Innovative ways to encourage household savings for financial wellbeing in South Africa: A township and national level empirical analysis.
Baloyi, Nhlonipho Prosperity
Baloyi, Nhlonipho Prosperity
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Abstract
South Africa is a country with a poor saving culture, which is detrimental to households in townships and at the national level. The gross household savings was 2.2% as of the fourth quarter of 2022 (South African Reserve Bank, 2023:22). Lack of household savings results in many households being adversely affected by financial uncertainty. Predominantly, challenges are encountered in addressing financial emergencies and/or long-term financial needs. The overall objective of this study was to craft innovative ways that can be used to encourage savings for financial wellbeing at the household level in townships and at the national level. The study collected both primary and secondary data. The study collected data through questionnaires and focus group discussions. Multiple logistic regression and linear regression models were estimated to assess the relationship between the household savings variable (for logistic regression) and monthly household savings in rands (for linear regression).
The secondary time series data were analysed using autoregressive distributed lag, which assisted in interpreting the long-run relationships between the household savings ratio and independent variables, with the data spanning 1980 to 2021. The study found inadequate household savings at both the macro and micro levels, and where household savings did exist, the household savings were decreasing at both the micro and macro levels. The study suggests innovative ways to encourage household savings for financial wellbeing, at both the macro and micro levels, which are a state-owned commercial bank; introducing a financial literacy curriculum into early childhood development; the government, through the National Treasury, to allocate incentives for household savings, such as tax incentives; commercial banks to cater for households in townships by offering them services specific to townshipsand their traits; and advertisements on various platforms on different household savings packages as innovative ways to encourage household savings for financial wellbeing at both the micro and macro levels. The outcomes of this study, in the form of the innovative ways to encourage household savings for financial wellbeing at both the household (micro) and national (macro) levels, are very significant and may be adopted by policymakers as a tool that they can utilise to comprehend the root causes of low, and in many instances a lack of, household savings. Policymakers can also adopt crafted innovative ways to encourage household savings for financial wellbeing at both the household (micro) and national (macro) levels as a vehicle to achieve the National Development Plan’s (NDP) objective of increasing household and other types of savings. The findings can therefore be adopted as a roadmap to fulfil the NDP’s
mandate on savings by 2030, and they are also aligned to meeting the United Nations’ Sustainable Development Goals 8 and 10.
Description
A dissertation submitted in fulfilment of the requirements for the degree Master of Business Studies in Finance in the Department of Finance and Investment, Faculty of Economics and Finance at the Tshwane University of Technology
Date
2023-09-01
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Tshwane University of Technology
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Keywords
Financial wellbeing, Households, Savings, Townships