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As one of the most personally indebted nations on earth, better financial education about debt could help South Africans get back into the black.
As one of the most personally indebted nations on earth, ever-increasing numbers of observers and experts are calling for better financial education to help South Africans get back into the black.
This strengthening push for greater financial literacy is now coming from all quarters, including calls by the National Treasury’s chief director of financial sector development, Ingrid Goodspeed, to focus and boost financial education. “We need to focus the myriad programmes — and there’s a lot of money — on where they are needed most” Goodspeed explained at the opening of the Alliance for Financial Inclusion Global Policy back in 2012.
Today, in 2016, these programmes still appear to be relatively disorganised, with numerous financial services and organisations running a variety of initiatives, all with the same goal of improving the nation’s financial literacy. From ASISA and Old Mutual, to the Financial Services Board, the Banking Association of South Africa and Operation Hope, a baffling array of programmes are now available and working to tackle the same issue.
Lessons in debt
Wonga is one financial service currently contributing to higher standards of financial awareness in South Africa. The lender’s new Money Academy website ‘www.moneyacademy.co.za’ delivers short, easy-to-understand video lessons about subjects such as debt and saving. The creation of the resource was prompted by research revealing that many South Africans lack financial knowledge, particularly about issues surrounding borrowing.
While some of the population make shrewd use of “good debt” to fund things such as tertiary education, a far greater proportion routinely use “bad debt” to cover non-essential purchases and even to fund holidays. Although many use financial products carefully, huge numbers of the population make less-than-savvy use of products such as store cards and credit cards. Today the average current balance on South African store cards is R2,836, with 2.97 million such cards opened in 2016.
Time to hit the books
Clearly it’s time for South African’s to hit the books and get studying when it comes to their personal finances. In March 2016, average monthly debt repayments stood at 49% of after-tax income, seriously eating into the budgets, disposable incomes and savings of the population as a whole.
But are the country’s organisations, businesses and schemes unified enough to deliver the level of education required to help both youngsters and adults understand more about their finances? With seemingly every financial body sticking their oar in, it is difficult to see how South Africa can start to deliver country-wide financial education which tackles the issue across the board, focusing on the areas and the demographics which need it the most.
Do you think South Africa needs a centralised approach to financial education? Do you think financial literacy should be taught in schools? Do you believe better education regarding financial matters will help South Africa to reduce its high level of personal debt? Have your say and share your story below.
