Spend Local and Spread The Love
“Every time you spend your money in a small business you support a job. Every time you spend your money in a big business you make one of the rich, richer.”
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Spend local and spread the love
As we enter a short week with a holiday weekend ahead, it’s good time to remind ourselves of the power of our money. Perhaps if more of us understood how one Rand can create wealth for many, we would spend it very differently.
One of the reasons that South Africa has such high poverty, high unemployment and low growth is because of the dominance of a few mega businesses (you know them – the businesses that you find at the malls, such as Pick n Pay, KFC, Foschini, etc) where the vast majority of us spend our money.
In basic terms, wealth creation works like this – if I spend R10 at the local bakery, and the baker keeps R1 profit and spends R9 at the local butcher who keeps R1 profit, who spends that R8 at the local tailor, who spends R7 at the school, who spends R6 at the local stationery store, who spends R5 at the farmer’s market, etc. That same R10 can circulate ten times over. For those with a head for numbers, with a 10% profit retention that R10 can circulate a staggering 63 times before it is depleted! The longer money stays in the system the more local wealth is created.
What usually happens is this: I have R10. I spend it all at the local Checkers where perhaps R2 of my money goes to pay the local shop wages, R7 of it goes to national suppliers elsewhere in the country and R1 goes to shareholders at the JSE. Other than the really tiny contribution to local store wages, none of my R10 circulates in the local economy and there is no secondary wealth creation.
The simple act of buying from small independent businesses rather than from a mall, and encouraging trade between local businesses has the power to build stronger, local economic communities, generate jobs, and build wealth for ten times more people than if we spend at a large retailer or global franchise. For more on the impact of shopping malls, read this article.
Makes you think, doesn’t it?
So this week for my local weekend getaway, I have committed to spreading the love by leaving Cape Town with an empty boot and doing all my grocery shopping in the small town of Veldrif so that as much of my money goes to a local small business where it can circulate to create wealth.
Now that you know the power of your Rand, will you change the way you spend it?
With kind regards
Catherine Wijnberg
