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Tiisetso Maloma
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South Africans do actually save, and the needs for economic growth

26 February 2014, 12:22

Whenever the economy is not going so well, I often observe the blame being laid on consumers. To the contrary, I believe we South African consumers do save. I understand the reserve bank has to curb things or encourage them, by stepping in now and then.

To farce a bit, my cousin is still waiting for my response on an invitation to join their ‘wedding fund’ stokvel. You see, South Africans save. I speak for my black community, I don’t totally know of white folks. Definitely Indians save.

Below are some reasons I say South Africans save, some are a bit outlandish, but I will interject with reasons as to why.

1.     We pay high taxes

Personal tax in SA is to the maximum of 40%, which is a lot. If we don’t regard these taxes as savings, then our conscience towards the value of money and saving is flawed. And other various forms of taxes: VAT and stupid ones like etolls.

Actually, how many cents in every R1 taxed is lost to corruption and inefficiency?

The government is a like a collective kitty, a communal wallet. These are savings in that the money is supposed to go to our overall benefit, like free education and health. Us paying these taxes means we are saving towards the services.

I wish our minister of health Dr Aron Motswaledi all the speedy best in implementing the National Health Insurance.

2.     Insurance

We pay for various forms of insurance such as for education, life and funeral.

3.     Buy property

The other South African dream is the owning of a house. People are buying houses. It is a saving.

You pay rent, someone receives the rent. The house is saving for them, it is insurance. They invested/saved in an asset which ensures they can receive an income from.

They then use the rental income to get by, i.e buy other insurance forms like life, education, shares in companies etc.

4.     Stokvels

This is a saving of course, no doubt.

5.     Buy shares in companies

Not just BEE shares, South African do actually buy shares. It is a saving as well, a risky one but still a saving. The rise of forex training companies cements this.

These savings we are encouraged to make or sometimes lambasted for not making, to where are they supposed to get us to? They make it seem like consumers are some radical spenders (ohh maybe yes). Given the savings I listed above, what are South African consumers supposed to do after saving in the above ways? Of course they finna spend – on Christmas trees, chicken and Edgars.

Speaking of Edgars, have you seen the many premium brands they have added, economists are going to hate Edgars even more for making us spend even steeper. Maybe this explains why Edgars has announced it will lay off more of its staff. I guess it doesn’t expect men and women over 40 to sell premium products.

Given the stokvel savings, what are the savings supposed to do? Isn’t just saving enough? So what if I am going to spend my stokvel savings on buying tin of beans in bulk at Makro? I don’t see how it improves the economy, besides that I would save on bulk buys. Is it what savings are spent on that is more important than the act of saving?

For contextual clarity, let me add foreign investors in the picture

When a foreign firm announces that it will invest $X billions in South Africa, we jump with joy. The important detail is: is the firm investing in extending their product reach to South Africans? If so, it means, (context) they are hoping to make 10 times billion from South Africans, this is money out of South Africa. I have no gripe with this form of investment, ok. It provides South Africans with jobs, to make money for the foreign company (it is a corny statement I know, but it is what it is, it is a good thing still – job creation is important).

But now, say a particular firm (say a venture capitalist firm) comes to invest $X hundred thousand in a South African owned startup, this is better than the above. It is better because, the practicality of the transaction is a South African owned firm is boosted to maybe increase its reach to more South Africans and hopefully the world. when the startup grows from the investment, the profits will be split between the owners who reside here and the investing firm’s country. It is favourable because all the money is not taken out of South Africa, we get to keep some, and if the startup negotiated well, we keep the majority.

The 2 types of investment yes create jobs, but the latter is favourable as it makes sure our home held equity reserves (profits) stay in the country. Jobs are created and with the profits, more money remains home, which can be used for local consumption (boosting other industries) or for investment. Even if the investment is made in foreign lands, their profits will come back to South Africa.

Back to us and saving

We are a saving nation, as I have self fulfillingly established.

The understanding is, jobs are created when resources (money being one of the resources, and we have it in savings) are placed on entrepreneurial opportunities.

We have the savings to place on these entrepreneurial opportunities, but we are not doing so. Again venture capitalists are not in their plenty placing money on our start-ups/businesses/entities/companies.

Maybe we do not have start-ups which compel even our own money (savings) or foreign VC money. As an entrepreneur myself, I have to say yes there are a few compelling start-ups, I work with some of them.

Do our labour union investment wings invest in local startups? I’m just asking.

In finality

The savings we make through stokvels generally fund our consumption activities, not investments.

We need as a country, to create a foundation for young entrepreneurs to start businesses of compelling value. When I say compelling value I mean, businesses which are not compelling because they are proudly made in SA by a South African, but because they honestly intrigue interest in consumers to own them and/or use their value – here and beyond South Africa.

For instance, when a South African loves All Star sneakers, it is out of pure fascination he/she finds in the shoes. Also, when an American loves All Star, it is out of a similar fascination as the South African. It is not because they are proudly American shoes. Yes to an extent the geography of ownership of the brand counts, but the overriding fascination is the intrigue of the shoes and/or how the shoes look on them.

When the foundation is laid, trust me, stokvels and insurers will be investing in such businesses. Again, as a South African entrepreneur who is exposed to the entrepreneurship streets, the foundation exists, it is building up. It needs some form of exposure. Maybe someone has to lobby for the connection of these start-ups and our country’s savings. Lobbying is a tough job. But who?

Tiisetso Maloma is a business model consultant, devised EBC business model canvas, authored Forget The business Plan Use This Short Model and the free booklet Township Biz Fastrack. He is an entrepreneurship activist, growth hack marketing explorer. Startups he is involved with are digital publishers, and DVDapps which makes DVD disc based edu-apps. Follow Tiisetso on Twitter @TiisetsoMaloma, Quora and Facebook.

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