I was recently invited to participate in the ‘After 8 Debate’ on SAfm Radio. My co-guest was a representative of Treasury. I have always been someone who has remained positive about South Africa in the 21 years that I have lived here, however, this hour may have been the saddest I’ve ever experienced.
Caller after caller phoned to say that they believed the government was going to nationalise their pension, that they would steal their money and are intentionally giving us confusing messages. I was really taken aback by their consistent message: WE DON’T TRUST OUR GOVERNMENT – THEY STEAL OUR MONEY!
Veritas is a Latin word which means Truth. Truth and Trust go hand in hand. Both are important to us at Veritas and we spend a lot of time discussing them. A few years back, we were given a book called the Speed of Trust by Stephen Covey, which deepened our understanding of the subject. Covey says that trust can only exist if two elements are in place: 1) Competence – the ability to do what you say you are going to do; and 2) Character – the personality and values to back it up.
As part of the review of our culture at Veritas Wealth after our recent 10 year anniversary, we read another book called Start with Why by Simon Sinek. The book tackles why some people and organizations are more innovative, more profitable, command greater loyalties from customers and employees alike and are able to repeat their success over and over. Trust is imperative to a successful culture, whether you’re talking about a country or a company. Sinek describes when you leave your home and go to work, you trust that when you get back, your home will still be there. When you park your car on the street, it will be there when you get back.
Capitalism is also built on Trust. It is about having the confidence to put your money in the bank and knowing it won’t be stolen. It is the confidence to pay a premium and when you get sick or die, the company will pay out. It is the confidence to put your money in a retirement fund, knowing it will not be plundered by either the company or the government. Capitalism in its purest form needs South Africans and foreigners to invest in order to create, build … manufacture.
What foreign investors look at and assess before committing is the overall environment: is government likely to change something that could harm their business, e.g. property or land laws, employment equity issues, labour laws and currency. All of these issues unnerve investors and they will choose to either allocate their capital to other investments or to other countries. Closer to home, many South African companies seem to be looking to grow elsewhere in Africa or further afield. This represents a lack of trust in the country at some level. All investors – at home or abroad – have to be confident in the laws around them and the likely policies of the future. Without this TRUST no capitalist will allocate capital within SA.
We have much to be positive about though, and it’s what we at Veritas believe is a sound foundation for trust. Government (Treasury) in our view is 100% correct in what it is trying to achieve in retirement reform. It is forcing lower costs and increasing the amount you can save tax free. Treasury wants to stop people from shooting themselves in the foot by cashing in their pensions…it wants to save us from ourselves. What it isn’t doing is trying to steal people’s money or infringing on their rights by preventing access to their funds. Ultimately we believe SA should follow Australia and the US by making automatic enrolment into some retirement fund compulsory.
Whether we’re talking about nations, businesses or individuals, the bottom line is that we need to trust in order to move ahead.