South Africans are buy­ing in bulk, scrimp­ing on lux­u­ries and join­ing sav­ings schemes in a bid to make ends meet

CityPress - - Front Page - MSINDISI FENGU msindisi.fengu@city­

The eco­nomic de­cline has seen a surge in mem­ber­ship of stokvels, gro­cery schemes and burial so­ci­eties as black South Africans scram­ble to find cre­ative ways to make ends meet.

The Sav­ings and In­vest­ment Mon­i­tor, an an­nual sur­vey com­mis­sioned by Old Mu­tual and con­ducted by in­de­pen­dent re­search house Pep­per­corn Re­search be­tween April 25 and May 24, has found that peo­ple are cut­ting back on lux­u­ries and on en­ter­tain­ing friends at home – and that nearly half of adult chil­dren be­tween the ages of 18 and 35 still live at home with their par­ents.

In ad­di­tion, the study found that the black mid­dle class was fail­ing to save for their chil­dren’s ed­u­ca­tion be­cause black tax – the fi­nan­cial re­spon­si­bil­ity which falls on black pro­fes­sion­als to pro­vide for their ex­tended fam­ily – hit their pock­ets hard.

Face-to-face in­ter­views were con­ducted with 1 000 house­holds of all races in Jo­han­nes­burg, Pre­to­ria, Bloem­fontein, Dur­ban, Cape Town, Port El­iz­a­beth and East Lon­don.

The study was mon­i­tored by Na­tional Trea­sury, the SA Re­serve Bank, the Fi­nan­cial Ser­vices Board and the SA Sav­ings In­sti­tute.

Julie Hutchins, spokesper­son for Old Mu­tual, said con­sumers were af­fected by the neg­a­tive po­lit­i­cal, so­cial and eco­nomic en­vi­ron­ment pre­vail­ing in the coun­try. Cor­rup­tion, crime and un­em­ploy­ment were top of mind.

Other is­sues wor­ry­ing South Africans were po­lit­i­cal strife, in­fla­tion, the coun­try’s down­grade to so-called “junk” sta­tus, drugs, fraud and racism.

“South Africans are cash-strapped and fi­nan­cially stressed be­cause of the cur­rent tur­bu­lent eco­nomic cli­mate with its in­ter­est rates, taxes, the ris­ing cost of liv­ing – with salar­ies re­main­ing un­changed – and in­creas­ing un­em­ploy­ment.

“Hav­ing no in­come re­sults in be­ing un­able to save,” Hutchins said.

When Fi­nance Min­is­ter Malusi Gi­gaba de­liv­ered his mini bud­get speech in Par­lia­ment, he painted a bleak pic­ture of the econ­omy, say­ing it could lead to fur­ther down­grades and in­creased un­em­ploy­ment, which re­mains at high 27.7%.

Some of the peo­ple polled in the Old Mu­tual sur­vey said they chose to bor­row from stokvels to pay for their chil­dren’s school and univer­sity fees. Oth­ers, such as Fik­ile Dube, prayed for a good Sa­mar­i­tan or for gov­ern­ment in­ter­ven­tion.

Dube (42), who lives in Vosloorus, Gaut­eng, is rais­ing her two chil­dren, as well as her sis­ter’s two, on a salary of R4 400 a month. She works as a cleaner at a steel prod­ucts fac­tory in Boks­burg East. She also has to take care of her par­ents and as­sist her ex­tended fam­ily when­ever she can. She said she was forced to join a gro­cery stokvel, through which mem­bers buy in bulk from ware­houses and re­tail­ers in De­cem­ber to have enough fes­tive food for Christ­mas.

She also joined a com­mu­nity burial so­ci­ety scheme in case any­one passed away, “to take care of fu­neral re­quire­ments and food”.

“I was also forced to rent out two rooms at the back of my fam­ily’s four­roomed house for R500 each. At least that makes a slight dif­fer­ence,” she said.

Dube said she was par­tic­u­larly wor­ried this year be­cause there was no money to save for her daugh­ter Xoliswa’s univer­sity fees.

Xoliswa is cur­rently writ­ing her ma­tric ex­ams.

“I hope I can get a bur­sary for her. I am sup­port­ing her to pass Grade 12. I want her to be ed­u­cated. I never got that chance,” she said.

Dube is one of thou­sands who have re­sorted to other means to cush­ion their fam­i­lies against poverty.

The study also found that South Africans were:

. In­creas­ingly buy­ing gro­ceries in bulk, look­ing for dis­counts and chang­ing to cheaper brands;

. Cut­ting back on lux­u­ries such as travel, hol­i­days, en­ter­tain­ing at home, eat­ing out, vis­it­ing beauty sa­lons and hir­ing do­mes­tic work­ers and gar­den­ers;

. Tak­ing on sec­ond jobs to make ends meet;

.In­creas­ingly in­vest­ing in stokvels, with par­tic­i­pa­tion by black fam­i­lies ris­ing from 49% in 2010 to 53% this year; and

. Mov­ing their chil­dren to more af­ford­able schools – “some­times to the detri­ment of the qual­ity of ed­u­ca­tion their chil­dren will re­ceive”, Hutchins said.

The Old Mu­tual sur­vey also found that:

. Nearly half (49%) of young peo­ple be­tween the ages of 18 and 34 live at home with their par­ents, com­pared with 45% in 2013; and

. At least 88% of black peo­ple par­tic­i­pate in in­for­mal sav­ings schemes such as stokvels, burial so­ci­eties, gro­cery schemes and un­banked money. Stokvel pay­ments were of­ten used to pay off debts, to save for an emer­gency or for ed­u­ca­tion, and to buy gro­ceries, fur­ni­ture ap­pli­ances and clothes.

About half of black house­holds bor­rowed money from a stokvel, at an av­er­age amount of R4 660, at least once last year to pay school fees (32%), pay off debt (24%) and buy gro­ceries (23%).

Hutchins said although more black re­spon­dents were in­volved in stokvels than other races, “this does not mean that whites, coloureds and In­di­ans are not par­tic­i­pat­ing in stokvels”.


Hutchins said the study found that wage earn­ers were not only car­ing for their chil­dren, but in­creas­ingly for age­ing par­ents too.

This so-called sand­wich gen­er­a­tion in­creased to 58% of wage earn­ers this year, com­pared with 50% in 2012.

Of those earn­ing less than R6 000 a month, more than a quar­ter (26%) re­ported that they were ex­pected to sup­port their par­ents and chil­dren this year, com­pared with 21% in 2013.

And, of those earn­ing more than R40 000 a month, one in five (21%) said they sup­ported par­ents and chil­dren, com­pared with 16% in 2013.

There has also been a de­cline in bor­row­ing from banks, mi­cro lenders, friends and rel­a­tives this year.

Hutchins said a con­tin­u­ous mes­sage that had em­anated from this re­search since 2008 was that South Africans wanted to be bet­ter savers. More than 80% of the work­ing metropoli­tan pop­u­la­tion sur­veyed at­tested to this an­nu­ally, say­ing they wanted to man­age their fi­nances bet­ter but didn’t know how to do so.

“One fac­tor is the mis­guided be­lief that one can only seek ex­pert fi­nan­cial ad­vice from ad­vis­ers or fi­nan­cial planners if one is wealthy. This is not the case,” said Hutchins.

Some of the sur­vey’s more pos­i­tive find­ings were that work­ing peo­ple had be­come more fru­gal, cut­ting down on lux­u­ries, buy­ing cheaper goods and, most im­por­tantly, in­creas­ingly re­al­is­ing the im­por­tance of pay­ing off debt or avoid­ing it al­to­gether.

“This is also po­ten­tially based on the ne­ces­sity for sur­vival, but is still a pos­i­tive,” Hutchins said.

South Africans are fi­nan­cially stressed be­cause of the cur­rent tur­bu­lent eco­nomic cli­mate with its in­ter­est rates, taxes, the ris­ing cost of liv­ing – with salar­ies re­main­ing un­changed – and un­em­ploy­ment

TALK TO US What are your ex­pe­ri­ences in the cur­rent eco­nomic cli­mate? Are you af­fected? Are you mak­ing ends meet at the end of each month?

SMS us on 35697 us­ing the key­word TAX and tell us what you think. Please in­clude your name and prov­ince. SMSes cost R1.50

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