JOHANNESBURG - The South African Savings Institute (Sasi) has thrown down the gauntlet to young people, calling on them to find ways to save despite millions of households battling in a high unemployment economic meltdown that has seen retrenchments adding to the jobs bloodbath in the public and private sector.
Sasi vice-chairperson Prem Govender, speaking in Sandton yesterday during the launch of 2019 savings month, said young people tended to save less and spend more.
“With over 20million people aged between 15 and 34, South Africa has a population that is increasingly relying on credit to fund everything from basics to fancy lifestyles,” she said.
Govender bemoaned South Africa for lagging behind in terms of household savings compared with emerging market peers India and China.
“We can always find excuses such as black tax, high unemployment, a rising tax burden and inflation, but we must also fundamentally stop living beyond our means and start to drive a savings culture from as young an age as possible to break this cycle of intergenerational debt that continues to haunt us,” said Govender.
South Africa's economic growth has been disappointing, with Statistics SA earlier this month reporting a 3.2percent quarter-on-quarter contraction in the first quarter. According to ratings agency Moody’s, the odds that the South African economy could experience a technical recession in 2019 are high.
Dawie Roodt, the chief economist at the Efficient Group, said yesterday that because of the weak economy people often borrowed money and used debt for day-to-day expenses.
“It is extremely difficult for people to save, but it is inevitable. We have no choice, but to save in order to grow the economy. Saving is not just about putting money into a bank account, it is also about putting money in a pension fund. We have a lot of savings, for example, the Public Investment Corporation. However, we are not saving enough. We need to save more,” Roodt said.
Samke Mhlongo, an international wealth coach and founder and chief executive of The Next Chapter Wealth Partners, who also spoke at the launch, said the government had to foster entrepreneurship as unemployment soars.
“Government, I don’t need you to give me a job. I need you to stay out of my way as I create employment for myself. Do not stand in my way with huge bureaucracy and cumbersome processes to register my business and get funding,” she said.
Annabel Bishop, the chief economist at Investec, said South Africa's growth rate had now fallen so low that unemployment risked trending further upwards while much could be done instead to substantially stimulate employment.
“South Africa lacks sufficient ease of doing business,” said Bishop.
She said the government's inability to reduce red tape, regulatory blockages, including lengthy time delays, and application of these regulations was hampering fluidity and dynamism in the economy and so faster economic growth.