Rands and sense - CNBC Africa

Rands and sense


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Chris Bishop

The early days of 1994 were crazy and bloody in sub Saharan Africa. There was genocide in Rwanda and real stalking threat of an uprising. Right wing extremists tried to foment violence in Bophuthatswana; there were pre-election killings everywhere and a bomb at what is now OR Tambo Airport.

So it was with smiles and joy that most human beings around the world greeted the free and peaceful elections in South Africa.

On April 27, the sun came out and the queues went on forever. I watched from Harare in Zimbabwe – a country which had gone through the same hopeful ballot just over 14 years before.

“I want to go to South Africa now to earn the rand,” said my Zimbabwean colleague.

“Why,” I asked puzzled. I was new to the continent.

“Before it becomes like the Zimbabwe dollar.”

It was the display of one of the oldest clichés on the continent that one-man one-vote means economic decline. I have disagreed down the years, but my blood runs cold when I see the rand plumbing its current depths. It appears mining strikes, not democracy, are weighing the currency down like a ton of gold.

It is not all bad news.

The hard working exporters of South Africa are rubbing their hands as all of a sudden their customers around the world can afford to use hard currency to buy more of their products. It is often forgotten, in this resource obsessed economy, that South Africa does fairly well in exports selling every from machinery and cars to ostriches to Dubai. I always say you could build anything from a car to a printing press from scratch, in Johannesburg, because there are so many companies making so much.

The fall of the Rand is not such good news for inflation; the laptops, cell phones and Chinese-made lounge suits, that everyone seems not to be able to live without, are becoming more expensive by the day.  How Africa is going to wean itself off these goodies – or better still make them ourselves – remains to be seen.

But those people worrying that the rand is on a dive from which it will never return – take heart. Remember 2001 when the rand dipped even further to 20 to the pound and 11 to the dollar?

The doom and gloom merchants wrote South African off, even hinting at a conspiracy to sabotage the currency. Four years later it was at 5 rand to the dollar. So don’t panic, hold on to your Rand and sense.