Are SA’s Financial Education Initiatives too Fractured to Function?

South Africa has a debt problem. As one of the world’s worst countries for accruing personal debt, the population is in serious need of smarter financial education – and fast.

From low levels of saving, to sky high use of credit and store cards, the nation’s financial habits can be described as “spend now, think later” – an approach which has lead to very high levels of indebtedness – particularly when it comes to “bad debts” such as unaffordable personal loans taken out to fund luxury expenses.

A window on South Africa’s debt problem

A small illustration of this effect can be seen in the 2016 GCRO report. According to the Gauteng City-Region Observatory Quality of Life Survey Report, 40% of residents in South Africa’s wealthiest province are in debt – a 10% rise from 2013. Although some of this debt is “good debt” (student loans, affordable mortgages etc.) it is amongst lower income groups which this uptick has manifested most prevalently.

Although medium-high income households are more likely to have debts (usually due to property ownership), the number of low income households with debt has rocketed over the past three years. While the number of wealthy R38,401-R102,400 households with debt rose by 1% between 2013-2015, amongst R0-R1,600 households that number rose by 11%, with 9% more R1,601-R12,800 households also becoming indebted over the same period.

Seeking solutions 

Clearly personal debt, and particularly “bad” personal debt, is a serious issue across the country. Chief director of financial sector development at the National Treasury, Ingrid Goodspeed, has long been highlighting the need for better financial education in the country to prevent those with less understanding of today’s financial products falling into dangerous debt spirals. As far back as 2012, Goodspeed was speaking out on the issue stating: “We need to focus the myriad programmes — and there’s a lot of money — on where they are needed most”.

Too many cooks

Goodspeed’s call for focus is a savvy one. There is no shortage of funding for educational initiatives to boost financial literacy, what is lacking is any degree of centralization or unification. A huge array of organisations and financial service providers now operate programmes designed to further financial education in the country, from Wonga South Africa launching their new series of online Money Academy tutorials, to the Banking Association of South Africa’s raft of different financial education programmes. These projects demonstrate that the funds and drive required to boost financial literacy in the country in order to tackle dangerous personal debt absolutely exists – but are all of these initiatives too fractured to make a real impact?

Should the investments made in financial education programmes be going to fund official financial education in schools? How do you think financial education should be delivered in South Africa? Are the people who need it the most receiving the support they need? Have your say and share your opinion with other readers below.

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