SAVINGS ARE STORE OF WEALTH

Sir,

Savings are a key component of capital formation in any economy. Likewise, capital formation is necessary to stimulate long-term economic growth. Governments that adopt well-crafted saving policies stand to win in the long-run. This is because savings contribute to wealth creation and hence position a country’s economy for prosperity through its citizens’ personal solvency and financial independence, as well as through the investments that the citizens’ savings fund.

Example

Consider this easy example: if more households are able to save and invest their money, their investments can actually create more jobs or ensure that more people find jobs in the economy. In the long-run, more and more people benefit as they gain financial freedom while government benefits as the tax base and size of the economy increases.
For instance, national savings funds like the Eswatini National Provident Fund and the Public Service Pension Fund would have more people contributing to them thus generating more wealth to invest in the local economy. Savings are a store of wealth.

Coincidence

It is not a coincidence that private and public sector savings funds have managed to play a central role in the various investments that we have all witnessed in the country; it has simply been through household savings! Eswatini certainly needs more active and diverse capital markets and making sure that households have more disposable income to save would be the starting point. It seems government is increasingly forgetting that everything it does, all the money it collects and spends is inherently about households.Gouging more from households in the form of increased taxes and user-fees for largely inefficient government services does nothing for creating wealth to finance the country’s development aspirations. Instead, when government becomes fixated on squeezing households to fund its programmes and capital projects, this takes away the ability for low and middle income households to accumulate assets that can allow them to survive financial crises and sustain a comfortable living into retirement.

In the absence of household savings that can improve ownership of a home, business, etc, the larger Eswatini society may end up paying more in crime-related costs and even higher taxes to sustain government programmes due to a shrinking economy. If government could just remember that its most important stakeholders are households, and make sure that households are taken care of by having more money in their pockets with more room to spend and save, then perhaps our economy in Eswatini could actually turn for the better.

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