The dynamics of education and stokvels in South Africa

The study investigated the dynamics of education and Stokvels in South Africa using a quantitative research methodology (descriptive statistics and correlation analysis) with data collected from the Gauteng province using questionnaires. Few authors have written on the subject matter and the author wanted to add her voice on the dynamics of education and Stokvels especially in the case of South Africa. The few related literature focuses on the role that stokvels plays on alleviating poverty and providing small credit to people who are excluded by formal financial institutions. The available literature on the relationship between stokvels, poverty and financial inclusion is still scattered, scant, inconclusive and signalling mixed results. To the best of the author’s knowledge, no study exist that has exclusively investigated the dynamics of education and stokvels in South Africa. The study found out that stokvels in the Gauteng province of South Africa were instrumental in the provision of not only education related small credit but also credit for groceries, transport, bridging loans, paying debts and guarantees. In line with literature, the correlation matrix shows a significant positive correlation between (1) education credit and groceries credit, (2) education credit and school uniform credit and (3) education credit and transport credit. The study therefore urges South African authorities to put in place policies that promotes the growth and safeguards the interests of stokvels as they are an important stimulant in the economy. Stokvels achieve this through their ability to improve financial inclusion by promoting savings and provision of small credit to people shunned by formal financial institutions

The Role of Regulatory Bodies and Other Role-Players in the Promotion of Financial Inclusion in South Africa

The promotion of financial inclusion is vital for the combating of financial exclusion in many countries, including South Africa. Nonetheless, most of the poor and low-income earners are still struggling to have access to basic financial products and financial services in South Africa. This status quo has been, inter alia, caused by several factors such as the lack of a specific statute for financial inclusion, the lack of a specific regulatory body to enforce that statute and the adoption of inadequate measures by the government and other role-players to effectively promote financial inclusion for the poor and low-income earners in South Africa. It is against this background that this article discusses the role of the government, regulatory bodies and other relevant role-players in the promotion of financial inclusion in South Africa. In this regard, the role of the South African Reserve Bank (SARB), the Banking Association South Africa (BASA), the National Consumer Tribunal (NCT), the National Credit Regulator (NCR), the National Treasury and the National Consumer Financial Education Committee (NCFEC), the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) is discussed. This is done to investigate whether these regulatory bodies and role-players have adopted adequate measures to robustly and consistently combat financial exclusion of the poor and low-income earners in South Africa

Instilling a cultutre of saving in South Africa

South Africa is pro-consumption and as a result, the level of saving has declined. This research focused on savings by household sector. The study started by assessing the reasons for the high consumption culture and a nonexistent savings culture in South Africa. The second question was to review the initiatives by government, corporate sector (especially financial institutions), and the South African Savings Institute, to encourage savings culture within South Africa. The methodologies followed were an unstructured interview with an industry expert, focus group and survey. The research concludes by highlighting the need for education on saving at basic levels, the initiatives by government to cater for all different LSMs.Dissertation (MBA)--University of Pretoria, 2010.Gordon Institute of Business Science (GIBS)unrestricte

Savings and Investment Dynamics in South Africa

This paper reviews savings and investment dynamics in South Africa in order to enhance the understanding of savings-investment gap in the country. This is achieved through an analysis of savings and investment trends, policy initiatives implemented and challenges faced. The study finds that saving rates in South Africa have been generally low, while investment rates have been erratic over time. Both variables display a rising trend from 1960 into the 1970s. However, by 2015 the savings rate had decreased significantly, while investment rates were relatively low and erratic when compared to the period between 1964 and 1984. The study recommends that polices that are aimed at strengthening corporate savings, while simultaneously bolstering household and public savings, should be implemented. The study recommends that polices that are likely to boost the cost of capital and returns on investment should be implemented to make the country more attractive to foreign direct investment

Examination of the Savings Practices Drivers Among Zimbabweans

Savings are part of the current income for use in the future or the accumulation of financial and non-financial assets and are mobilised by the financial sector which allocates them for productive use in the economy. The study examined the determinants of savings practices among Zimbabweans. A mixed approach was used to establish the drivers of savings among Zimbabweans. Both secondary (Bank deposits and liabilities) and primary data were employed for analysis and testing of hypotheses. A linear regression model was used to explain the savings practice among Zimbabweans and the determinants of savings. 200 depositors randomly selected from the ten provinces as well as 114 key informants were used in the investigation. Although the Zimbabwean majority across gender had a formal bank or mobile account, the predominant are savings for transactional purposes. Savings motivation was related to the selected banker although the provincial residence of accounts was independent to the savings practice. Zimbabwean savings culture has been affected by economic fundamentals, political factors and the credibility of the financial system. There was low financial literacy and depth of the financial system products and services. The savings costs were too high and there was low confidence in the financial system. This called for financial deepening and product development to meet the diverse population needs. This could be supported by broadening the scope of the financial institutions’ operating licences. A cost reduction and framework of rewarding savers as well as confidence restoration by providing guarantees against future losses was necessary. Monetary and fiscal policy reforms could also help long term savings. Key terms: financial system, savings practice, bank deposits and liabilities, gross and net savings DOI: 10.7176/DCS/10-8-04 Publication date:August 31st 202

The National Strategy on Financial Literacy: A Conceptual Review of South African Perspectives

The relevance of financial literacy in the lives of individuals has attracted several stakeholders from different parts of the world in the quest to provide the required financial knowledge for households to manage their financial wellbeing. Accordingly, previous studies show that financial literacy serves as a mechanism to enhance the ability of households to better allocate financial resources with regard to savings and wealth creation over their lifetimes in a world of uncertainty and imperfect insurance. Thus, this study provides a literature review on global initiatives, strategies and programmes on financial literacy as well the perspectives of financial literacy programmes in South Africa. As such, it is the objective of this study to ascertain from previous literatures the factors that hinders the smooth delivery of financial literacy programmes in South Africa. Thus, the researcher employed a descriptive literature review method to achieve this objective. The findings of this study identifies that there is a growing need for a continuous financial literacy campaign especially in South Africa as the aging populations are confronted with intensified pressure on standardised plan for future financial well-being. However, the challenges of financial literacy programmes in South Africa was ascertained which forms part of the factors that hinders smooth campaign of financial literacy programmes in South Africa. Hence, this study recommends practical intervention factors of financial literacy programme in South Africa, which is expected to assist policy makers in formulating the right financial knowledge delivery programmes in South Africa

Inequality Traps in South Africa: An overview and research agenda

There has been considerable eort in ascertaining with condence the trends in income inequality in South Africa. South Africa has traditionally been among the most unequal countries in the world and continues to be so. Surprisingly, levels of inequality have not decreased despite the transition to democratic rule in the 1990s; if any, they seem to have increased. There has also been considerable work on the proximate causes of these high levels of inequality on the basis of inequality decompositions (See Leibbrandt, Levinsohn and McCrary 2010, Leibbrandt. Woolard, Finn and Argent 2010, and Bhorat et al. 2009 for recent analyses). However, much less is known about the underlying causes of this high level of inequality and of its persistence.

Mitigating the South African retirement-income shortfall crisis

Orientation: National Treasury acknowledges that 90% of all South African retirees will not have adequate financial resources in order to sustain themselves. Research purpose: This study aimed to address the retirement income shortfall by assessing possible changes to prudential retirement fund regulations. Motivation: Asset allocation plays a pivotal role in achieving the required rate of return of any portfolio. However, the restrictions on asset allocation imposed by article 28 of the Pension Funds Act of 1956 limits pension funds’ ability to achieve adequate returns. Research approach: A survey was conducted among chief investment officers (CIO) of the top 25 South African investment management companies. Main findings: The study proposes changes to the Income Tax Act, the Collective Investment Scheme Control Act and Regulation 28 of the Pension Funds Act. Managerial implications: The proposed framework should result in fewer pensioners becoming dependent on the state for their pension and empower pensioners to have greater amounts of post-retirement savings. Contribution: The contribution of this article is the proposed changes to the regulatory framework, which could – ceteris paribus: (1) Enable SA retirement fund investors to contribute to the retirement wealth pool in an unconstrained manner. (2) Enable SA retirement fund assets to increase investment returns by as much as 1.21% per annum. (3) Increase the average SA GRRs from the current projected 10.0% to 10.7% by 2045. (4) Increase the efficacy of the existing tax incentives. (5) Reduce spending requirements for grants in the national budget

An analysis of funding liquidity risk in the South African banking system

Most emerging markets are faced with the predicament of a misalignment, or mismatch, of assets and liabilities in the banking sector where long-term assets are funded by short-term deposits. The South African (SA) banking sector also faces a challenge regarding the composition of the short-term deposits that fund these assets. The large and unstable wholesale funds dominate the funding side of local banks' balance sheets, particularly in the short-term bucket. The danger with wholesale funds arises when they are withdrawn unexpectedly, due to either perceived or realised risk. Due to their bulk, the wholesale funds have the potential to create a funding liquidity risk crisis in a bank. Most banks are unlikely to match these types of withdrawals, and will therefore have a forced asset fire sale to fund them. Retail funds do not face this danger, as it is highly unlikely, in normal market conditions, which many retail depositors would want to withdraw all their funds at the same time. Furthermore, retail funds are a cheaper source of funding compared to wholesale funds, thus making them a bank's preferred source of funding. In as much as they are a preferred source of funding, in the SA banking system retail deposits are very low compared to wholesale funding. This research study explores the funding liquidity risk and the predicament that exists in the SA banking industry by highlighting its main sources, and providing recommendations on how it can be addressed. This is achieved by testing the relationship between the ratio of retail funding to total bank funding (ROBF) and five explanatory variables, namely: household saving rates; retail deposit rates; corporate saving rates; wholesale deposit rates; and the Johannesburg Stock Exchange (JSE) All Share Index, with the aid of the multiple regression analysis method. The regression analysis was performed on data collected between 2002 and 2011. The research established that household saving rates and retail deposit rates were predictors that were statistically significant in explaining the movement in the ratio of retail funding to total funding

Measures to improve household savings in South Africa.

Thesis (MBA)-University of KwaZulu-Natal, 2011.The level of savings in South Africa has been described as dismal and on the verge of becoming an economic crisis. Household savings has declined to a level of dissavingand is therefore in need of rectification. Savings can be broken down into household, corporate and government saving. The purpose of this research is to identify measures to improve household savings in South Africa. A critical review of household savings is conducted in chapter two utilising secondary data to examine household savings, identify factors affecting savings as well as establish measures to improve household savings. The study gathers primary data from 10leading economists and financial experts located in South Africa.A qualitative study is undertaken as it helps provide intrinsic information on the thoughts and opinions of the sample group on measures to improve household savings. The research has revealed that South African households are not saving sufficiently and that there are a few key factors affecting households savings. The key factors are indentified and investigated in the literature review and further examined by the respondents for their expert opinions. The respondents have identified thathousehold savings behaviours are insufficiently contributing to savings and there is a lack of a savings culture to encourage positive savings growth. Consumers are caught up in a web of consumerism with easy access to credit as a result of financial liberalisation. These two factors have created a debt trend and left many households in a downward spiral of debt. The respondents have identified the main factors affecting households as: savings culture,financial literacy, consumerism, income levels, education and interest rates. Measures identified to improve household savings are: Tax breaks, government incentives to saving, education, budgeting as well as developing a national culture of saving. These suggestions help outline a path for government, corporations and individuals to follow in achieving greater household savings. The research has outlined measures to improve household savings and stressed that there is no one single measure to rectify the savings dilemma, but rather it is to identify and acknowledge that the savings solution lies in addressing each of the factors affecting saving with a view to improving saving as a whole.No print copy submitted to library