South Africans invested most in 55 years as virus crisis raged

South Africans invested the most last year in more than half a century — even as the coronavirus crisis ravaged the economy and unemployment rose to a record.

The country’s collective investment scheme industry saw net annual inflows of R213 billion ($13.8 billion) in 2020, according to statistics released by the Association for Savings and Investment South Africa on Monday. That was the highest figure since 1965.

While Covid-19 lockdowns forced many companies to cut jobs, that could have contributed to the jump in investing as retrenched workers looked to save compensation payouts, according to Sunette Mulder, senior policy adviser at Asisa. Even so, “last year’s record-breaking net inflows came as a surprise given the volatility and uncertainty,” she said.

South Africa was already in recession and battling high unemployment before the pandemic hit, and initially tough restrictions to contain the spread only worsened the situation. While the economy has since returned to growth, the jobless rate hit a record 32.5% in the fourth quarter of 2020.

A less surprising outcome of Asisa’s research is that life insurers paid R522.7 billion to beneficiaries last year, an increase of more than 6%, while death claims jumped to more than 434 000 from 317 442 a year earlier.

South Africa has been the worst-hit country by the pandemic on the continent, with more than 50 000 reported Covid-19 fatalities. To protect against the crisis, the life industry ended the year with more than double its legally required capital buffer in place, Asisa said.