How we can all take #actionagainstpoverty this Mandela Day

A lack of financial literacy and poor access to financial information results in many people owing large amounts of debt and making poor financial decisions.

This Mandela Day, given the current state of unemployment and indebtedness in SA, the need to take action against poverty is more important and urgent than ever. Mandela Day’s #ActionAgainstPoverty initiative encourages South Africans to work together to eradicate poverty. With poverty being the root of malnutrition, stunting, poor educational outcomes, loss of dignity and violence, it is in the interests of everyone to work together to alleviate it.

South Africa is a heavily-indebted nation and breaking generational cycles of debt is an important part of reducing poverty. Over 25 million South Africans are in debt, with 40% of them behind in their loan repayments, although these statistics do not include personal debts owing to loan sharks. Our country’s consumer debt is currently sitting at R1.7 trillion as more and more people resort to debt in order to feed their families.

While tough economic conditions are to blame for much of South Africa’s indebtedness, a culture of consumerism at all income levels certainly plays its part in driving up debt. A lack of financial literacy and poor access to financial information results in many people owing large amounts of debt and making poor financial decisions, to the extent that middle-income South Africans spend one-quarter of their income paying interest on debt. In fact, according to a South African debt collection company, South Africans spend three-quarters of their disposable income servicing debt. As a result, poverty is pervasive at all levels of income, as people are driven into a cycle of spending and voluntary borrowing to sustain a desired lifestyle.

Interestingly, research shows that people are likely to be less entrepreneurial if they are debt-laden and are less likely to start a new business – with this entrepreneurial timidity having long-term economic effects. Sadly, debt also often motivates people to pursue higher paying jobs as opposed to seeking out careers that they are truly passionate about. Public interest professions – such as teaching, nursing and social work – lose huge numbers of quality people to higher-paying jobs.

Debt can seriously affect a person’s psychological well-being, often resulting in severe depression and anxiety. It can also result in substance abuse and other self-destructing habits used to cope with the stress of being debt-burdened.

Debt and poverty have far-reaching consequences and we all have a role to play in helping eradicate it. Poverty affects employers when their workers cannot afford transport, food or healthcare. This manifests in the form of absenteeism and loss of productivity, which in turn lowers turnover and affects wage increases. Vendors and small business owners are adversely affected by poverty as customers have less disposable income to spend. Widespread poverty also means that social workers struggle with the size of their caseloads, while teaching in schools with impoverished learners is compromised. In addition, poverty is a major cause of social tension, civil unrest and gangsterism, and has a direct impact on crime and violence, as the unemployed become desperate and resentful.

Although the sheer size of the problem can be overwhelming, there is a lot each of us can do in our own neighbourhoods and communities to combat poverty and debt. Here are some ideas:

  • Be a role model to the younger generation by ‘walking the talk’. Reject hyper-consumerism and live modestly within your means. Avoid going into voluntary debt in order to achieve a superficial lifestyle. Be sure to judge people on their character and not on their material wealth.
  • Communicate openly and honestly with your life partner about money. Refrain from keeping money secrets or committing ‘financial infidelity’. Commit to joint financial planning to ensure that you work together towards financial independence.
  • Talk openly with your children about money, and have age-appropriate discussions with them about finances, the household budget, what things cost and the difference between wants and needs. As they grow older, allow them to become more and more involved with the household budget so that they learn to appreciate the value of money. Allow your children to make decisions with their money and let them live the consequences.
  • Demonstrate the importance of saving and investing to your children. Share with them your saving and investment objectives. Encourage them to save a portion of their pocket money for a longer-term goal as a means of teaching them delayed gratification. Allow them to experience the joy of charitable giving.
  • Spend time educating your domestic worker on financial literacy including how interest works, the danger of buying on credit, the dark side of debt, and how to save and budget. Consider enrolling your domestic worker in a financial literacy course. In addition, put life- and income protection cover in place for them, and assist them in drafting a valid will to avoid dying intestate. If they are contributing towards a funeral policy, encourage them to rather save for their funeral expenses by explaining the benefits of doing so.
  • Do not compromise your own retirement funding in favour of your child’s tertiary education – bearing in mind that it is easier to borrow for an education than it is for retirement. Being underfunded for your own retirement will result in you becoming a financial burden on your children, thereby perpetuating the generational cycle. While everyone would love to pay for their child’s tertiary education, this is not always possible – and there are lots of alternative funding options available to students in need of financial assistance.
  • Speak to your younger colleagues and friends about saving for their retirement. Share with them your financial mistakes and regrets, and encourage them to make smart investment decisions. Discourage colleagues from withdrawing their pension benefits on resignation, and explain to them the long-term benefits of preserving their capital. Encourage younger colleagues to avoid opting for the default investment option on their group retirement fund, and to rather select a strategy that is aligned with their investment horizon.
  • Support small businesses in your community wherever possible. Avoid bargaining with small business owners for discounted prices and special rates. Make a concerted effort to give online ratings and referrals when you receive great service from a small business. Word-of-mouth referrals are the lifeblood of many small businesses and your opinion has monetary value. To alleviate poverty, we need to ensure that small business owners and vendors succeed.
  • If you are a business owner, consider creating internship positions for graduates to help them gain experience and access to the industry. Run job shadow programmes and seek innovative ways to give young people access and experience to your field of expertise.
  • Commit to using your skills, talents or resources to uplift those who are less fortunate. Whether it is woodworking, photography or pottery, find time to teach others a skill that they can use to better themselves and increase their earning potential.
  • Educate yourself on the extent of poverty in your community, how organisations and charities in your area are working to alleviate poverty and what their needs are. Most communities have churches, religious organisations and/or NGOs working to uplift impoverished communities. Even if you are not able to get directly involved, you will at least be in a position to direct those in need to these centres.


Although we may be overwhelmed by the poverty and debt that surrounds us, we must not turn a blind eye to it. As Theodore Roosevelt suggested, “Do what you can, with what you have, where you are.”

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Craig Torr

Crue Invest (Pty) Ltd


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