Financial literacy key to growing economy

Mondli Gungubele, deputy finance minister

“Their long-term success lies in the clarity of the clients they are serving. There are always costs in dealing with a client who lacks clarity,” he says.

Gungubele was addressing the launch of the Money Smart Week initiative at the Financial Sector Conduct Authority (FSCA) premises in Pretoria.

Championed by National Treasury, with the minister of finance (Nhlanhla Nene) as its patron, the Money Smart Week South Africa (MSWSA) initiative is a public awareness campaign aimed at bringing financial education and literacy to people at grass roots level. This will be done through bringing informed financial advice from qualified professionals to the people.

The objective of the MSWSA, which will run from 8-12 October, is to enable South Africans to take control of their finances and safe guard their future.

Gungubele says it is important to promote clarity between clients and service providers so that consumers do not end up taking decisions in the dark.

Boosting the economy

Gungubele says South Africans need clarity on the financial sector because bigger numbers of people are going to participate in the economy through entrepreneurship. Understanding the financial sector will help business thrive and boost the economy.

“It will boost our economy and increase participation in our economy, and businesses will thrive… Once our people are clear about [finances and the relationships that protect it], they [have the] boldness and confidence to invest because they believe the possibility of returns. That can only come from clarity,” says the deputy minister.

The initiative follows the February 2018 Budget Review that placed emphasis on building a financial services sector that serves all South Africans. At the time, the document stated that the MSWSA initiative will be piloted to help South Africans to make sound financial decisions.

Also speaking at the launch, the FSCA’s consumer education head of department, Lyndwill Clarke, says the idea for starting the initiative began over a year ago, as statistics had shown that consumers are battling to save.

“The ability to save has taken a dip,” he said.

It is envisaged that the initiative will become a national event taking place on an annual basis.

Launched in April by Nene, the FSCA replaced the Financial Services Board and will supervise how financial institutions conduct their business and treat customers.

The launch of the supervisory body follows South Africa’s new Twin Peaks system of financial regulation, bringing to fruition a regulatory reform announced in 2011.