing 100% with a corporate business leader that we needed to promote savings. It is a subject that crosses every divide."
