African youth prone to saving, advancing education: Barclays report

31 October 2014

African youth are more likely to invest surplus cash to achieve their long-terms goals, rather than spend money on luxury items, according to a report released recently by Barclays Africa Group Limited.

A result of a survey conducted among 7 052 young Africans from 11 countries, the report states that 49% of all respondents said they would invest or save an extra US$100 if they had the money.

Of the total number of respondents, 14.7% said they would use the extra US$100 for education and skills-related expenses and 13.2% would use it to pay off their debt, indicating good saving intentions and a readiness to make sacrifices for education and training as a strategy for prosperity, the report notes.

Young South Africans less likely to invest

Compared to the overall score, Ghanaians (62%) and Kenyans (63%) came out tops as the most likely nations to invest additional funds. However, South Africans were less likely to invest (27%) and were only slightly more inclined to pay off debt (31%).

Entitled “Africa Prospers: Future Youth Drivers of the African Economy’, the purpose of the survey was to gauge how Africans defined “prosperity” and how they are investing for their future. Respondents from South Africa, Zambia, Botswana, Kenya, Ghana, Mozambique, Seychelles, Mauritius, Tanzania, Uganda and Zimbabwe took part in the survey from April to August this year.

What it means to prosper to young Africans

Young Africans mostly agreed that to prosper means to be successful, to thrive and to be fortunate in not only finances but also in health, career satisfaction and happiness.

“The survey showed that there is a new understanding of prosperity – one that transcends the confines of traditional family or community structures,” according to the report.

Of note, 30% of respondents said they would buy a computer if they had extra cash and 24% said they would purchase books in order to prosper. Education cropped up quite frequently in the survey, an indication of the zeal for knowledge among the youth.

“Both the internet and new and developing mobile phone technology are increasing the importance of this generation as agents of social transformation and wealth creation in different sub-regions of Africa,’ the report notes.

Lack of finance

However, 68.9% of the participants said the major impediment to “prosperity’ was lack of finance. Half of the participants indicated there was general lack of opportunity to prosper and 26.2% said they needed financial advice.

Commenting on the findings in the executive summary of the report, independent analysts Professor Monde Makiwane of the Human Sciences Research Council and Dr Golda Chimere-Dan of Africa Strategic Research Corporation (Pty) Ltd said the survey “captures the prosperity perspectives, experiences and life strategies of Africa’s growing and young emerging middle-class, who holds the key to accelerated economic growth and transformation in Africa’.

“It addresses critical issues of financial behaviour and prosperity that have either been missed or poorly measured by previous social and financial surveys in Africa. Although some results from the report confirm findings from other location- specific studies, this is the first survey of its kind to collect this specific set of information in a comparative study of 11 African countries.’

Findings key to attracting investment in Africa

Makiwane and Chimere-Dan said the findings will have profound implications on how economic development and financial services are packaged and presented to people in Africa in years to come.

“Africa constitutes a sizeable portion of the global market with its share of general and unique risks and opportunities. Even though regional economic growth is vulnerable to the fluctuations in the global markets, many analysts remain optimistic about the economic prospects for sub Saharan Africa,’ the two analysts noted, adding that a combination of demographic and social dynamics has given rise to two notable patterns that attract regional and global attention to the African market.

The first pattern shows that the current phase of the demographic transition in Africa is contributing to a growing sub-group of young, economically active Africans who are better educated and not as digitally disadvantaged as the generations that preceded them.

Recent studies by demographers and economists have identified this new generation as the potential vanguard for accelerated economic growth and human development in Africa, a phenomenon is referred to as the African “youth bulge’.

African youth bulge

The second pattern relates to Africa following Asia’s saving boom. Makiwane and Chimere-Dan said several decades ago, Asia experienced a similar “youth bulge’.

“Asia capitalised on this by creating employment opportunities and mobilising the youth to save, thereby boosting per capita savings. Encouragingly, one of the most significant findings from the Barclays Africa Prosper Report is the high level of savings and investments reported by participants. As many as 50% of respondents would save or invest to help them prosper financially. This needs encouragement,’ Makiwane and Chimere-Dan noted.

SAinfo reporter