SA poor bank on communities for livelihood

Many South Africans only survive because of their social networks. The results of the Finscope 2010 survey, published last week by the FinMark Trust, revealed that about 10 million people – 31 per cent of the country’s adult population – rely heavily on family and friends for income.

The survey, conducted between August and October, showed 20 per cent of people depended on social grants for their main source of income, about 7.4 million people spent their average day looking for work and 9 million borrowed to buy food.The Finscope findings were derived from face-to-face interviews with 3 900 South Africans, aged 16 years and older. The results were benchmarked against the 2009 mid-year population estimate.The survey, which takes place annually, is designed to help financial institutions deliver affordable products and services to low-income people. Without access to the financial system, marginalised people are trapped in the cash economy, unable to expand their economic activities or improve the quality of their lives by providing for the future.The Finscope data paints a picture of ordinary life in South Africa. Maya Makanjee, the chief executive of the FinMark Trust, said financial products and services must address the ‘very specific needs in day-to-day realities’ if they were to be effective.A sign that financial service providers are extending the boundaries of the financial frontier is that more than 25 million people – 77 per cent of adults – are financially included this year. In other words, they use either formal or informal financial products and services. The proportion is up on the 74 per cent last year and the 76.4 per cent peak in 2008. Informal products are those with no ‘recognised legal governance’.Also, more people are using formal financial products – 67.6 per cent this year from 63.6 per cent last year and 65.8 per cent in 2008. And 63 per cent are banked. In 2003 when Finscope was launched little more than half were banked.Despite increased use of formal products, 38 per cent of adults use the informal sector. Service providers within the informal category include stokvels, savings clubs, mashonisas and burial societies.Finscope showed a crossover with 29 per cent of people using both. However, more than 23 per cent used no financial products and are excluded.Questions designed to elicit details about people’s lives showed 28 percent of the respondents were unemployed. Statistics SA puts unemployment at about 25 per ent of the economically active population.Discouraged workers (those who are not actively looking for work) are not included in unemployment figures by Stats SA.The Finscope survey found 23.5 per cent of people worked full time in the formal sector, 2.8 per cent worked part time and 2.8 per cent were self-employed. Others were involved in the informal sector: 5.1 per cent full time; 3.4 per cent part time; and 3.5 per cent were self-employed.One per cent of the respondents said they were seasonal workers, 4 per cent were described as housewife or husband, 11 per cent as retired and 15 per cent as students.Of people who were out of work, 7.1 million were engaged in crafts, took care of the household and livestock, did piece work or worked from home. Nearly 1 million did nothing due to illness and disability.Answers from respondents showed that more than 12 million people – 38 per cent – claimed to have bought their own home. And 3.6 million of these households still owed money. Twenty six per cent stayed in rent-free houses and 12 per cent rented their houses.Twelve per cent, or 3.9 million people, stayed in Reconstruction and Development Programme houses and, of these houses, 24 per cent had been extended.More than 7 million people – 22 per cent of adults – come from a household that either owns or has access to a piece of land. And 60 per cent of these adults, either grew their own produce or kept livestock.The survey showed 3.3 million adults from households that grew produce or kept livestock for their own consumption, did not sell their products for income generation. Of these, 41 per cent said they did not produce enough to sell, 29 per cent had no need to sell as they had other sources of income, 13 per cent said the market was too far away, 6 per cent that transport was too expensive and 2 per cent had no transport to the market.Since the launch in 2003, Finscope has been funded by a range of organisations, including major banks and short-term insurance services providers, the retail sector, the National Credit Regulator, the Financial Services Board and the National Treasury.The full dataset is available to those organisations that join the syndicate of funders.- Business Report