FINANCE
FINANCE
Why South Africans do not save
SA is not primitive, but it is suffocated. The effect is visible everywhere- businesses chase quick returns instead of long-term projects, households spend today because tomorrow’ s rand will be worth less, and investment horizons shrink. The machinery of capital formation grinds down, leaving the country with the appearance of modern industry but the reality of shallow growth.
What follows is the reason why capital cannot be accumulated in SA
Ownership insecurity
As the threat of expropriation without compensation lingers, so too do people rationally retreat from long-term commitments. A farmer who considers buying new machinery cannot plan on future harvests if the land itself may be seized.
The same logic applies to homeowners and firms. Capital improvements require confidence that tomorrow’ s returns will belong to the one who bore today’ s costs. If that assurance is absent, saving appears foolish. SA’ s debate on land confiscation has already damaged confidence, and it has chilled investment across agriculture, housing, and industry.
Taxation
SA faces multiple layers: income tax, VAT, fuel levies, excise duties, property taxes, so-called“ sin” taxes. Each one removes resources from households and firms that could otherwise fund saving or investment.
The Treasury channels these funds into state programmes, many of which generate little value and some of which collapse under corruption and inefficiency. Meanwhile, the pool of private savings shrinks. The cumulative effect is not redistribution toward growth, but redistribution away from growth. The State grows larger while the productive base weakens.
96 REI MAGAZINE NOVEMBER 2025