Durban - The lowest-end earners in South Africa today are “resigned” to their fate and largely accept that they will never move towards their aspirations, because of debt and their inability to secure higher incomes.
This is according to the 2016 Aspirations Report by the University of Cape Town Unilever Institute, which carried out more than 1 000 interviews with earners in all income brackets to discover the challenges to their financial ambitions.
Elsewhere, the report found that South Africans mainly rely on unsecured credit and borrowing to fund education or starting small businesses.
The introduction of free housing, water, and electricity, coupled with social grants, to low bracket earners led to “routines of resignation” - a phenomenon they said is “unique to South Africa”.
“If you were to go to Mozambique, the poor people don’t have a house... and they don’t have a social grant to live off. But they are usually happy with their lot because they have no debt,” Professor John Simpson, director of the institute, told The Mercury yesterday at the presentation in uMhlanga.
“But (in South Africa) since 1994... the poorer you are, the greater your access to free things.”
Simpson said this inevitably led to poorer people borrowing money to buy extra items for their home, and most of the little money they did collect through work and grants went to paying off debt.
“Then you become resigned (to your fate) because you’re actually not going to get anywhere because you’re so heavily in debt. So the interesting thing is that giving people things for free has paved them into a corner.”
Simpson claims that this leads to “frustration” from citizens, which causes civil unrest, exemplified now in the #FeesMustFall movement.
“After 1994, (black) people expected to get better opportunities... it hasn’t happened.”
He said this presented a tough situation for the government, which would be “out the next morning” if they stopped social grants and free amenities.
As a recommendation, the presentation pointed to financial institutions helping in increasing financial literacy, mainly among black citizens.
“(Banks) should go into townships and teach people how to manage finances, how to get loans, how to service the loans,” Simpson said.
“They would (then) be able to be more selective of the credit they get, and could recognise the credit they shouldn’t be taking.”