By Niresh Gopichand
Too many young South Africans are entering the workforce without a sufficient understanding of financial fundamentals. This concerning trend is highlighted by financial services provider, who regularly encounters high numbers of customers lacking knowledge of basic financial principles.
Financial education is essential for enhancing economic participation and personal development in young South Africans. The need for improved financial literacy is underscored by the Financial Sector Conduct Authority (FSCA), which, in partnership with the Human Sciences Research Council (HSRC), found that only about 51% of South Africans are financially literate. The FSCA, the market conduct regulator and financial institution overseeing the financial services industry in South Africa emphasises the importance of financial education in addressing this gap.
Coupled with the low financial literacy rate is a challenging economy that has seen consumers appetite for credit increase according to data by the National Credit Regulator shows that the appetite for consumer credit increased from Q3 2023 to Q4 2023.
Credit analytics group Experians Head of Data Insights, Ans Gerber, says approval rates for credit have remained low for the first quarter of the year with just over 30% of loan applications being approved. The reasons behind low approvals include increased inability of consumers to meet debt obligations (also called affordability) and a likely reduction in qualification for credit especially considering lenders being more risk-averse in the post-pandemic time than what was the case pre-Covid.
