A study of 160 countries, spanning 60 years of economic history, establishes that there is no country that has been able to transition from “poor to prosperous” without a high savings rate. And that households - in other words you and me - are one of the most important contributors to a country’s overall level of savings rate.
Yet, South Africa’s household savings rate is among the lowest in the world at only 0.5%. This is far below that of many emerging market peers like Brazil, Chile, or India where households save between 5% and 9% of gross domestic product.
Around the world, household savings don’t stay “under the mattress” but generally are channelled via banks and other financial institutions to serve as one of the main domestic sources of funding of capital investment. This means that ultimately your and my savings become the funder of harbours, highways, and hospitals which, in turn, are the major driver of long-term economic growth, job creation, and rising incomes.
