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S. Africa's rand is falling, but no one knows why (racism suspected)
Miami Herald ^ | February 3, 2002 | JOHN MURPHY, Baltimore Sun

Posted on 02/04/2002 1:56:53 AM PST by Cincinatus' Wife

JOHANNESBURG, South Africa -- Renowned for its safaris, bustling black townships and new democracy, South Africa is now earning a new, somewhat dubious distinction as one of the cheapest countries in the world.

Consider this: Big Macs cost less here than any other place on the planet -- 82 cents. You can dine on a three-course steak dinner at one of Johannesburg's top restaurants for less than $10. A bottle of vintage wine (with a cork, not a twist top) will set you back as little as $3. A ticket to a movie is $2.50.

The prices are good news only to tourists. Among South Africans, you won't hear many celebrations because what's driving down prices is the weakening South African currency, the rand. The buying power of 43 million South Africans has diminished, pushing prices of even the most basic items out of reach of many.

Once one of the world's most-respected currencies, the rand is plummeting to its lowest levels in history against the dollar, the British pound and the euro. And no one can quite explain why.

In 1990, when Nelson Mandela was freed from prison, $1 bought 2.5 rand. A dozen years later, a dollar buys nearly 12 rand. Since September, the rand has experienced one of its sharpest declines, losing 40 percent of its value against the dollar. In December, it hit a new low of 13.85 to $1, before recovering to its current level.

BIG MAC INDEX

Based on The Economist magazine's annual Big Mac index, South Africa has one of the world's most undervalued currencies. The index compares the price of the McDonald's hamburger around the world as a measure of the buying power of domestic currencies.

``The falling rand, when looked at in the context of the Big Mac index, makes South Africa arguably one of the cheapest destinations in the world in pound and dollar terms,'' said Owen Leed, chief marketing director for South African Tourism, who is hoping the less-valuable rand will draw more visitors to South Africa this year.

There is more than cheap burgers to attract visitors. At Johannesburg's exclusive Butcher Shop & Grill, where diners must book a table a week in advance and no one under 14 is allowed, a three-course meal of snails, the most expensive steak on the menu and a Caesar salad is just $9.94. Wash it all down with a bottle of merlot for another $5.60.

Prices are so low that it is not uncommon to see tourists laugh when they receive a bill here. A Johannesburg newspaper recently featured a story about foreign tourists, shocked by the favorable exchange rate, leaving huge tips at bars and restaurants.

But for South Africans who are not waiters or bartenders, the sharp and steady decline of their money has been a disaster.

FOOD COSTS UP

Imported fuel and agricultural products are driving up transportation and food costs. One of the hardest-hit items is maize meal, a cornmeal that is cooked into a thick paste called pap, a staple in most black households. The price of the meal has shot up more than 100 percent in the past year, partly due to the rand's slide. The price of bread also has increased.

``We used to buy bread for one rand a loaf. Now it's almost four rand. We can't afford it,'' says Cyprian Mathole, 47, a day worker living in Johannesburg. He said he has given up smoking to help save money.

Middle-class South Africans planning trips abroad are discovering that they cannot afford to buy dollars, pounds or euros.

Under pressure to save the ailing currency, President Thabo Mbeki is launching a commission to investigate what is causing the rand's slide.

Pressure for an investigation came from the business community, afraid the weak rand would lead to higher interest rates and inflation. In a letter to Mbeki this month, the head of the South African Chamber of Business alleged that people and organizations had used ``dubious financial methods and instruments'' to manipulate the rand for their own profit.

Economists, however, remain puzzled about what caused the currency to lose value. The last time the rand nose-dived so steeply was in 1986, when South Africa was wracked by anti-apartheid protests and nearly defaulted on its debt repayments. In contrast, South Africa has been calm and stable in recent years. By all measures, the country is financially sound, analysts say.

NERVOUSNESS

Some economists blame the problem on nervousness after the terrorist attacks of Sept. 11, the debt crisis in Argentina, currency speculators and political and economic turmoil in neighboring Zimbabwe.

Many observers say they doubt the commission will root out a culprit because there might not be one.

``If there is anything to be uncovered, they will uncover it. But it's a big if,'' said Merton Dagut, a professor of economics at the University of the Witwatersrand in Johannesburg.

``I don't think that it's criminal. It may be immoral in some sense. I think the underlying problem is that the currency is weak because confidence in the country is weak,'' Dagut said. ``You don't need a commission of inquiry to discover that.''

RACISM

In an interview last week with the Financial Mail, South Africa's main business magazine, South Africa Treasury Director-General Maria Ramos suggested something else: that South Africa, like the continent, might still be dogged by racism.

``Nobody expects African countries to do the right thing, to do well,'' she said.

``Virtually every other emerging-market economy has bigger problems, but they are not subjected to the same skepticism.''


TOPICS: News/Current Events
KEYWORDS: africawatch
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To: nopardons
Your email box is full again
61 posted on 02/04/2002 7:17:20 PM PST by Gaas
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To: Wonder Warthog
Gee, bucko , we're working on getting FOUR out; but I, my husband, my daughter and son-in-law, don't own a company that can LEGITIMATLY bring in my son-in-law's sister, her husband, and their kids ... let alone the rest of his family and friends. Sooooo, since none of us qualify, to be able to be their sponser, money, for the lottery visa is about all that we can supply. Care to sponser them, loudmouth ?

Holland won't take them, and neither will the USA ! You don't have any idea what kind of hoops and red tpe their is, to get people here, BUCKO ! There are colonies , of South African ex-pats living in the . Most of them are here only temprarily, on working visas. There are a FEW lucky ones, who have managed to get permnent statis; however bucko , that isn't easy.

Since you claim to know this subject far better than I, bucko , how many family members , of YOURS are South African ? How many South Africans do you talk with on a daily / weekly basis ? How many South Africans have YOU actually gone through the process with, of getting a green card for ? Oh yes, and just how many grandchildren, descended from South African stock, are YOU going to be able to have , BUCKO ? I'll have as many grandkids, calling me grandma, as my daughter and her South African born & bred Husband produce, bucko !

Oh, and NO, my daughter did NOT marry her husband, in some " phoney " way, so that he could get his green card. My son-in-law had been here legitimatly / legally, for more than 2 years, when they met, and was in NO danger of " having " to get that kind of help. So don't even start with me ... bucko .

62 posted on 02/04/2002 7:36:46 PM PST by nopardons
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To: Gaas
Sorry ! I'll clean it out. You CAN always FREEPmail me.
63 posted on 02/04/2002 7:39:00 PM PST by nopardons
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To: Gaas
The situation is South Africa is so sad, but when massive death is black on black, the world doesn't care. I'm glad I don't live there, it's probably going to get worse.

Violent deaths from 1994 to 2000: And the SA Police reports that a total of 174,220 people died violent deaths, from crime-related violence, between 1994 and the year 2000.

64 posted on 02/04/2002 7:41:52 PM PST by GOPJ
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To: Gaas
Many thanks for showering some light AND actual facts on the matter, my dear. : - )
65 posted on 02/04/2002 7:45:46 PM PST by nopardons
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To: Cincinatus' Wife
with 21,000 murders in 2000 alone

There's the biggest problem. I think South Africa has about the population of California. I think that is 6000 more murders than the entire US.

Not to mention that racist Pol Pot fan next door in Zimbabwae. I'm no fan of Aparthied, but it looks like South Africa is failing badly.

I think there are two stable countries that are growing in Sub-Saharha Africa. I forgot which two, and they are cursed with some awful neighbors(One neighbors Rawanda).

66 posted on 02/04/2002 7:47:09 PM PST by Dan from Michigan
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To: hinckley buzzard
Happy to be invested in some drooy myself. Just worried about much ugliness to come.
67 posted on 02/04/2002 7:50:21 PM PST by getsoutalive
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To: Dan from Michigan
It's a horrible thing to see happen. Some intervention must be done sooner than later. We'll be called on later, after much more damage is done.

When I read the accounts from FReepers with family and friends trapped in SA it makes me see red that the LIBERAL media buries it's head in the sand.

68 posted on 02/04/2002 11:39:19 PM PST by Cincinatus' Wife
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To: GOPJ
South Africa is clawing it's way to the bottom, soon to join the bottom third of third world countries.

That's what communists do, they leave misery and death where ever they go.

69 posted on 02/04/2002 11:40:42 PM PST by Cincinatus' Wife
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To: Gaas
"Some of you might be in industries where you get in contact with many ex-South Africans, but spare a thought for the rest, like ALL of my family and friends that are still stuck back there."

Believe me, I do. And I hope that many more succeed in emigrating.

70 posted on 02/05/2002 2:38:40 AM PST by Wonder Warthog
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Comment #71 Removed by Moderator

To: HAWMWarrior
LIBERALS know but this is just collateral damage to them as they move toward creating the perfect world.
72 posted on 02/05/2002 8:55:52 AM PST by Cincinatus' Wife
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To: Wonder Warthog
Thank you .
73 posted on 02/05/2002 1:29:49 PM PST by nopardons
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To: Cincinatus' Wife
Whenever a black man is poor or hungry or miserable anywhere in the world, the white man is always at fault.
74 posted on 02/08/2002 11:58:13 PM PST by Michael2001
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To: Cincinatus' Wife
At Johannesburg's exclusive Butcher Shop & Grill, where diners must book a table a week in advance and no one under 14 is allowed, a three-course meal of snails, the most expensive steak on the menu and a Caesar salad is just $9.94.

You would have to pay me a lot more than $9.94 to eat a three course meal of snails.
75 posted on 02/08/2002 11:58:54 PM PST by Michael2001
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To: Wonder Warthog
Well, in South Africa, the problem IS racism---but the racism is "black-on-white" violence.

There is no such thing.. or at least that's what our media says
76 posted on 02/09/2002 12:02:46 AM PST by Michael2001
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To: Gaas
It must be very hard to try and live and raise a family as a white person in today's South Africa. My sympathy to your family. These people should be able to come here under political assylum. I have a feeling they would make good immigrants, who would assimilate here rather easily.
77 posted on 02/09/2002 12:13:35 AM PST by Michael2001
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To: Michael2001
Land Restoration in 3 Years
78 posted on 02/12/2002 5:53:21 AM PST by Cincinatus' Wife
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Comment #79 Removed by Moderator

Comment #80 Removed by Moderator


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