Household saving and wealth in South Africa

Abstract

Background: A detailed picture of the saving behaviour of South African households would enable researchers to determine whether households are proactively attempting to safeguard themselves financially.

Aim: Of this article is to analyse household saving(s), using both an income-statement (saving) and a balance-sheet (savings or wealth) approach, while investigating the link between the two as well.

Setting: The perception that households are ‘dis-savers’ without really delving into the details, definitions, or reasons why this may or may not be the case. This notion is proven superficial as it ignores various interacting definitional and measurement issues.

Methods: A descriptive analytical methodology is applied to household saving (flow) and savings (stock or wealth) in the period 1995 to 2018, with the focus on macro-economics, while data are sourced from the South African System of National Accounts (SNA).

Results: Findings include a long-term decline in net household saving to Gross Domestic Product (GDP), which turned negative in 2006, so that dissaving occurred. In contrast, household wealth recorded an average nominal increase of 10.3% in the period 1995 to 2018. Focusing on the link between the two concepts, it is confirmed that net revaluation of assets plays a prominent role to support the rise in wealth, while the role of saving diminishes over time. Therefore, the need for additional methodological updates is highlighted. More research is required on the various possible factors driving household income and expenditure trends, and their sustainability. The contribution of household saving to total saving should be evaluated in detail.