Chairman's message

At the launch of South African Savings Institute (SASI) 10 years ago, the then Minister of Finance, the Hon. Trevor Manuel emphasized the need for a strong savings culture with a resulting high savings rate to boost the economic growth of our country. In the ensuing years SASI has used the four guiding principles of Research & Advocacy, Debate around key aspects of saving, Education and Information provision and promoting awareness through various campaigns to fulfil this mandate, a decade of working tirelessly albeit on a shoe-string budget to get South Africans to embrace the savings habit. For those South Africans who did develop this habit, the global credit crunch with its resultant job losses meant having to fall back on such savings. Unfortunately for those who did not, it has meant untold hardship. Clearly the benefits of a high savings rate in any economy cannot be disputed and these include a reduction in external dependency and the improved financial health of citizens both now and during retirement.

Despite our continuing dismal savings rate, we firmly believe that our voices have been heard particularly by government through their commitment to providing an enabling environment for savings with the Social Security and Retirement Reform initiative, the National Financial Education Framework, the protection of consumer rights under the new Consumer Protection Act and the substantial increase in allowable tax deductions and tax concessions particularly with a view to encouraging private savings, both short and long term. We are further encouraged by the role that financial Institutions have played over the last decade, in general by expanding their product base as well as their approach to providing services to potential clients and in particular by their willingness to partner with SASI in driving home the savings message. Indeed it is for reasons like these that SASI, despite being thinly funded, is encouraged to continue the work that the founding members had such a passion for. May I add that this passion continues to burn brightly in the hearts and minds our current Board, CEO and staff members, to whom I will be eternally grateful for the ongoing support and guidance that I enjoy.

My vision for SASI going forward is a continued partnership with both government and business that will take our savings rate to levels that will ensure that we are at par with other emerging nations.  

Prem Govender, Chair: South African Savings Institute.

An Overview of Savings in South Africa

While government and corporates are saving, individual South Africans are not and the trend appears to be getting worse each year. The fundamental reason for this differential lies in consumer behaviour and a number of measures need to be adopted to develop a savings culture in this country. Education is a core strategy and campaigns have to be directed at helping people to understand the importance of savings. As more people move into gainful employment, families begin to have more money that can be directed towards savings. Therefore, job creation is seen by government as a key vehicle for encouraging savings.

Saving is all about discipline and people spending less than they earn. People will have to adjust their lifestyle and the manner in which they live so they can accommodate the redirection of income into a savings scheme. After a few years, people will get used to the idea.

Implications for South Africa

The effect of a low savings rate on the economy as a whole can be interpreted in exactly the same way at household level.

"If a household is not saving enough to fund its needs, whether it is consumption or investment, it will have to borrow. The more you borrow, the less creditworthy you become and the higher the interest rate you have to pay. Exactly the same happens at the country level. If South Africa relies on foreign savings it will require that we justify the decision of foreign investors to invest their money in this country. Therefore, for South Africa to be able to attract capital inflows we have to be able to offer offshore investors a good return and that means a higher interest rate and a higher cost to this country to borrow the capital. The higher cost of capital results in higher costs of production, making the country less competitive. However, if the cost at which South Africa borrows is lower than the rate of return that it enjoys, then it can be beneficial. Borrowing is not bad in it's own right, it is when it is unsustainable that it creates serious problems."

(Elias Masilela , SASI)

Click here to read what the Bible says about Saving: Proverbs 22:6-7...