Rebuild confidence to promote savings

Savings are considered as the first step towards building up wealth.

For instance, if an individual intends to start a small resale business, that person requires funds to get started.

It’s the same principle when one wants to invest, be it in the stock market, bonds, insurance or any other sector.

The alternative choice is to get a loan, but with the high interest rates, it is more prudent to save up.

But for Zimbabweans, saving up no longer appears as the logical step, and that’s not entirely the fault of the ordinary folk.

The majority of ordinary Zimbabweans have been on the wrong side of a significant loss of value in currency one time too many.

The first hyper-inflationary period, which peaked around 2008 seriously affected Zimbabweans who had been saving for decades, some even as far back as 1980 when the country attained independence.

Prior to the hyper-inflationary period, savings accounts were the norm, not the exception, and people gained interest.

People also gained interest on other forms of savings as well — insurance, pensions and bonds, just to mention a few.

But because of circumstances beyond their control, Zimbabweans are now as detached from a savings culture as is realistically possible.

Other reasons for such a sad state of affairs include: low disposable income, high bank charges, a high level of mistrust of financial institutions, high costs of maintaining insurance and risk management accounts, lack of education and cumbersome account opening requirements.

To some extent, we can say that the financial institutions are not to blame as they have been affected by the macro-economic environment in which they are operating.

But then, it’s fair to say that they also need to take a share of the responsibility.

Numerous long-term savers of old (most of whom are now not enjoying their retirement) have complained about how their savings — savings accounts, stock and bond certificates — simply disappeared.

Efforts to get recourse from the institutions they spent years placing their monies and their faith in, have and continue to fall on deaf ears.

There are cases where some institutions, even the “big” ones, have appeared to cover up paper trail around people’s “disappeared” savings.

Thousands, if not millions, of people are hurting because of the money they lost. Some have gone to their graves with immense bitterness.

Perhaps what hurts these people the most is the nonchalant attitude of the institutions and companies they entrusted with their hard-earned monies.

For the firms and institutions that are still operating, we encourage them to tell the truth.

We are sure they have records.

Or at least all things being equal, they should have those records.

As we said at the beginning, a savings culture is critical for the development of a wealthy nation; it’s that first essential building block.

If Zimbabweans are to regain their savings culture, there is need to rebuild trust in both the corporate and financial systems.

But the healing process cannot start until discourse begins between those who were supposed to be the custodians of people’s savings. It makes perfect business sense too, for the implicated firms and financial institutions.

For instance, Zimbabwe is presently experiencing low uptake of insurance, with the country’s insurance penetration rate hovering at a depressing two percent.

It’s not too far-fetched to assume that this is correlated to a general lack of trust.