The private sector tax that is draining South Africans’ money

Investec’s head of Clarity, Tinus Rautenbach, described online gambling as a “private sector tax” that sucks money out of the system and worsens savings and investment rates in South Africa.

In an interview with Daily Investor, Rautenbach said tighter regulations are needed to make it more difficult for foreign digital gambling sites to operate.

In light of July being Savings Month, Rautenbach explained that, for many South Africans, the old advice of “just save more” has not stood the test of time.

While it remains important to save for emergencies and short-term goals, he said modern-day savers must understand the time value of money and how inflation erodes its value.

Now, to achieve goals such as a comfortable retirement or funding a child’s education, money needs to be invested to generate returns that meaningfully outpace inflation.

“It’s very simple advice, but it’s still the same: put money into a normal savings type product that’s liquid and fairly stable,” Rautenbach said.

This is money that savers may need for a rainy day or to work towards affording a particular goal. It is a pool of money that they need quick and easy access to.

“The moment you go above that level, you want to go further up the risk curve a little bit and go towards investing,” he said. 

By investing over the long term, South Africans can earn an incremental return above inflation and avoid the erosion of the value of their money over time.

“If you just say to someone, ‘Okay, the only thing you need to do in life is put money in your savings account,’ unfortunately, that isn’t good enough,” Rautenbach said.

“Over the long term, you just won’t have the growth that you need or the ability for that money to outgrow inflation meaningfully.”

Luckily, Rautenbach said it is also easier than ever for South Africans to invest now compared to a decade ago.

Previously, if South Africans wanted to invest, they had to go into a physical bank branch to deposit money.

“No, I can go into a savings product that pays me a return immediately. I can just swipe, and it’s there,” he said.

However, while access to investment products is easier than ever, the ability to put money away every month has become more difficult as the cost of living rises and spending becomes easier.

Draining South Africans’ money

Rautenbach acknowledged that another reason why the “just save more” advice falls flat is that many South Africans simply cannot afford to do so.

South Africa’s household savings rate sat at -1.4% at the end of 2025, as many consumers are spending more than they earn and have little room to build financial buffers.

Rautenbach explained that South Africa’s low savings rate is not due to a lack of intent, but that the gap is driven by the reality of the high cost of living.

In addition, considering South Africa’s high unemployment rate, many households have several dependents who rely on a single source of income.

“Living is expensive. We all would love to have good habits, and we’d love to have everyone save the first 12% of their paycheck,” he said.

“I don’t think it’s intent. It’s just the reality of the cost of living and then dependence, specifically within the South African context.”

However, for those South Africans who do have disposable income, Rautenbach said there are other “drains” that take this money out of the system.

In particular, he mentioned “private sector taxes”, specifically sports betting and other online gambling activities.

“All of that sucks more money out of the system that you could have invested for the long term, because you were going for a get-rich-quick scheme,” he said.

“So, there’s this drain on income, both from just the cost of living, but also there are some betting sites – it’s a scourge right now.”

Rautenbach said the belief that betting is an easy way to make money quickly is leading many South Africans to spend money they can’t afford to replace.

The solution, Rautenbach said, is to not only increase financial education, but also for legislation and regulations surrounding online gambling to become stricter.

“South Africa needs to make it harder for people to spend money on betting apps and sites with the correct controls,” he said.

He said the irony is that physical gambling sites, like casinos, have built-in friction, as people need to go to the locations in order to gamble.

Now, South Africans can gamble from the comfort of their homes, at work, and anywhere else where they have internet access.

“It’s not so simple, but for a start, get anyone who advertises doing any betting in South Africa to be registered, and that registration must come at a high cost,” he said. “There is a whole lot of regulation that needs to be put in place.”