The Fall of the Rand: An Eye Opener for Africa

rand

The start of the year 2016 was welcomed with jubilation and fanfare with all and sundry. The dawn of the new year gave hope to dreams that were shattered. South Africans were in need of a business boost for the falling rand. Instead, they faced a rise in fuel prices and the weakening of gold on a global scale. The fall of one of the African economic giant currencies was a shock to many.

South Africa is regarded as one of the economic giants in the African economy and the only economic powerhouse in Sub-Saharan Africa. The region experienced a shock in the way the exchange rate was falling at 16 rands per U.S. dollar. A look at a bit of background, one is reminded about the immigration of people from across the continent, seeking greener pastures, in the country where all is perceived as gold. People as far as Nigeria, Cameroon, Ghana, Malawi, and some neighbors, such as Zimbabwe, Mozambique, and Zambia have flocked down for businesses, jobs, education, and healthcare. All this migration adds some strain on the economy and the policy makers, if not planned well.

In addition, the country was loggerheaded with the global powerhouse, United States of America, over agricultural products sell and supply. This is the tip of the iceberg, businesses and investors alike were in shock.

As if this was not enough, the South African leader made a blunder in appointing and dismissing three ministers of finance in a space of two days. The results were overwhelming to the economy, which is already struggling. President Jacob Zuma in the political field is being encouraged by the opposition to step down in the face of an economic turmoil. The DA, EFF, and unions are pushing for a vote of no confidence for the president, in the face of unemployment, housing problems, electricity shortages, and drought ravaging most parts of the country.

In all this chaos, one goes to the issue at hand, which is the falling rand. Most of the African countries rely on South Africa to export their raw materials and human resources, in return for finances and services. For instance, major telephone networks, such as Econet, MTN, and Vodacom are all based in South Africa, not in their parent countries. Food processing giants, mining corporations, business and manufacturing conglomerates are all relying on the rand for survival. The most important question is, what will happen if the currency continues on the same downward path? The intelligent guess is that it always leads to a disaster.

In the face of the above-highlighted problems bedevilling South Africa. One of the neighboring countries must open up and do something to save the unknown future. The steps, which most African countries must take, include investing in their own human resources, research and development, infrastructure development, processing of their raw materials into finished products, devising an investor friendly policy, and investment in education and its populace.

Many of the African countries are lacking in policy matters and the implementation thereof. This has resulted in the dependence of South Africa.

By Samuel Charandura

Sources:

The Telegraph: FTSE 100 closes lower as oil price rally vanishes
Biz Today: Gordhan promises: We’ll use Rand Crisis to reform SA, take tough decisions
World Bank: South Africa
Featured Image Courtesy of Paul Saad’s Flickr Page – Creative Commons License

One Response to "The Fall of the Rand: An Eye Opener for Africa"

  1. Shepherd Mutsvara   January 26, 2016 at 3:14 pm

    Good piece,Sam! Enjoyed reading something close to home

    Reply

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