Tough Economy: What You Can Do

Times are tough, and they're about to get a bit tougher. Economist Trinity Ncube shares a few tips on what you can do to survive these tough economic times.

05 August 2018

What was supposed to be a stronger economic growth year for South Africa, heralding a new dawn, has been tripped up by the greater financial burden imposed on consumers, set to limit economic growth this year. Lower disposable income will result in a negative effect on retail spending and harm household consumption expenditure. In our quest to reduce income inequality and poverty, it is in our best interest to ensure that our middle-income earner’s, who aspire to reach higher income levels, do not slide back into lower income thresholds and abject poverty.


Firstly, the government and employers need to get serious about operating along ethical lines. There is an unbelievable amount of waste that results from public and private sector scandals. We need to reward value-creating entities and workers to move our economy forward. The African region urgently needs great examples of socio-economic leaders.

Not everything bad that happens to personal finances is as a result of government and corporate failure, hence middle-income earners need to use their income wisely and increase earning capacity, through generating assets, skills and various sources of income. Among other spending habits, middle-income earners are trapped in living beyond their means. There is far more consumption than production. The emergence of hundreds of malls is evidence that South Africa has become a dumping ground for global producers of luxury and non-essential goods. The incomes just do not keep up with the introduction of goods. There is a great increase in technical skills amongst the middle to high-income earners, however there is still a great need to improve financial and economic literacy.

The banks are notorious for lending car loans instead of business and housing loans to the middle-income earners. Cars being liabilities are drowning people in debt. We need to probe these unclear lending habits. If one has been consistently paying rentals for more than a decade, how are they unable to secure a mortgage bond?

There are great misconceptions amongst the middle-income group about the differences between assets, liabilities, cash flow, income and wealth. We are embarking on a process to educate the South African public about financial skills to ensure we all make evidence-based decisions and increase the quality of lives. The wealthy negotiate interest rates with banks and payment terms that do not stress their cash flow positions. Something that our middle-income earners need to exercise.


One of the key insights is that wealthy South Africans have an eye on their finances. They often check their financial statements line by line and this is something the less wealthy seldom do. There are many avoidable charges contained in bank charges, insurance premiums and unauthorized debits. It all adds up and has a compounding effect. Property loans, a stagnant market and the land issue; the past quarter has seen a stagnation in the housing market. The economy is just so bad leading to credit rationing and cash flow shortages. Ironically, we see a short-term surge in car sales at a time when more middle-income earners desperately need to own and invest in property. With regards to insurance premiums/taxes, only about 30 % of South African drivers are insured. Of those that are insured, most of them are bleeding more premiums than what is actuarially fair.

The cost of data is an impediment to the 4th industrial revolution when most people need affordable access at decent speeds. South Africa has more expensive Internet costs than Kenya and Morocco, despite the economic status of the former. More jobs are created in the economy through Internet access; hence we are still to take advantage of this market. There are sizeable freelance and independent work opportunities on the global marketplace that are accessible via more and cheaper Internet access.

At Elevate, we give online advice on value creation, financial health, and economic literacy. We need a well-informed citizenry to build a more efficient economy. Households need to budget more deeply, in terms of transportation costs, food baskets, and general spending habits. Moreover, we should be pursuing additional avenues to diversify sources of income given the interconnectedness of the global market. There are massive economic opportunities to be harnessed within our current challenges; long-term solutions, such as the integration of commercial transport applications that enhance efficiencies of all modes of transport, as well as changes in energy sources.

Consumers need to reduce their debt levels to free up disposable income to meet the rising cost of living. They should also try to eliminate non-essential travel to cut costs. Increase the value of business and workforce. Increase earnings through diversifying income sources, one salary is insufficient. As an economy, we need to embrace socio-economic opportunities that come from Africa and the rest of the world.

Our culture of consumerism and instant gratification perpetuates our bad relationship with finances. The government, employers, and society are all culpable. There are plenty of resources among us to create immense value toward a more prosperous economy. Let us reward workers who create value and weed out the rent seeking and corrupt culture that is bound to bankrupt us all.

Written by: Trinity Ncube, Economist & CEO of Elevate

Trinity Ncube is a PhD Student in Economics and Entrepreneurship at the Edinburgh Business School and is also finalizing an MIT Micromasters in Data Science, Economics & Development policy. Trinity's work revolves around employment growth through sustainable entrepreneurship. Over the past decade, he has worked with over 3000 predominantly South African middle-income earners.