By Stella Mapenzauswa
JOHANNESBURG May 31 (Reuters) – Like many South Africans,
Nkululeko Makhaya has only the most basic financial strategy for
his future: a pension contribution deducted from his salary and
100 rand ($11.90) put aside each month towards family funeral
cover.
The 35-year-old admits this is woefully inadequate, but with
only a modest salary and obligations to both his immediate and
extended family, there is barely enough each month to see him
through to the next paycheck, let alone save.
Cue the future: what happens in 30 years when he is still
very much alive but retired, and inflation has eaten into his
pension?
“I’ll get by somehow. Hopefully my children will have good
jobs and take care of my wife and me in return for the good
education I’m paying for now,” said Makhaya, a salesman for a
Johannesburg cleaning products firm.
“I might not even live to retirement, in which case the
funeral policy will come in handy.”
In fact, Makhaya is setting aside more than most people in
South Africa, where the majority of households are forced – or
choose – to spend most of their income, and just keep their
fingers crossed about the proverbial rainy day.
The weak savings culture is a big headache for the
government because it hampers speedy economic growth. With less
cash sloshing around its banking system, South Africa cannot
finance the infrastructure such as roads, ports and broadband
Internet needed to move its economy up a gear.
Tellingly, it fares poorly on both growth and savings when
compared to peers in the BRICS bloc of developing countries.
Continued…
