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Freedom Day 2021: Will we ever have financial freedom in SA?

by | Apr 26, 2021 | Personal Finance

As we get ready to celebrate Freedom Day 2021 in South Africa – we really must ask the question – when will the majority of South Africans be financially free?

In 2019, the World Bank recognized South Africa as the most unequal country in the world. The country’s wealthiest 10%, own more than half the nation’s income, while the poorest 40% shares just 7.2%.

The World Bank also reported that the richest 20% of people in South Africa control almost 70% of the resources.

In 2020, the United Nations, Human Development Report (HDR) shows that there are about 11 million South Africans who live on less than R28 a day, which is around R800 per month.

The HDR also analyses and highlights the socioeconomic inequalities between men and women. According to the report, on average, South African women earn 38% less than men. And fewer women have received a tertiary education as compared to men. Stats SA show that unemployment figures stand at 32.5% – the highest it has ever been.

All of the above paint a pretty bleak picture. And one must ask when the concept of celebrating Freedom Day – will include financial freedom for South Africans? As even those who have jobs are struggling.

Just over four out of five (82%) South African consumers indicated in a recent survey that their household income has been negatively impacted by Covid-19. In addition, 84% of these consumers are concerned about their ability to pay bills and loans, while 31% expect to run short within one month.

These figures were determined by the latest TransUnion Financial Hardship Survey in South Africa that also showed an increase in outstanding balances across most product categories.

Is there a silver lining somewhere? Even just a glimmer of hope?

CEO of National Debt Advisors, Sebastien Alexanderson seems to think so. “The Covid-19 pandemic and subsequent lockdowns gave South African consumers the wake-up call they needed with regard to their finances. With incomes being interrupted in some way or the other, we had to redo our household budgets, adjust our spending habits and get out of denial about our debt.”

According to Alexanderson, more and more people are completing the debt review programme. And since people are more aware of their financial situation, they are approaching debt counsellors earlier than usual, leading to less legal action and administrative debt collection fees for the consumer. He says “At NDA, we partner with our clients on their journey of not only becoming debt free, but financially free as well. When someone has successfully paid off all of their debt, it shouldn’t only reflect on their credit records. It should also show in the way they handle their finances and in their overall relationship with money.”

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