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In South Africa, a number of institutions offer Consumer Financial Education programmes. These programmes are aimed at equipping South Africans with the necessary knowledge and skills to make informed financial decisions. DNA Economics has evaluated a number of these programmes and this blog unpacks some of the lessons from the evaluations.
Recently, formal institutions and services have begun to emerge in townships, usually through mall-style retail spaces.This has included many financial sector institutions.In doing so, it was expected that the close proximity of banks would lead to an uptake of financial services from the unbanked population based in informal settlements with close proximity to townships. However, the available evidence suggests that this has not occurred, and a number of regulatory barriers have been identified as rendering the use of formal institutions prohibitive for the poor.
Well-functioning financial systems support the functioning of all components of the economy, by facilitating transactions and the flow of resources between deficit and surplus economic units (Mishkin, 2007). A key asset of the South African economy is its well-developed financial systems. However, the regulation of such systems is a complex task, and regulatory failures in financial systems pose large risks for the wider economy. Given these concerns, it is interesting to examine some of the characteristics of the South African financial system, especially as regards consumer indebtedness.
Anyone who has recently spent time in Kenya, Zimbabwe or Tanzania could not help but notice the pervasive influence of mobile money on everyday life. Mobile money has changed the nature of payments in these countries, lowering transaction costs, driving financial inclusion and providing consumers and small businesses with easy, cheap and safe ways to transact. Even a cursory comparison reveals that South Africa is lagging far behind in terms of both uptake and innovation. A number of attempts to launch similar solutions in South Africa have failed, although more recent efforts such as MTN’s mobile money offering appear to be more successful. Is South Africa’s divergent experience a result of its sophisticated banking system and different customer demographics? Or is a highly restrictive regulatory environment to blame? This blog, based on research done with the Centre for Competition, Regulation and Economic Development at the University of Johannesburg, attempts to unpack this complex market and analyse some of the reasons we are so far behind our regional peers.
The recent spate of newspaper articles detailing the level of indebtedness of South African consumers is a cause for concern. Is it driven by the actual need of citizens, or by the increasing ease with which short term, high cost credit can be accessed, given that limited credit checks are conducted on those who access them?
South Africa is a hub of economic activity in the SADC region, and many migrants move to South Africa in search of a better opportunities and a better life for themselves and their families. The money and goods that these migrants send to their countries of origin are an important source of income for many households in those countries, but for undocumented migrants in particular, there are few formal options to get money home. As a result, migrants often rely on informal channels, such as sending money via taxi drivers, which take an unpredictable amount of time, are fairly expensive, and sometimes result in the loss of funds.