Programme director
Dignitaries present
Ladies and gentlemen
All protocol observed
It gives us pleasure to be part of this auspicious occasion as the Ministry of Economic Development and Tourism where we are launching one of the critical programmes for the creation of wealth and economic well being of our nation. From the outset, programme director, we would like to apologise for MEC Ina Cronje who requested us to stand in for her because she is not feeling well.
Programme director, one of the enduring legacies of our apartheid past is that the majority of our people were not empowered with the basic skills of financial illiteracy.
Because the stated aim of the apartheid policy was to reduce our people to the drawers of waters and hewers of wood, our people were systematically denied the skills and expertise to manage their own financial matters. Now, we all know that financial literacy and the general ability to handle your own financial resources goes to the heart of our very existence as a people, let alone the impact it has on a nation’s financial health.
It is because of this reason that our government has taken a decisive step to ensure that we not only deal with the legacy of financial illiteracy but we equip our people with the skills that will ensure that they are able to handle their own financial matters.
Today we are here to ensure that in our students we have a cadre of pupils who are not only au fait with financial management, but who can be able to compete with the best in the world when it comes to managing their own purse strings.
Programme director, initiatives across the globe to introduce children to the world of money are indeed exciting.The fact is that an increasing number of countries regard financial literacy as a key life skill. It is no longer an optional skill but essential in all our life stage:from school to university or college to career, marriage, and parenthood to retirement.
The fact that the world economy is slowly recovering from the financial meltdown testifies to the importance of financial skills. We now all know that the financial crisis, which spread like wild fire across the world about two years ago, was started because people in America decided to spend money they did not have. So when the time for them to pay came, the whole thing began to unravel, and created a ripple effect that threatened to bring to its kneels the very foundation of the global economy. With the world moving towards regional integration the importance of financial literacy cannot be overstated. We now know that by 2015 we will have a single market in the Southern Africa Development Community (SADC) region and that by 2018 we will have a single currency in the region.
The reality is that the nations within the region that will be able to reap the benefits of regional integration are those that have the necessary skills such as financial skills. As a country, if we want a seat in the table of economically advanced nations in the world, we have to start ensuring that all our people are equipped with the ability to handle our financial resources. What good is a nation that is able to create its own resources, but does not know how to manage them?
Therefore, providing young people with good financial literacy skills helps to establish responsible attitudes and good habits from an early age. If we can instil the basic principles and concepts about money in the minds of our children we give them the tools for a lifetime of prosperity and financial responsibilities. In fact financial literacy is an investment that lasts generations. We also know that informed consumers; low debt and high savings equal high economic growth. Countries, such as China and India are the living proof of this belief.
We have to remind ourselves, that while South Africa is now the “S” in BRICS (Brazil, Russia, India, China, and South Africa); we are also in competition with these partners. Currently we are cautiously optimistic about our higher than expected GDP growth rate for the first quarter of 2011 – in KwaZulu-Natal (KZN) most of the 4.29% growth can be attributed to the tertiary sector. However, when compared to our BRICS partners, we cannot smile as they touch on 8%. It is because of this reason that we believe our ability to manage our financial resources are a key pillar of our efforts to grow our economy.
Economic growth that results into job creation is crucial if we want to address the high unemployment rate among our young people in particular. A vital step in freeing our future adults from the poverty they are trapped in is to train them in the field of entrepreneurship: to become job creators, rather than job seekers. It is because of this reason that last week our department hosted the inaugural International Entrepreneurship and Investment Conference which specifically looked at the question of what we need to do to create a new breed of entrepreneurs in our country.
The complex mix of challenges facing our country means that we need, more than ever before, business people who have the fire in their bellies to be innovative. We need school leavers who will not look for jobs but who will start their own businesses.
As all of us know far too few of South Africa’s economically active population are presently self-employed compared with the percentage in other countries.
Our country also needs competent financial advisors who have the best interest of their clients at heart. One of the aims of the speech contest on finance we are launching today is to encourage learners to pursue careers in finance. The research they have to undertake for the contest will certainly demystify some financial principles and inspire them to find out more.
Our children should learn, from an early age, to be knowledgeable consumers; to develop the right attitude towards work, and develop the skills needed to identify viable business opportunities and eventually start their own business undertakings. They should also learn how to spend and save wisely. They should learn the value of hard work and the virtues of philanthropy and sharing what we have with the needy.
They should learn that accumulating debt by buying big cars and big houses for mere self-aggrandisement is not ayoba and is not a symbol of wealth. It is a symbol of inner emptiness, the compulsive desire to be famous for the sake of it. They should learn that being wealthy or possessing symbols of wealth is not a ticket to self-glorification and conspicuous consumption.
Yes, we all want to have the finest things in life. But money is not an end in itself, it is an enabler, a means to an end. A life well lived is a life lived for the benefit of others. No nation can build its financial resources or itself on the back of hedonism, and parties where skimpily clad women parade themselves as sexual objects. We should all fight this incipient culture which is gripping our society that the wealth and the worth of any man is now measured by how many parties we throw and who attends them and how many cars we own.
One of the biggest structural challenges facing our economy is that we have one of the lowest saving rates in the world. We are yet to learn that in life we need to live for tomorrow than today. It is because of this reason that we rely on Foreign Direct Investment to stimulate our economy because we just don’t have the necessary financial muscle to crank up our economy without the help of other nations. We believe that it is the responsibility of every parent to teach their children the importance of saving. Saving is not only good for an individual family, but it is a national imperative.
Unfortunately our children do not have numerous role models when it comes to finance.Children are remarkably aware of their parents’ financial habits. They learn our bad habits almost through osmosis. Seeing mom or dad swiping a card to pay for purchases dozens of times does not teach him or her any money skills. It does not prepare the child to understand financial products in a highly competitive world or protect him or her against scams, fraud and dishonest people. And - perhaps the most important omissions – it does not teach the principles of not spending more than what you earn and saving for those rainy days and also for your dreams, like setting up your own business.
Our children have greater temptations than what we had. They are daily confronted and surrounded by very persuasive advertising campaigns, as well as constant pressure from their peers. Our parents should not be bullied into paying for items they cannot afford. If our children are deprived of this knowledge when they are young, they may grow old having saved nothing for retirement. Consequently, they will depend on government for a meagre old age grant. In their working lives they will not know how to deal with debt and mortgage payments. But let us remember that children do what their guardians do and not what they say.
Programme director, South Africa is fortunate to have financial education as a defined component of the national school curriculum. However, there is no data to assess whether or how well the curriculum has been implemented, let alone what impact it has made. Mandates or policies alone do not make people any smarter.
Absolutely pivotal to the success of financial education are our teachers. The question that we need to ask is are our teachers financially literate and how prepared are they to teach financial literacy courses and do they lead by example? There are no easy answers. But a glance at the high number of garnishee orders among government employees suggests that our civil servants, including our teachers, are as mired in financial debt as the rest of our nation.
Therefore it makes infinite sense that one of the KZN Financial Literacy Association’s focus groups is government employees.
The fact of the matter is that financial literacy is equally important in the school setting. It has to be expanded beyond management studies. And no, learners who take mathematics are not necessarily financially literate. Many, if not the majority, of our children leave school financially illiterate.
As the biggest education department in the country, it is a mammoth task to get all our 2.7 million children financially literate. When we add the school governing bodies of approximately 6000 schools the challenges grow.
As custodian of public funds, the KwaZulu-Natal Treasury realises the impact that financial education can have on households, emerging entrepreneurs and our young people. We made it a priority to include financial education in outreach events with communities. However, as the demand for these programmes grew, it became clear that the Provincial Treasury was only scratching the surface of the need for basic financial education.
A way had to be found to enhance the impact of interventions in order to reach more people and change attitudes and behaviour. This gave birth to the recently established KwaZulu-Natal Financial Literacy Association, an advisory body, which provides strategic direction and coordinates programmes.
Working together in a coordinated way, government, business, the non-government and non-profit sectors will make a much better impact than working in fragmented isolation, which often leads to some communities being over serviced, while others miss out.
Let us enable our children to leave school with an awareness of:
- how to make their money (jobs and businesses)
- how to manage their money (budgets)
- how to multiply their money (investing in business, the stock market, business and more)
- how to think like, and develop the habits of, a wealthy person
- when to use other people's money and when not to!
- how money can be used to give back and help their communities.
Financial literacy can be life-changing. Let us enable our people to be in control, rather than victims, of their destination.
Forward to a financially literate KwaZulu-Natal! Phambili!
I thank you.
