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SA among least financially literate in Southern Africa

SA also lags behind in productive use of debt, research shows.

The FinMark Trust has called on financial service providers and regulators to include financial education as part of their financial inclusion efforts as new evidence shows access to financial services does not necessarily translate to higher levels of financial literacy.

A FinScope survey comprising some 50 000 participants across 11 countries within the Southern African Development Community (SADC), shows that financial literacy – as classified by the number of adults that keep track of their spending and earnings – in South Africa is among the lowest in the region.


“South Africa has got one of the most advanced financial sectors in Africa, and the country has one of the highest level of financial inclusion in the SADC region. However, due to existence of wider disparity in education, income, and employment among different sectors of the population financial literacy is lower than level of financial inclusion,” explained Ashenafi Fanta, a data analysis and segmentation expert at the FinMark Trust.

He went on to say that financial literacy globally is very low, with only 33% of adults understanding basic financial concepts and 3.5 billion financially illiterate adults in the world compared with 2 billion unbanked adults.

At the same time, the proportion of South Africans who report to have no money to cover basic expenses such as food and clothing is out of kilter with the country’s relatively high per capita income.


“While per capita income of the country is among the top in the region – comparable with Mauritius and Botswana – the percentage of adults who do not have money to cover basic expenses is comparable to poorer countries such as Mozambique and Madagascar. This may be attributed to high degree of income inequality in the country,” said Fanta.

And while 30% of adults in South Africa do not have enough money to cover their basic expenses, a lack of access to credit sees only 24% of adults borrowing to cover these expenses.

Still, people in South Africa have better access to credit than in a number of neighbouring countries, which is reflected in the “higher tendency among adults of utilising credit for non-developmental purposes”.


“Wider accessibility of credit driven by higher level of competition among lenders to win customers may result in a lenient credit policy and hence lower chance of credit being used for developmental purposes,” Fanta said.      

Regionally, only 20% of people use credit for developmental or productive purposes such as paying for education, property and equipment or starting businesses, which can help to boost a person’s earnings capacity.  

The study confirmed that people who solicit financial advice from professional sources such as banks, financial advisers and even financial media are more likely to use debt for productive purposes. “This has important implications for encouraging usage of debt for changing people’s income generating capacity by promoting financial literacy in general and debt literacy in particular,” it said.  

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From the fact that South Africans support a socialist agenda and racist policies like BEE and AA, it is clear that they have no clue about basis economics.
A socialist agenda is always the easiest political policy to sell to uneducated and ignorant voters, especially if they are working class or starry-eyed academics.
People who read history, realize that there is no way the state can ever deliver on a socialist promise without first taking away all personal freedoms, and eventually destroying the economy. Currently we are witness to both, as where you work, what contracts you get and for which team you play are dictated by the state, and unemployment is around 50% and rising.

“If Socialists understood economics, they wouldn’t be socialists.” Friedrich Hayek

The more financially literate you become, the more you realize how bad going into debt is, even for “productive” purposes.

During the middle-ages the feudal system meant that the people worked for the landlord. The feudal system was replaced with the modern banking system, where the people now work for the bank through a system called credit. The owners of the bank (pension funds) are the modern day landlords.

Financially illiterate people enslave themselves willingly, and are most happy when they get confirmation that they were accepted to be enslaved!
In South Africa politicians who are also financially illiterate even force banks to enslave citizens in order to “provide credit to the masses of our people”.

The moral of the story is – if they don’t want to learn, let them borrow money from you.

The solution is simple, but it is difficult.

1. Teach basic personal finance as a subject at all schools.
2. Parents should attend classes on personal finance and teach kids at home on personal finance.
3. Financial advisers should find a way to uncomplicate personal finance and be willing to teach their clients about personal finance. Thus, the client has the base knowledge to decide what he wants to do instead of blindly following the advice of the financial adviser.
4. All forms of debt should be discouraged by financial services providers except student loans (even this is debatable) and mortgage bonds.
5. A nationwide effort should be made to encourage everyone to track their income and spending on a daily basis, and keep a budget, giving every R1 of income an assignment or an allocation. No income should be unaccounted for.

I have a number of rental properties to earn retirement income, without debt I would most likely still be saving up for the first one.

End of comments.



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