With most if not
all efforts focused on the now, for a considerable number of Zimbabweans,
thinking about their economic future is an afterthought. Make no mistake about
it; it is not by choice that people are leaving their economic future to fate.
The present economic realities- a legacy of the 1998-2008 economic meltdown-simply
dictate that survival is the rule of the game. With evidence suggesting that
people are just ‘getting by’, the good old principle of saving for retirement,
investments and for that rainy day has now become a flight of fancy.
Most Zimbabweans
are barely scrapping by and can hardly afford the basic necessities. For the
purposes of this argument, let us exclude the highly contested unemployed
figures (Zimstats-the National Statistical Agency- pegs this figure at 11%
whilst the World Food Programme and other international organisations estimate
that the rate is somewhere in the region of 85%). When one looks at that section
of Zimbabweans who are employed, 30.6 % of these earn less than $100 per month
according to statistics released by Zimstats. The same report also shows that
at least 87.4% of employed persons earn less than $450 a month. What these
statistics show is the prevalence of poverty in the country as effectively,
most people fall well below the Poverty Datum Line (PDL) which is northwards of
$500 for an average household of six.
We can conclude
therefore that the average Zimbabwean consumer is over extended financially,
and unless they augment their primary income somehow, making ends meet becomes
somewhat of a herculean task. It becomes very difficult to see how people can meaningfully
save for their future years beyond formal employment. Looking comparatively at
the country`s Gross National Income per capita- a measure of the average wealth
per person- standing at $615 at the end of 2013, one can see how relatively
poor than their other sub-Saharan Africa peers Zimbabweans are. Be that as it
may, locals consume just as about the same as their considerably wealthier
neighbours as evidenced by Consumption per capita statistics. This reflects the
low propensity Zimbabweans have towards savings at best and an entirely non-existent
savings culture at worst.
This leads to
the question of how the people will make it in say 20 years` time when they
retire from work, in the absence of adequate savings. Normally, in cognisance
of their working career coming to an end through either reaching retirement age
or God forbid, something as unfortunate as retrenchment, one would regularly
set aside money in an investment account to see them through retirement. In
Zimbabwe though, the scenario described above is the exception rather than the
norm. Of course, workers here contribute to the National Social Security
Association (NSSA)-the statutory body mandated to pay out pension benefits-,
but past occurrences have highlighted the frailties of NSSA in paying out workers
in their retirement. There have been documented cases of people who have worked
for decades receiving monthly pay-outs of as little as $40 a month from NSSA.
Most would agree
that this makes a compelling case for people to set aside money in other
investment portfolios to cushion them in their future years. Quite, yet a
survey carried out by Finscope revealed that 31% of Zimbabweans do not put
aside money as savings. Of the small population that does save, an estimated
27% keep their savings at home, which is not surprising given the low levels of
financial inclusion in the country. According to that same survey, the main reasons
for savings are largely related to short term consumption needs like education
and medical expenses. This obviously means that long term savings for things
like retirement remain subdued.
As stated
earlier, this phenomenon is largely a result of a sluggish economy, where
people have low disposable incomes. No matter how much people want to save
money for investment purposes, retirement and for the odd rainy day, they
simply cannot afford to. In trying to cover the living essentials, they find
their hard earned money gone with little else to spare. Then to a lesser extent
are those who can manage to put aside something but do not either due to their
distrust of local financial institutions or just generally a lack of a saving
culture.
So the long and
the short of it, is that Zimbabwean workers are overextended, earning little
when the demands on their static incomes are rising. The financial future of
many is heavily compromised in this pressing economy. A safer bet to ensure a
reasonably comfortable future in retirement, would be to invest in one`s children,
spend whatever little earns on a good education for them, and hope that in old age,
one`s children would provide a financial cushion when the economy improves.
With the way education is valued in the country, as evidenced by Zimbabwe`s
high literacy rates, an investment in the education of one`s children, could be
the most profitable. Less than ideal, yes! Taboo even, but if the economic
trends remain as they are, this could very well be the reality people face in
their retirement years. It would be an era where most Zimbabweans` retirement
plan, would be nothing but simply their children.
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