KwaZulu-Natal is not excluded from the alarming statistics that are pointing to a worsening savings culture in the country, said the provincial MEC for Finance, Ms Ina Cronjé. She also pointed out that the low rate of saving and the increase in the debt of our citizens in the hope of achieving their aspirations instantly have dire consequences not just for the individual’s financial stability, but also for the provincial efforts to achieve sustainable economic growth.
MEC Cronjé was reiterating a call made by the national government at the official launch of the National Savings Month (July) recently, where citizens were encouraged to ‘save now’ and to do it for themselves and for their country.
The KwaZulu-Natal government, through the Provincial Treasury, has prioritised educating citizens about how to manage their finances. This initiative has seen the Province calling for the financial services sector as well as the private sector to come on board and play its role through the KwaZulu-Natal Financial Literacy Association, championed by MEC Cronjé, in helping citizens to make financially-sound decisions.
Through this association, the government and private sector are tackling financial illiteracy head-on. This initiative involves numerous educational programmes targeting the citizenry, starting at school level, as a way to create a savings culture in the province.
“Although we are officially out of the recession, the country’s savings rate of 16% is far lower than that of other successful countries, even in Africa. KwaZulu-Natal’s economic growth of 3.13% in the last year (2010) is worrisome indeed but given where we were a year ago there is an improvement. However it is not at the level where we would like it to be or at level where we are able to create sufficient and descent jobs,” said MEC Cronjé.
The provincial government benefitted a lot from the savings initiative adopted by the provincial Cabinet to reduce unnecessary spending and wastage. But by implementing cost-cutting measures the province saved close to R900 million over the past two years, a decrease of 44% in expenditure on the same items.
An entrenched savings culture would achieve important goals at both an individual level and for the province as a whole. The total income per capita is standing at an average of R28 882 per annum and total Income per household per annum is at R121 864 on average. People are encouraged to save at least 15% of their income, especially younger people.
It is a fact that 75% of South Africans have inadequate retirement savings. The sad truth is that some people do not manage to retire at all and find themselves facing serious financial shortfalls when they reach retirement age, with far too little in the way of savings to maintain their lifestyle.
A savings culture needs to be inculcated in all the citizens, young and old. People cannot live like there is no tomorrow, we have to save for rainy days. A high savings rate would allow our province to meet investment needs, making us less reliant on volatile short-term capital inflows for funding, which can easily be reversed and pose risks of instability for an emerging economy like ours.
“It is imperative that all of us save enough: government, business and private households. July is National Savings Month and I am calling on all citizens of KwaZulu-Natal to start saving. Let us all ‘save now’ and do it for ourselves and for our lovely province,” concluded MEC Cronjé.
For more information please contact:
Musa Cebisa
Cell: 071 687 8777
