It is no secret that South Africans are not great savers – it is also no secret that our spend-thrift ways have been a matter of debate for years. Solutions have been posed and economic models have been suggested to change the national outlook, all to no avail.
Six years ago, Dr Monde Mnyande, then advisor to the Governor and Chief Economist at the Reserve Bank, pointed out that the evolution of South African savings – instead of displaying a positive curve – was doing just the opposite when savings were expressed as a percentage of GDP.
He showed that between 1960 and 1999, gross savings in the South African economy averaged around 22%. However, the aggregate saving rate between 1985 to 1999 fell to around 18% from about 23% in the period from 1960 to 1972, and 25% in the period from 1973 to 1978. During the 1990s, the national savings performance deteriorated to about 16%. Dr Mnyande said the steady decline in savings during the 1980s and 1990s resulted from slow economic growth, rising tax and interest rate burdens. South Africans, rather than continuing to save, concentrated on maintaining their lifestyles.
During apartheid, this encouraged South African migrant workers to form stokvels, collaborative ‘safety nets’ to survive financially outside of their social settings back home, with some schemes attracting up to 50 members. But in the late 1980s, the apartheid government began to recognise the power of these collective savings schemes within black communities and tried to ban them. This became a huge barrier, because the savings were used to assist stokvel members to pay for necessities, such as burials and groceries.
In support of these collaborative savings groups, the National Stokvel Association of South Africa (NASASA) was formed in a bid to secure legal representation and protect stokvels. As a result, NASASA is today a self-regulatory body, approved by the registrar of Banks under the Banks Act of 1990.
This year, the South African Savings Institute (SASI) celebrates its 15th anniversary and looks back on the evolution of the nation’s savings during this period. Tracing back the country’s history, we can see that the household saving rate increased to -0.80% in the first quarter of 2016 from -2.40% in the fourth quarter of 2015. Personal savings in South Africa averaged 4.98% from 1960 until 2016, reaching an all-time high of 23.80% in the second quarter of 1972 and a record low of -2.70% in the fourth quarter of 2013.
Standard Bank research indicates that only 5.5% South African households potentially have the ability to save, as they have positive net-income balances. The higher-end households can potentially save 19% of their after-tax income, while affluent households have a savings potential of 65%.
The bottom line, however, is that arresting deterioration in our savings rate requires an ‘about turn’ in our behaviour. A culture of savings means examining priorities and deciding which personal expenses are acceptable and which should be avoided. Essentially, as has been pointed out by more than one expert, people can spend and then decide what portion can be saved, or they can save first and then decide what portion of what remains can be spent.
Perhaps, as a nation, we can reverse our ‘devolution’ of savings by re-examining our most successful saving mechanism and adopting some of the behaviours that make it so: Stokvels epitomise ‘the peak’ in inculcating savings habits by changing consumer behaviour.
In stokvels, the emphasis every month is on getting your contribution in by the due date. The penalties are subtle; other members are from the community and know you well. As regular meetings are held to discuss savings and the objectives of the society, the fact that you have not contributed is known by friends and neighbours. Worst of all, by not meeting obligations, you are placing the group in danger of not meeting their objectives. It is peer pressure at its best.
Related: A Savings Culture is Not Enough
Add to the mix the fact that stokvels have defined objectives for saving and you have the perfect recipe for a new attitude to savings that most South Africans could embrace. The irony, of course, is that stokvels are generally schemes that have been the preserve of lower-income groups, yet they have succeeded in mobilising billions of rands in national savings. Recent reports put their value in South Africa at and estimated R49 billion annually.
We have now reached the point where the power of stokvels combined with the need to attract more people into mainstream banking has seen them become organised: To have bank accounts, stokvels must have constitutions and office bearers. Like any business, no payments can be made without authorisation by nominated signatories.
As banks, we are already seeing savvy young professionals take on the lessons provided by their elders. There is an increase in the number of savings schemes that rely on the stokvel principles of pooling and distributing funds. However, their ambitions are loftier and the contributions significantly higher. Middleclass South Africans are saving together to invest in equities and unit trusts, or to use joint resources to acquire lifestyle purchases. The trick is finding ways to expand these changes in habits so that saving by groups becomes attractive to the majority of South Africans.
Apart from stokvels, South Africans should consider various savings and investment accounts that can help them plan for their future better – be it for retirement, that special holiday, or to cover unplanned expenses. The question each consumer should pose is, which savings account is right for me? Standard Bank’s PureSave account is, for example, an easy way to start saving and gain instant access to your money when you need it. With the MarketLink account, you gain the flexibility of being able to access your cash, in addition to competitive interest rates. Should you have a lump sum of money, consider the Tax-Free Call Account, where you can invest up to R30 000 a year and a maximum of R500 000 in your lifetime – and get tax free returns on your contributions.
Maybe the key to our national savings evolution rests on going back to our roots, and saving as a collective toward a common goal..
How Kiran Rai Became A Global Brand Ambassador With Over 10.5 Million Facebook Followers At The Age Of 26
Kiran Rai has been featured in 600 international newspapers worldwide and has hosted 80 major events including 50 entertainment events and 23 major sport events. Find out how one of Britain’s most influential young people has made it to the top.
Now, Kiran Rai is a global brand ambassador traveling the world promoting Social Box. He was also recently appointed as sponsorship director of the Cake Bake and Sweet Show currently running in Australia. But his life wasn’t always global travel and fancy titles, at 23 he stood outside Waterloo station for a month holding a sign saying, “please support me.” He managed to raise £15 000, which allowed him to follow his dreams and catapult himself into the entertainment industry. Find out how he did it:
Kiran Rai started out very young, he realised early on in life that if he didn’t take his dream and himself seriously, nobody else would. His mindset developed out of what he learnt from his school life and his family, he also developed a thick skin from watching his mom and his aunt.
“The strategy I used was phoning people constantly and making sure that people heard me, it was a gruelling process.” He says that there were even times when he would bang on directors and casting agents’ doors and send them numerous emails and letters.
He exhausted every option in trying to achieve his dream. “I would do open mics late at the night hoping that maybe someone would spot me,” he says.
Related: Making Money From Your Baking Hobby
Kiran Rai learnt quickly the importance of standing on his own two feet. “I just want to keep proving to myself that I am good at what I do, and I kept pushing whether I succeeded or not,” says Rai.
He is constantly on the move and learning new things, he feels that being versatile and gaining experience will help him achieve his dream. “I have a very fierce mentality when it comes to learning that once I complete something I need to move on to something else straight away,” he says.
“I’ve also learnt to be humble – it’s the most important thing. Yes, there are times when you need to be confident to show people that you know what you’re doing but being arrogant puts people off,” says Kai. “I’ve learnt to keep pushing despite people telling me no, I’ve had so much rejection and I still get rejected, I just learn to handle it.”
Putting in the time and effort
“I’ve produced my own work for years, and I’ve put in the time and effort. I’ve learnt my craft and travelled across the world to make my dream happen. I am very grateful to everyone who helped me and for how far I’ve come,” he says.
“Working with Cake Bake has really improved my business mindset and thanks to Ralph and Binu Pillai and Aka Samara who have made this happen for me. I have great mentors around me, who motivate me to try harder.
There have been times when I’ve become demoralised as it’s difficult to see where my career is headed, but I just keep reminding myself that it will take time to realise my dream and improve myself.
Related: How To Start A Bakery Guide
What he’s up to now
“I’m just a 26-year-old having fun, travelling the world and being able to achieve my dreams and work with great brands including Social Box, 3LT and of course being the sponsorship director of Cake Bake and Sweet Show in Australia,” says Rai.
“Currently, I’m leading a team of 8 and it’s incredible to work with a great company. I will be presenting on stage at the Cake and Bake Show happening in Sydney and Melbourne and I’m excited about it.”
Plans for the future
“My plans are to head to Mumbai and Los Angeles. I am targeting both cities as my dream is to become an established actor. I am also learning Hindi right now to improve my chances when auditioning for Bollywood projects. But I’ll also continue to keep pushing and never settle,” he says.
“The Cake Bake and Sweet Show is a great opportunity to learn. I’m learning how to work with people and work in a team, whereas previously I was very much on my own hustling every day and I haven’t worked closely with people for numerous of years,” says Rai.
A word of advice
To the youth looking to follow their dreams he says: “Do whatever you can, don’t be scared and make your voice heard. Never let others keep you down.”
He continues to say that you should remember to focus on your education. “I’ve learnt the hard way that it’s important, and that I should haven listened to my parents and followed their advice.”
South Africa Joins Global Impact Investing Body
South Africa will take another step toward meeting its development challenges this week when it becomes the first African country to join the Global Steering Group (GSG) for Impact Investing.
A global body promoting investments that not only generate a financial return, but deliver positive environmental and social outcomes as well, the GSG currently comprises 21 countries, plus the European Union.
South Africa will be represented on this important global body by the National Task Force for Impact Investing – that was established recently to grow local support for the impact investment sector. The Task Force is made up of representatives from government, private capital and research institutions. The Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business (GSB) is acting as the secretariat for this new initiative.
“This is an amazing development, as it signifies South Africa’s leadership role in the area of impact investing,” says Elias Masilela, Executive Chairman of DNA Economics and Chair of the Impact Investing National Task Force. “South Africa’s entry into the GSG will usher in a new perspective in thinking about investing.”
According to the Global Impact Investing Network, the amount of money committed to impact investing around the world has doubled in the last year. From $114 billion in mid-2017, there is now $230 billion in funds targeting investments that not only generate a financial return, but deliver positive environmental and social outcomes as well.
This rapid growth has been largely due to a greater awareness of how private investment can contribute to the attainment of the Sustainable Development Goals set by the United Nations. Yet there is still a long way to go. It is estimated that the world needs $2.5 trillion per year to hit the UN’s targets.
Meeting these goals is crucial in South Africa, where poverty and inequality remain significant challenges. Attracting more private capital to support projects in fields such as education, housing and water is imperative.
According to Susan de Witt, Innovative Finance Lead at the Bertha Centre and head of the Impact Investing National Task Force Secretariat, being part of the GSG will give the movement in South Africa international credibility and allow the country to learn from the experiences of other countries.
“One of the major advantages of joining the GSG is that local representatives from the mainstream capital markets will be exposed to the global shifts in asset allocation,” says de Witt. “They will also be able to develop the appropriate contextual vehicles and tools to do this effectively spurred on by the efforts of major players such as Blackrock, Credit Suisse and UBS.
Giving Africa a voice in this forum is a crucial development, says Masilela. “With the strategic role that the country holds on the continent, as well as its representative voice on BRICS and other global fora, it is imperative that South Africa continues to drum up the need for this consciousness towards investment.”
Not only will the country benefit enormously from the learning opportunities, but it will be able to make a meaningful contribution to discussions as well. As many international impact investing projects are focused on Africa, there is a need for local insights to guide international investment allocations.
“Having sat in a number of these meetings, there a noticeable lack of African opinion,” says de Witt. “Working groups with an international strategy often focus on Africa, but there is rarely an African in the room.”
As a member of the GSG, South Africa will be a fully-fledged member of the global impact investing movement. This will unlock meaningful opportunities for the country.
“There is no better time than now,” Masilela says. “Done right, it will reverse many of the domestic and global imbalances we face. It is particularly important, with South Africa’s economy struggling to record a much needed turnaround.”
Along with South Africa, similar Advisory Boards in New Zealand and Bangladesh will also be admitted to the CSG this month.
“The impact revolution is a truly global movement, and its expansion to Bangladesh, New Zealand, and South Africa underscores that the pivot to risk, return, and impact is spreading to all corners of our world,” said Sir Ronald Cohen, founder and chair of the GSG.
The GSG’s Board of Trustees approved the new member countries amid preparations for the annual Impact Summit on 8-9 October in New Delhi, India. The Board also approved sites for its next two Impact Summits: Santiago, Chile on 7-8 November 2019, and Johannesburg, South Africa in 2020.
FNB Announces The 7th Franchise Leadership Summit
FNB is hosting the 7th Franchise Leadership Summit at Montecasino on Tuesday, 13 November 2018. The summit is a well-attended industry discussion amongst high calibre franchisors and industry stakeholders.
The Summit is aptly themed “Equipping you to future proof your franchise”. The discussions will include exploring the impact of technology on the franchising industry.
To this end, Morne Cronje, Head of Franchising at FNB Business explains that “the rise in online applications in franchising means we need to find innovative ways on how to continue to grow and improve this new dimension to this already robust industry.”
The South African Fast Food Landscape Report of 2018 backs the position that Cronje speaks to as it revealed that a growing number of consumers are opting for the convenience of online delivery services when purchasing fast food, this has a far reaching impact that the Summit will begin to talk to in this year’s leg.
The speaker line-up includes:
- Mike Vacy-Lyle, CEO of FNB Business; Marcel Klaassen, Executive Head at FNB Business: Opening address
- Mamello Matikinca-Ngwenya, Chief Economist at FNB: She will talk about the state of the economy and what it means for entrepreneurs.
- Morne Cronje – Head of Franchising at FNB Business; Eric Parker – Franchising Consultant at Franchising Plus; Stephen Walters – GIS Specialist and Co-Founder at Fernridge Consulting & Tony da Fonseca – MD at OBC Chicken: Panel discussion on future proofing franchise.
- Richard Mulholland – founder: Beware of the Fox, a look at the actual impact of Artificial Intelligence (AI) on business
- Andy Higgins, Founder of Bidorbuy and Managing Director of uAfrica.com: Will E-commerce replace traditional retail? – How to adapt your business model.
- Dion Chang – Trends Analyst: Pivoting your skills for the second wave of disruption.
- Dr. Sarah Britten – Independent shopper marketing and social media strategist: Check ins and check outs – how franchises can use social media to build their businesses.
- Dr. Rosy Ndhlovu – Founder: Social Franchising – Is this the future for Healthcare?
Cronje says the great line-up of industry experts will go beyond the digital discussion and the subsequent challenges it presents, each speaker will offer workable solutions on how to improve and navigate the move to the 4th Industrial Revolution as a business.
“Franchising is a healthy and resilient industry in South Africa. However, we need to continuously improve it and keep adapting to the ever-changing landscape. Therefore, unpacking online applications and trends in franchising is at the centre of this summit amongst other things,” concludes Cronje.
Buy tickets or find out more information on the Summit here: www.franchisesummit.co.za
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