Friday, April 29, 2016

The Mall Of Africa : One Mall To End Them All


The smartest minds in investment, property and forward planning have just sat down at a polished mahogany boardroom table. The discussion centers around the future of the South African economy, the state of our local currency, and the looming recession. Concern for investors and shareholders is deeply etched into every wrinkle on white capitalist faces. Business and residential foreclosure is at an all-time high. Bad debt is spiraling out of control and household savings is almost non-existent.
Suddenly a voice in the room cuts the doom and gloom with the surety and confidence of a Zuma ‘Finance Minister’ selection.
“What Gauteng and this country really need right now, is a mammoth shopping mall!”
Instantaneous cheer and applause and the popping of champagne as another white elephant is expected to come marauding through Africa.
The idea for a Mall Of Africa has just been born.

With a population of 55 million at last count, South Africa is ranked 6th in the world for most number of shopping centers. While Canada may be 5th on that list with a population of 35 million, let us not forget that the Canadians don’t have half their population living below the poverty line. According to a 2015 report, 27 million South Africans live on an average of R779 per month . Poverty Report
Put into perspective, that’s less than the average price of a t-shirt from Armani Exchange at The Mall Of Africa.

The fact that investment in the country is sorely needed is unquestionable.
The question I pose regards our social responsibility.
We have a booming middle-class who have more exposure to ways of spending disposable income than they do to ways of investing that disposable income. Fancy cars and trendy brand-name clothes compete with retirement plans and long-term investments, and the latter is coming up short. Terribly short.

One only needs to view the auction pages every week to see the number of cars and homes being sold at the drop of a hammer. Simply because a middle-income earner with a promotion or new high-paying job was enticed to compete with his neighbor for the shinier German car or spankier home, without being educated about looking after his or her personal finances. The auction houses are doing brisk trade. Banks are doing brisk trade. Unsecured loan companies are doing brisk trade. Unscrupulous loan sharks preying on the desperate are doing brisk trade.
The guy trying to make ends meet while deciding between his Sandton bond, his BMW installment, his Versace store account, or his case of 2-minute Noodles bought on his Credit Card as a priority… that guy isn’t doing anything briskly accept dodging phone-calls.

What then is our social responsibility?
Maybe we should start with educating ourselves about the difference between “Wants” and “Needs.”
As Walter Slezak once said, “We spend money we don’t have, on things we don’t need, to impress people we don’t like.” All in an effort to keep up with the Joneses, who quite frankly are trying to keep up with someone more in debt than they are.

Where do we start then?
We start by embracing and promoting a culture of saving.
Here’s a scary statistic to show just how bad South Africans are at saving:
Our BRIC’s partners have saving ratio’s ranging from 5% for Brazil to 30% for China (that’s the percentage of household saving compared to income). How do we compare? Try -2.3% for size. Yes, that’s negative 2.3%! Household Saving Crisis
We suck so badly at saving, we’re practically borrowing money when we do try to save!

This financial education needs to start at primary school level. We need to start teaching our early generation of learners the importance of money, and the importance of saving money. We need to have programs in place throughout our schooling system that focus purely on fiscal management. We need to have more, many many more, courses for our middle-income earners and adults and pretty much everyone earning a salary. Courses that focus on savings and investments. Courses that teach the difference between Wants and Needs. Courses that teach about the perils of Impulse Buying, of Credit and of Interest.

Failure to do this ultimately leads us down a slippery slope of more malls, more borrowing, more debt, more poverty, and more social crisis.

The smartest minds in investment, property and forward planning have just sat down at a polished mahogany boardroom table. The discussion centers around the future of the South African economy, the state of our local currency, and the looming recession.
Suddenly a voice in the room suggests an investment in more public schools better equipped at teaching finance and economics to the youth.
Instantaneous cheer and applause and the popping of champagne as another inspirational project is expected to bring prosperity through Africa.