July 24, 2010
 By Bruce Cameron
"Save for the goal: the path to recovery" is the theme for this year's national Savings Month. Prem Govender, the chairperson of the South African Savings Institute (Sasi), announced the theme at the launch of Savings Month this week.
The "goal" is a play on words associating the World Cup with this year's saving campaign. The goal is your savings goal.
"In World Cup year it was natural for us to emphasise the 'goal' terminology," Govender says.
The second part of the theme - "the path to recovery" - underscores the need for everyone to save to help the economy recover.
"It's not only business and government that have to work towards the recovery. All South Africans have a role to play. We all have a responsibility to engage in planning and mitigate unpleasant changes in business cycles," Govender says.
And, she says, very few of us are behaving well when it comes to managing our finances.
She says that South Africa's household debt as a proportion of disposable income "is now at a staggering 80 percent, while savings by by households stands at minus 0.4 percent of income".
"Many people have to rethink their lifestyle and recalibrate their goals. They can launch themselves on their personal path to recovery as the business cycle turns, but to do it they may need to acquire new skills," Govender says.
She says employee retirement contributions are, at best, minimal. This means that the need to plan and save for retirement "is even greater today, and demands that we pay off debt as quickly as we can in the short term to enable us to concentrate on accumulating retirement capital for the long term".
Govender says low levels of financial literacy are a major drawback to debt control and savings, and this is part of what Sasi addresses in Savings Month.
Poor savings rate
Johan van Zyl, the chief executive of Sanlam and chairman of financial services industry body the Association for Savings & Investment South Africa (Asisa), backed Govender, urging all South Africans "to embrace the importance of saving for their own benefit, as well as to ensure sustainable future growth for the country".
South Africa has one of the worst savings rates in the world. Last year South African households saved only R1.50 of every R100 they earned. Against this, the Chinese, with the highest savings rate, saved the equivalent of R38, followed by the Indians at R34.70 and the Turks at R19.50.
"Poor savings translate into lower levels of investment, which impacts on economic growth, employment and personal income," Van Zyl says.
Leon Campher, the chief executive of Asisa, says that not saving in South Africa also usually involves "excess splurging on cars, clothing and other luxury items", which means that you cannot fund the necessary things such as the education of your children or provide for a financially comfortable retirement.
He says savings help you pay for future financial commitments without going into debt, while also providing the government and companies with capital to create jobs.
Van Zyl says significant interventions are needed from various role players, including the financial services industry, to create a "savings culture" in South Africa.
He says it is time for the financial services industry, which has the knowledge and the means to help you to save, to apply its resources in partnership with others "to improve our country's savings rate and reduce debt levels".
He says as part of its contribution, Asisa has established the Savings Forum, a high-level savings think tank tasked with finding practical solutions to help improve our dismal savings rate.
The forum will concentrate on three issues:
How to stimulate savings and broaden the country's savings pool using appropriate savings and investment products;
What economic policy levers are required to stimulate economic growth and employment; and
How savings can be used as investments to stimulate economic growth and job creation.
PUBLIC EDUCATION PROGRAMME
The South African Savings Institute (Sasi) has launched a number of initiatives this month to educate consumers about savings. These include:
Workshops with soccer club members in North West province and northern Gauteng.
Classes on how to save for pupils in grades four to seven, presented by volunteers from the financial services industry.
  
 
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