Lihle Z Mtshali
Analysts and the financial services sector say South Africans lack a savings culture, but a new Old Mutual study says consumers are merely choosing nontraditional forms of saving that were previously not measured.
The research into the country's savings levels found that an increasing amount of cash going into savings is more often put into residential property and other savings mechanisms, such as stokvels and burial societies, than traditional financial services, such as bank accounts and unit trusts.
Total stock in traditional savings had increased by 12percent over the past decade to 2006, said Derrick Msibi, executive director at Old Mutual Investment Group South Africa.
Nontraditional savings increased from 13percent to 18percent of total adjusted savings between 1996 and 2006.
"There is a pool of savings in this country, but the rate is not growing fast enough," said Msibi.
South Africa's rate of savings of 1percent is low when compared to the global benchmark of 5percent.
While people have been earning more in the past 10 years, there is also a strong culture of consumption, which has resulted in the net personal saving ratio falling to less than zero and the increase of total debt.
Old Mutual managing director Paul Hanratty said South Africa's household balance sheets were not in distress because "the net wealth effect experienced over the past few years has outstripped the amount of borrowing they have had".
Hanratty said consumers were not necessarily extravagant and wasting money on cars and luxury goods but that most had taken advantage of booming house prices.