Let’s Shape the Future of South Africa
I am an optimist. I refuse to accept that the status quo is the best it can be and I dream of a better future for South Africans.
South Africa is a country with a complicated history. Today, we still face many challenges. While the origins of some of these challenges may be in our Apartheid history, more than 25 years have passed since our first democratic election and our government needs to stop playing the victim and start taking responsibility. It is time to acknowledge that our unemployment, crime, and economic stagnation are a result of government failures.
I am an optimist. I refuse to accept that the status quo is the best it can be and I dream of a better future for South Africans.
How can we build this better future for South Africans?
Many actions can and should be taken. Let’s focus on two categories— job creation and wealth accumulation.
Job creation in South Africa is a multifaceted problem. We can generate thousands of high-paying jobs by offering specialized courses to every graduate of high school.
These 6 to 12 month long courses can be paid for using an income-sharing agreement (ISA) and could focus on in-demand, tech jobs to prepare students for careers in web development, data science, machine learning, blockchain, design, software engineering, and other related fields.
An income-sharing agreement (ISA) is a contract that means that the student only starts paying for the course once they have a job in their industry and are earning above a certain amount. This means that a student can complete the course with no upfront payment. Once the student completes the course and finds a job in the industry that pays above a certain amount, they can begin monthly payments for the course.
An ISA is key because it aligns incentives. It means that the organizers of the course only get paid once their students are employed which forces everyone to work towards the same goal — job creation!
Courses like the ones described above would not only allow graduates to find jobs in South Africa, they could also empower graduates with the skills necessary to start their own businesses. The economic benefits for individuals and the country could be tremendous.
Additionally, the world has pivoted sharply towards remote work in the last 2 years and this trend opens many opportunities for South Africans. More and more companies are hiring remote employees who live in countries around the world and finding relatively cheap, highly-skilled employees in South Africa could be very attractive to them.
Wealth accumulation is very important. It is very difficult, if not impossible, to build wealth by simply earning a salary and not owning equity (a part) in a business. If you only earn a salary then your maximum earning potential is limited to what you can do in the finite hours of every day. However, if you own a piece of a business, it means that you can benefit from the combined work of the employees which can be exponentially more valuable than the work of one person by themself. This is one example of leverage. Additionally, many South Africans are stuck in a nasty loop of working as hard as possible to help support their parents and/or grandparents while raising and supporting their own families. This dynamic prevents people from accumulating wealth and building generational wealth.
So what is a solution?
All South Africans can open a Tax Free Savings Account (TFSA). This account allows a South African to invest R36 000 each year until they reach the lifetime limit of R500 000. You can deposit smaller amounts and you aren’t required to deposit each year, but those are the upper limits — R36 000 per year and R500 000 total. This account is unique because it is tax-free. You pay no taxes when you take the money out.
To create wealth for South Africans, the government can create a special TFSA for every South African. When a baby is born, they could make a once-off deposit and investment of R36 000 into this special TFSA. This money can be locked until the person turns 60, at which time the person can make monthly withdrawals. A person should also be able to contribute money to this account before they turn 60. This will open up the world of investing for many people and create a meaningful way for them to invest and build wealth.
Assuming 7% to 8% percent growth per year of the investment, any person in South Africa will be able to make monthly withdrawals of between R10 000 and R30 000 for a minimum of 20 years after they turn 60. The life expectancy in South Africa is around 65 and with the ability to control the withdrawal amounts, this fund could replace our existing pension infrastructure and people will have enough money to live on for the rest of their lives. There is also a good chance that many people will leave generous inheritances for their descendants. This will create generational wealth for every South African.
Unemployment and wealth accumulation aren’t the only two problems in South Africa and these aren’t the only two solutions. However, these two ideas would stimulate the economy, create jobs and improve the lives of so many South Africans. Empowering people with real-world skills and enabling people to invest and build generational wealth enable people to thrive instead of only survive.
We must dream big.
We can build a great future for everyone.
