Wednesday, November 19

My favourite South African economist, when I think of economists at all, is Iraj Abedian. An Iranian by birth he became a South African citizen in the 90s. Recently he has been chosen as South Africa's top economist by the Association of Black Securities and Investment Professionals (Absip) (With the usual speculation on whether hes black in the first place, but I think everyone is now agreed that your black so long as you're not white).

A view of his that has interested me is the fact that even though South Africans have very low levels of personal savings, we do have very high levels of personal insurance. That we do not need to save as much as people in other countries, because we are covered for all major disasters. Medical, Car, Life and Household insurance constitute a large part of the savings of this country. As prove of this he notes that no large public or private venture has ever failed because of a lack of investment funds. That the large financial institutions, which invest the insurance funds, have been able to provide finance for all comers.

This can certainly be seen as a larger tax burden however. People in western countries do not need as much insurance, because there are better basic levels of medical care, the roads are safer and crime less of a personal everyday problem.

It does not take a large stretch of the imagination to equate the cell phone networks I use and the security company I employ as part of this larger tax burden. Cell phone networks aren't free anywhere, but they certainly form part of the infrastructure of any country. Cell phones have also become almost ubiquitous in SA. with 1 in 4 South Africans owning a cell phone (13 million users at the beginning of this year). If you think that half of the population is under 18 you start to see how essential to SA life it has become, especially in the townships.

The growth of private security companies has also been phenomenal, and is set to expand. The use of private tracking and recovery companies for stolen cars and trucks has also become so common that the two major companies are offering very attractive package deals, something only possible in a mass market. The use of private detectives in serious criminal cases also look to be something that is to experience massive growth in the near future.

This for me is the dichotomy of the new South African economy, the difference between the first world South Africa and the third world South Africa, and the reason that Trevor Manual is expected to lower taxes once again next year.

As the government focuses on pulling the 'whole' of South Africa up by its bootstraps, the first world South Africa has taken upon itself the cost and responsibility of much that would be a governments responsibility in other countries.


Post a Comment

<< Home