Guest Contributor | Jul 25, 2017 | 0
My own pet campaign – Get rid of the Rand
Perhaps the biggest issue facing the entire southern Africa at the end of 2015, is the unspeakable embarrassment that now occupies the office of the President in South Africa. Granted, there are several other leaders in the bottom part of the continent who also rank very high on the embarrassment ladder, but they are either inconspicuous or of no consequence.
The leadership in South Africa is unfortunately the one fundamental issue we can not ignore. Its decisions and its actions determine the fortunes of over 100 million people spread over about 12 countries. Furthermore, the economies of all the countries in the region are linked to a greater or lesser degree to the quality of governance that springs from South Africa. For some of the more unfortunate ones like Namibia, the link is very strong, almost umbilical, and we are at the mercies of the latest antics of the world’s number one political clown.
When Zimbabwe goes up in smoke, nobody really cares. We find it inconvenient to have to accommodate a few thousand economic “refugees” but ultimately we enjoy a rather positive spin-off from this quietly percolating migration – we get some of the best brains from Zimbabwe and in many instances, these displaced people have found a welcome home in Namibia where they participate in the economy, basically to the benefit of all the locals.
If the Angolan government robs its own citizens, who cares? Angola is a large country and it will take many decades before even the most basic infrastructure is in place over a statistically large portion of its land area. And while the proceeds of petrodollars mostly leave the country, when that source of insider funding diminishes, it is only the top 0.1% that is affected. For the vast majority, Angola is still stuck in the stone age, inconsequential on the world stage, except for its oil.
But when a stooge runs South Africa, the consequences are real, hard and hit far and wide. Whether we want to acknowledge it or not, the whole region is tied to the fortunes of both the SA economy and its currency, the Rand. I have found it quite easy to make deals in Rand in Angola, Zambia, Malawi and Mozambique. In Botswana and Zimbabwe, it goes without even asking. Legal tender or not, the Rand enjoys a circulation and an acceptance far beyond the South African borders.
It is not a matter of opinion how well the South African currency is managed, the empirical facts are readily available to show how it has been ground into the dust. It has lost just over 32% in value since the same time a year ago.
Usually, when one consider currency metrics and the merits of devaluation, any weakening of a currency must be accompanies by a concomitant growth in exports, if only to maintain a neutral position on the balance of payments. This has not happened and the much-punted growth in exports, anticipated by many, can not exactly be described as an explosion. While vehicle exports may be up by just under 6% over the year, it still leaves a value shortfall of just under 27%. In practical terms, it means the average Rand-dependant SADC resident, is about one quarter less well-off than a year ago. This is a disguised form of state robbery, and it can be debated which one of the two delinquent governments, South Africa or Angola, is causing its citizens the biggest harm.
For some time, I have propagated a neutral, digital, regional currency. Something like a southern African bitcoin, but which can be used as exchange to effect any deal between any company, party, institution or government based in any of the twelve southern African countries, and perhaps also in Madagascar. The type of agreement required to get such a currency workable, does not need to be hampered by the fruitless, decades-long discussions which have become the new framework for regional integration. This currency must not be controlled by any government, only by an exchange and it must be available to every single citizen as a digital currency.
Its trust must be based in the market and not in a central bank. Most important, it must be a currency solely for the purpose of transacting where the other currencies are inadequate, i.e. across jurisdictions and outside the ambit of any controlling government. The moment such a currency becomes available, I suspect its uptake will be stellar.
I have much hope for the latest developments in mobile payment systems and the progress I observe on the ground. When such a currency is operational with a sufficient liquidity base, then it should be a simple matter to persuade clearing houses in other parts of the world, to exchange this Africa bitcoin with something harder.
As soon as we can escape the Rand’s stranglehold on our local (regional) economies, then what their president does, also becomes of no importance.