ETFs offer hope for South Africa's savings crisis, according to report

SOUTH Arfrica’s poor savings culture remains one of the country’s most pressing financial challenges, according to Prescient Fund Services.

- DIEKETSENG MALEKE

WITH only 6% of South Africans expected to afford retirement and household savings at negative rates, the country faces a critical financial crisis. This article explores how Exchange-Traded Funds (ETFs), particularly actively managed ones, are emerging as accessible, transparent investment vehicles that could help reverse South Africa's poor savings trajectory while empowering more citizens to build long-term wealth.

The group has released its inaugural (Exchange-Traded Funds) ETF Evolution Report, offering insights into the state and future of the South African ETF market

The report says that with only 6% of South Africans expected to afford retirement, according to the National Treasury, and household savings sitting at a negative 1.20% as reported by StatsSA, the reality is stark: many households are spending more than they earn.

This crisis is driven by a combination of factors, including limited financial education, widespread distrust in complex financial products, and a financial ecosystem that often rewards product sales over consumer outcomes. The result is a population largely excluded from long-term wealth creation and retirement security, the report reveals.