Issued by: North West Communication Service
PRESS RELEASE BY NORTH WEST MEC FOR FINANCE AND PROVINCIAL EXPENDITURE, MR MARTIN KUSCUS, 24 JANUARY 1996.
It appears that government has been silent on the issue of Sun Multi-Serve and similar get-rich-schemes. In fact, the opposite is true.
In November last year, the North West Consumer Council was very vocal in warning people about keeping aloof from such schemes. There were press statements, a campaign, phone-in radio shows as well as direct contact with the public at large.
Now, following discussions ON Tuesday, 23 January 1996, between President Nelson Mandela, his two deputy presidents, Provincial Premiers and the Provincial MECs for Finance, the North West Government wishes to clarify its position regarding get-rich-quick schemes in our province.
The Provincial Government notes with concern the proliferation of these schemes which promise returns to investors of 300 percent or more within short periods of time.
Basic arithmetic indicates that the longer term sustainability of such schemes is suspect in that they require ever increasing participation in order to be able to pay their clients.
It should be noted that the pyramid nature of these schemes distinguishes them from stokvels or from the megodisano concept, and that their operations fall outside the provisions applying to stokvels contained in the relevant Government gazette.
The Provincial Government is also concerned at the rising incidence of social instability associated with the operation of these schemes.
The North West Provincial Government remains committed to the economic empowerment of disadvantaged sectors of our society. In fact, we have established and financed two hawkers banks. We are also supportive of the concept of community banking and easier access to financing for poorer communities.
But we believe the current get-rich-quick schemes will benefit only a minority of investors at the expense of large numbers who participate at a later stage.
It is from this perspective that the North West Government wishes to warn the public against participation in these schemes, and to indicate its support for actions taken by the national government to regularise the situation.
It is our belief that government has a duty to apply the law in protecting the public and ensuring a financial environment in which sustained growth and development can take place.