Despite solid growth in financial assets in South Africa, the distribution of wealth is unequal with the richest 10% of the South African population owning 85% of the total net financial assets.
This is according to the Allianz Global Wealth Report 2024, a report that examines the asset and debt situation of households in almost 60 countries.
The report said that the distribution of financial assets remains the Achilles heel of SA and over the last two decades the situation has hardly improved.
The net financial assets per capita has increased to EUR9,770 (R187,885).
Financial assets for SA households increased by 8.3% in 2023, posting a strong recovery following a dismal year in 2022.
The main driver of the rise in financial assets were insurance/pensions (9.5%) which are also the dominant asset class in the portfolios of SA households with a share of 49%.
The other two asset classes that showed solid growth include bank deposits which increased by 7.5% and securities that had experienced 7% growth.
However, the picture is less rosy in real terms.
According to the report, adjusted for inflation, financial assets increased by only 2.2% in 2023.
Compared to the pre-pandemic level of 2019, the purchasing power of financial assets was 12.3% higher at the end of 2023.
Allianz said: “This is in sharp contrast to many European economies where savers suffered four lost years in real terms.”
Growth in liabilities slowed to 5.6% in 2023 which was in line with the global trend. The debt ratio, however, remained at 41%, the pre-pandemic level and 8% below the record of 2007.
Globally, financial assets of private households also reported strong growth with increase of 7.6%. Overall, total financial assets amounted to EUR 239 trillion at the end of 2023.
The report showed that growth in the three major asset classes was uneven.
Securities and insurance/pensions which showed growth of 11% and 6.2% respectively, benefited from the stock market boom as well as higher rates and grew faster than the average of the last ten years.
In contrast, growth in bank deposits dropped to 4.6% after the pandemic-related boom years, recording one of the lowest hikes in the last 20 years.
IOL Business