While increasing debt levels have been getting bad publicity over the past few months, low levels of savings may be a greater threat to the country's sustainability, according to the Finmark Trust's financial trends survey released yesterday.
The annual study found that Mzansi bank accounts - low-cost accounts aimed to help South Africa's poor enter the banking system - had brought an additional 1500000 people into the fold over the past year.
"This shows that the initiatives used by banks are working. even though they are basic accounts such as Mzansi accounts, it is very positive," said the report's co-author Bob Currin.
Currin added, however, that 30 percent of account holders withdrew their money as soon as it was deposited.
"I think what we're seeing here is that employers are forcing employees to open accounts to make payment easier. They are withdrawing the full amount to meet their immediate payment needs instead of saving," he said.
This indicated that there was a portion of those banked for the first time who, although they were exposed to banking, were not using bank accounts effectively, especially for saving.
"There is still a huge need for financial literacy," said Currin.
He said that only 36 percent of adults have matriculated, while a further 40 percent have completed some high school education, which indicated poor financial literacy.
The financial services charter's aim to achieve 80 percent penetration in lower-income groups by 2010 is still "way off", said Currin, and he suggested that the charter looked at new ways of bringing people into the banking fold.
"Give companies points for financial literacy instead of just penetrating the low income-market," he said.
The report also uncovered the dire financial circumstances faced by many South African residents.