Investec GIBS savings index: The real facts about saving

Abstract

GIBS Foreword: The capacity of a nation to save – through its citizens, companies and the public sector – is strongly related to its ability to achieve elevated, sustained and inclusive economic growth and social development. South Africa’s poor track record when it comes to recent years is of growing concern, and remedies to address our lacklustre performance need to be at the fore of our collective agendas. Significantly improving responsible performance on the part of both individuals and organisations is core to our GIBS mission. Without the production of applied scholarship dedicated to investigating the levers of performance that will drive South Africa forward and enable its people and country to reach their inherent potential, selecting appropriate paths of action is difficult. The generation of thought leadership is integral to any business school. At GIBS we seek to focus on applied research that not only contributes to scholarship, but is relevant to practitioners alike. The Investec GIBS Savings Index, prepared by Associate Professor Adrian Saville, provides a much needed tool to deconstruct, critically evaluate, and track the key drivers of South Africa’s performance when it comes to saving. The resulting study goes beyond providing a comprehensive analysis that shows South Africa’s poor performance when it comes to saving behaviour. It highlights the importance of moving from growth that relies on consumer consumption and government spending to growth that stems from increased levels of investments and exports. It shows that current trends in investment are way below what is required to fuel sustained and inclusive economic growth. Saville provides compelling evidence to show why the decline in gross domestic savings as a % of GDP must be reversed. Our role at GIBS is to elevate management performance through high quality education. We thank Investec, one of our corporate partners who play a critical role in funding scholarly research. This report provides compelling evidence to show what’s needed. Our collective challenge is to convert knowledge into action if we are to progress. Professor Nicola Kleyn Dean of GIBS

Investec Foreword: South Africa’s (SA) poor savings rate over the last two decades has been no secret, however, the importance of savings to fuel investment for sustained economic growth is less understood. At Investec, one of our core philosophies is to make a contribution to society, macro-economic stability and the environment. Our approach includes a strong focus on education and entrepreneurship. As such, we believe it is important that we not only raise awareness of the poor savings rate but also drive a discussion from a corporate, economic, academic and social perspective on how we can challenge the convention and approach this task. We have therefore partnered with the Gordon Institute of Business Science (GIBS) to provide the research to form the foundation for further debate and through the Investec GIBS Savings Index we hope to increase awareness in all sectors of the importance of taking action to improve South Africa’s savings. The index aims to provide the following: (1) Research the real facts behind the structural decline of SA’s national savings rate (2) Create an aspirational national savings benchmark to support SA’s economic growth objectives (3) Measure the performance of the SA economy in terms of its critical savings components (4) Call to action for all sectors of SA’s society to make a positive contribution to SA’s savings culture On a personal note, I have been involved in the savings and investment industry for close to a decade and have seen numerous initiatives from industry to improve the awareness of the importance of savings at an individual level. However, in my view, we have not focused enough on the environmental factors or savings influences that impact the general population’s ability to save. My hope is that the Investec GIBS Savings Index and the research behind it will assist in a call to action to all stakeholders in addressing the savings trap that we are caught in as a nation. René Grobler Head of Investec Cash Investments