Financial literacy entails a foundational understanding of key financial concepts, including debt management, budgeting, saving, and investing, according to insights from a reputable online lender. However, for individuals grappling with significant debt burdens, the feasibility of prioritizing investment or savings remains uncertain.
Recent data reveals a pressing concern for many South Africans, particularly those fortunate enough to be employed within the nation’s workforce, which currently stands at 67.9%. Statistics from SearchWorks, a data aggregation firm, indicate that the average South African consumer allocates approximately 62% of their disposable income towards debt repayment. Moreover, projections suggest that the household debt-to-income ratio will persist around 65% throughout 2024, compounded by an estimated R300 billion in municipal debt.
Against the backdrop of an official unemployment rate of 32.1%, equating to 7.9 million individuals, the challenges become even more pronounced. Statistics South Africa highlights the heightened vulnerability of individuals aged 15 to 34 to unemployment, with approximately 33% of those aged 15 to 24 not engaged in employment, education, or training.
Amidst these challenges, the importance of financial education, particularly for the youth, cannot be overstated. With only 51% of adults in South Africa deemed financially literate according to a recent survey by the Financial Sector Conduct Authority (FSCA), the urgency to address this gap is evident.
Ruth Benjamin-Swales, CEO of the ASISA Foundation, has been at the forefront of financial education efforts for over a decade. Established in 2012 by the Association for Savings and Investment South Africa (ASISA), the ASISA Foundation operates as a public benefit organization, aiming to enhance consumer financial education (CFE) through various initiatives in alignment with the Financial Sector Code guidelines.
Benjamin-Swales underscores the multifaceted nature of CFE in South Africa, emphasizing the necessity of addressing debt management as a precursor to promoting savings and investment behaviors. She stresses the importance of fostering sustainable income generation, risk comprehension, and instilling a long-term financial perspective as integral components of effective financial education.
ASISA’s recent research report, “A five-year transformation journey (2018 to 2022),” highlights achievements in enhancing access to financial services. However, Benjamin-Swales acknowledges the need for further innovation in designing products that cater to the unique needs of underserved communities, particularly those with irregular income streams.
Operating under the banner of “Saver Waya-Waya” (Save all the time), the ASISA Foundation implements tailored programs aimed at diverse beneficiary groups, including workers, micro-entrepreneurs, young adults, and community cooperatives. These programs seek to equip participants with practical financial skills and empower them to make informed financial decisions conducive to long-term financial well-being.
As the foundation commemorates its 10th anniversary, Benjamin-Swales emphasizes the focus on quantifiable impact and behavior change, rather than mere knowledge dissemination. She underscores the importance of measuring the effectiveness of each program in driving tangible changes in individuals’ financial behaviors and circumstances.
However, effective implementation of CFE initiatives necessitates substantial financial resources. Despite ASISA’s significant investment of R88 million in consumer education over the past five years, Lister Saungweme, ASISA’s senior policy adviser, highlights the need for increased funding to scale up efforts and reach a wider audience effectively.
