There’s more to understanding a country’s poverty levels than merely calculating how much or how little individuals earn. That’s why a method called the multidimensional poverty index was introduced globally in 2011.
The multidimensional poverty index reflects aggregate levels derived from a number of socioeconomic indicators. These include education, health, standard of living and labour market activity. It unveiled new insights about the nature of poverty around the world.
South Africa had been watching with interest. In 2014, Statistics South Africa adopted the multidimensional poverty index into understanding the nature of the country’s poverty. The move produced the South African multidimensional poverty index (SAMPI).
Before this, the picture of the country’s poverty was mainly informed by the money-metric approach, which examines the proportion of the population with income below the minimum level required for survival (poverty line).
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"Behavioural scientist Mavis Ureke believes that South African women are worst affected by the country’s high levels of financial illiteracy. Speaking during Women’s Month (August 2019), Ureke discussed the low standard of financial education in South Africa, the financial difficulties many citizens face as a result, and the disproportionate impact that low financial literacy has on the Rainbow nation’s women."
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Millennials use apps to buy transport, food, accommodation, fashion and beauty, and consequently, expect the same technology-driven convenience when it comes to customer service and communication from their bank.
This market, aged 21-37 in 2018, represents 14-million consumers or 27% of the South African population, and is arguably the most dynamic and prominent banking consumer base out there. Millennial consumers are the dominant force in the marketplace, wielding 55% spending power worth over R100bn per annum – more spending power than any generation before them. We need to fit in with them, not the other way around.
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The contentious National Credit Amendment Bill has been the topic of much debate in recent months, and is expected to have a significant impact on the lives of thousands of ordinary South Africans as well as large parts of the finance and banking sectors because of the wide-scale debt relief it will provide.
Originally the proposed bill made provision for debt intervention for consumers earning a maximum of R7,500 per month and with less than R50,000 in unsecured debt.
“If the National Credit Regulator is of the view that the applicant requires assistance, a single member of the National Credit Tribunal can suspend all qualifying credit agreements in part or in full for a period of 12 months,” explained Eugene Bester of law firm Cliffe Dekker Hofmeyr.
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MMI aims to enhance the lifetime financial wellness of South Africans and believes that the starting point for this is financial literacy. To this end, the group focuses part of its corporate social investment on promoting knowledge and skills that enable individuals to make informed financial decisions, thereby empowering them to effectively plan their futures.
Two key projects which exemplify MMI’s financial wellness goals are:
- The Making Money Matter board game, designed and implemented by Momentum
- Metropolitan’s Early Childhood Development Financial Literacy Project
Regardless of economic circumstances, geographical location or level of formal education, everyone deserves equal access to financial products and services that can improve their current financial knowledge, daily habits and future opportunities. Financial literacy is key for this level of inclusivity to be realised.
This is according to Peter Tshiguvho, CEO of Metropolitan Retail, who notes that over-indebtedness impacts consumers at all income levels and, as more people are brought into the formal economy, educating them on the financial skills they need to effectively manage their finances is ever more important.
The World Bank defines financial inclusion as individuals and businesses having access to useful and affordable financial products and services that meet their needs and are delivered in a responsible and sustainable way.
Tshiguvho says, “An important contributing factor when it comes to promoting financial inclusion is improving the financial situation of the greater population. This is being addressed by government as they make strides to free up public funds for development in sectors such as healthcare and education - by tackling cases of collusion, bribery and general maladministration. However, government is not the only party that can play a role here.”
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