Savings challenges and opportunities for South Africans

The pressing issues of individual savings in the context of inequality, unemployment and behavioural conditioning in SA were the focus of the Sanlam Investments Critical Conversations webinar held on June 5. 

This virtual event included a panel discussion featuring Manka Sebastian, portfolio manager at Sanlam Investments; Matthew Parks, parliamentary coordinator for Cosatu; Anne Cabot-Alletzhauser, co-founder of the Responsible Finance Initiative at the Gordon Institute of Business Science; and Dr Mavis Mazhura, adult development and leadership psychologist. These experts unpacked the factors hindering South Africans from saving effectively.

South Africans are among the poorest savers in the world, with a high debt burden. Debtbuster’s 2023 survey shows the average South African spends 65% of their salary on debt. 

Furthermore, only 6% of the population is on track to retire comfortably, according to ASISA. Sanlam’s Benchmark Survey 2023 confirmed that a comfortable retirement is unattainable for most South Africans, with one in five likely never to retire at all. Additionally, 42% feel insecure about their financial future. 

Reframing “black tax”

A significant topic of discussion at the webinar (watch the recording below) was the concept of “black tax” — the financial responsibility many black South Africans bear to support their extended families and communities.

Mazhura emphasised the need to balance this social responsibility with personal financial growth. “We need to decondition and recondition our approach to finances, prioritising long-term wealth-building, while maintaining cultural responsibilities,” she said. 

Mazhura said while supporting one's community is essential, there needs to be more conversations and education around setting financial boundaries and prioritising long-term financial wellbeing. 

The impact of personal long-term savings on improving the country’s economy is also important. “I wanted to start giving back when I got my first salary. It's social responsibility,” she said.

Sebastian reframed “black tax” as “black pride”, advocating for empowering individuals with the knowledge to make informed financial decisions. 

Harnessing stokvels

The potential of stokvels — traditional savings clubs — was highlighted by Sebastian. With an estimated R60bn circulating within these informal groups, they represent a substantial yet untapped market.

Sebastian suggested integrating retirement planning into stokvels to elevate their role in financial growth. “Engaging with stokvels can enhance savings rates and provide culturally relevant solutions,” she said.

Redefining retirement

The panel also addressed the evolving concept of retirement. With global life expectancy rising significantly, Cabot-Alletzhauser argued for a shift in how retirement is perceived. “Retirement should be viewed as a lifelong financial journey requiring continuous planning and adaptation,” she said.

This perspective calls for the financial services industry to support individuals throughout their lives, helping them create a sustainable financial future.

The role of financial advice

The panellists underscored the importance of financial advice and planning in navigating the complex savings landscape. They called for the financial services industry to engage individuals from the start of their financial journeys. 

A collaborative effort between the financial sector, government and individuals could foster a culture of saving. This collective approach can help South Africans build a more secure and confident financial future. 

This article was sponsored by Sanlam Investments.

_{Sanlam Investments consists of authorised financial services providers in terms of FAIS and disclaimers can be viewed here.}