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Sun City - It is only companies that have contributed to South Africa’s savings rate in the past 10 years.
On Thursday Sanlam Life chief economist Jac Laubscher told the annual congress of the Association for Savings & Investment (Asisa) that things had gone badly in the investment environment for the past 10 years, discouraging savings.
The relationship between the savings rate and economic growth should not be underestimated. One was not possible without the other, he said.
Of the three sources of savings – households, companies and government – companies alone had contributed to the national savings rate.
According to Laubscher the household savings rate – calculated as income less expenditure – had been 0% for 10 years.
In 1960, when government decided to fix the deposit rate, the household savings rate had been 6.7%.
What was more concerning was that the only contribution made by households to the savings rate had come from the very wealthiest, and people running their own businesses.
Companies, which are dependent on savings to be able to grow, had contributed 3.2% to the national savings rate.
On the other hand, government had contributed a negative 0.7%. Apart from three years, government’s savings rate had been negative since the 1980s, said Laubscher.
Government had direct control of the national savings rate, and this was not a matter that should be handled by the national Treasury alone.
Government should ensure that policy to encourage saving was created, and that required policy certainty.
Laubscher said the national savings rate was an indicator of how confidence was being destroyed and savings undermined.
Uncertainty over future mining industry policy, he said, was an example of this.
The contribution of the mining industry to the gross domestic product had declined to 0.3% because investments in the country were discouraged by contradictory utterances about future policy.
JSE CEO Russell Loubser said foreign investors would stay away from South Africa while there was uncertainty about policy. He said South Africa should dispense with its image of moderation and provide policy certainty.
Repeated calls for the nationalisation of mines and subsequent denials dissuaded foreign investment in South Africa, he said.
On Thursday Sanlam Life chief economist Jac Laubscher told the annual congress of the Association for Savings & Investment (Asisa) that things had gone badly in the investment environment for the past 10 years, discouraging savings.
The relationship between the savings rate and economic growth should not be underestimated. One was not possible without the other, he said.
Of the three sources of savings – households, companies and government – companies alone had contributed to the national savings rate.
According to Laubscher the household savings rate – calculated as income less expenditure – had been 0% for 10 years.
In 1960, when government decided to fix the deposit rate, the household savings rate had been 6.7%.
What was more concerning was that the only contribution made by households to the savings rate had come from the very wealthiest, and people running their own businesses.
Companies, which are dependent on savings to be able to grow, had contributed 3.2% to the national savings rate.
On the other hand, government had contributed a negative 0.7%. Apart from three years, government’s savings rate had been negative since the 1980s, said Laubscher.
Government had direct control of the national savings rate, and this was not a matter that should be handled by the national Treasury alone.
Government should ensure that policy to encourage saving was created, and that required policy certainty.
Laubscher said the national savings rate was an indicator of how confidence was being destroyed and savings undermined.
Uncertainty over future mining industry policy, he said, was an example of this.
The contribution of the mining industry to the gross domestic product had declined to 0.3% because investments in the country were discouraged by contradictory utterances about future policy.
JSE CEO Russell Loubser said foreign investors would stay away from South Africa while there was uncertainty about policy. He said South Africa should dispense with its image of moderation and provide policy certainty.
Repeated calls for the nationalisation of mines and subsequent denials dissuaded foreign investment in South Africa, he said.
- Sake24
For business news in Afrikaans, go to Sake24.com.
