The last time the South African Rand broke the “psychological barrier” of 10 Dollars to the Rand was four years ago. With Zuma’s speech yesterday about the current striking action, the president did not manage to establish confidence amongst South Africans and international investors.
Looking at other major currencies like the Euro, the exchange rate is looking equally bleak for those with Rands in their pockets. South Africa has last seen a 13.5 Euro/Rand exchange rate in 2009.
There is no doubt: A low Rand/Dollar exchange rate and inflation obviously have a negative effect on a country’s economy: Increased cost of living, particularly petrol prices and food prices are only some of the economic side effects of inflation. Anything imported from overseas is suddenly more expensive.
However, is there reason to believe, that things will turn around in South Africa? Is this just a particularly good time for foreigners to invest in houses, cars and on a larger scale set up businesses with money brought in from overseas?
Well, according to Ernst & Young’s Africa Attractiveness Survey things are looking bright in general at least. The report published earlier this month, combines an analysis, which has been conducted over the past five years and combined with a current 2013 survey directed at 500 global business leaders. The survey questions were directed towards the potential of South Africa as a potential country for investment.
The outcome of the Africa survey was rather encouraging. Not surprising for many expats living in South Africa, South Africa came first scoring 41% of votes. 61% voted for South Africa within the top three choices of African countries.
In the popularity survey South Africa was followed by Marocco, Nigeria, Egypt and Kenya.
“The primary reasons for South Africa’s popularity appear to be its relatively well developed infrastructure, a stable political environment and a relatively large domestic market,” Ernst & Young said in a statement.
The South African president, Jacob Zuma in his current speech addressing strikes, poverty and the drop in Rand, makes the slow growth responsible for the continuous unemployment and poverty problem in South Africa.
The The latest Ernst & Young study draws a happier picture.
The South Africa attractiveness report reveals a growth in investments especially from emerging markets such as China, India and Russia. This was published by Business Day Live on the 6. May this year.
On a positive note, South Africa’s Department of Trade and Industry’s Director General Lionel October, revealed at the beginning of this month that the Chinese government was looking at investment opportunities in South Africa for retail and state owned organisations across several South African provinces worth 5 Billion Rand.
Russia is, surprisingly currently the biggest market for South Africa grown citrus fruits. 12% of citrus fruits are currently exported to Russia. Talks with the Russian Department of Trade and Industry revealed that import of citrus fruits, juices and long-shelve food products will be increased in the near future.
So looking at the dropping Rand and trying to find a silver lining from a positive perspective of an expat, who has settled in South Africa many years ago, I can say that quite a few of my friends are waiting out the currency crisis by investing in the country.
Quite a few expats currently living in South Africa and originally from countries like Germany and the UK, use the exceptionally low Rand to bring in money from overseas for major investments, like properties and even businesses. Many of us would not be living in this emerging economy if we were not believing in South Africa’s future. Having said that, we do keep an eye on the Rand, but will not start shaking every time the Rand takes a dip against other currencies.
Should you have any questions with regard to permit and visa application or immigration to South Africa in general, feel free to contact Initiate Immigration.
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Michaela heads up the marketing department for Initiate Holdings. An expat herself she understands the unique challenges immigrants are facing in South Africa.
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