23 Jun 2021

Financial literacy and planning are key to eradication of black tax challenge, a Moemedi Financial Training financial planner, Mr Nelson Letshwene has said.

Briefing the media on Botswana Television on Tuesday, Mr Letshwene said black tax, which originated in South Africa, was a social phenomenon, where most black professionals felt pressure to share their income with struggling family members, making it difficult for them to build generational wealth.

He said in societies, which did not have to deal with colour such as Botswana; it could be called class tax, for those classes of individuals that, upon finding employment, could not ignore the legacy of poverty from which they had come, but instead felt obligated to take care of their family members financially.

Mr Letshwene said the advent of COVID-19 pandemic had also added a huge financial burden on the already struggling breadwinners.

He thus advised individuals to not bite more than they could chew, but instead draw financial plans to ensure that both themselves and their family members would be taken care of without being drawn into debt.

“Lack of education, opportunities and abject poverty are some of the issues that contribute to class tax,” he stated, underscoring the need to set parameters to addressing it.

Mr Letshwene said investing either in money or time to generate multiple streams of income was the key to building wealth, adding that creating boundaries on who, where and when to help could aid in avoiding the worst effects of the social phenomenon.

“Building pillars of financial stability does not happen by accident, but by planning if we want to eradicate class tax,” he stated.

Mr Letshwene further said entrepreneurs and government could assist individuals tackle class tax through social cohesion programmes, financial mentorships as well as including financial literacy in school curricula.

He noted however that he did not discourage individuals from financially assisting their less fortunate family members, but rather encouraged them to exercise financial discipline so as to break the ‘black tax’ cycle for future generations.  ENDS