Cataclysmic tempest of the rand: SA’s eroding confidence

In the tumultuous landscape of global currencies, the rand bears testimony to volatility and uncertainty. Its journey has been marked by highs and lows, reflecting economic forces and also the underlying challenges SA faces.

As the rand’s value ebbs and flows, it symbolises a deeper narrative — a gradual erosion of confidence in SA’s ability to transcend the politics of power, greed and corruption to embrace a future of duty, service, and prosperity for all its people.

As we all stare economic hardship and possible collapse in the face, I dare not say in the words of Lord Acton: “Power tends to corrupt, and absolute power corrupts absolutely. [And that] great men are almost always bad men ...”

The rand’s rollercoaster ride mirrors the dwindling faith in our political leadership and governance. Political mishaps, mismanagement of state assets and resources, and incessant news of corruption scandals have weighed heavily on the credibility of the sovereign and the rand.

Once seen as a symbol of stability, the rand has become susceptible to external factors, market sentiment, and most importantly, the erosion of trust.

We now have a currency teetering on the edge, reacting sharply to every twist and turn in the political and macroeconomic landscape.

It is tempting to argue that we are not alone in experiencing the damaging effects of the “power corrupts” syndrome.

Many emerging markets have faced similar challenges, witnessing economic collapse and enduring hardships as a result. The parallels are striking. We can pick and choose examples from other countries to see that unchecked power, political patronage and pervasive corruption in the system leads to dire consequences and immense suffering for the people. Brazil, once heralded as a rising economic powerhouse, grappled with massive corruption scandals that unravelled its progress under President Dilma Rousseff from 2014 to 2016. Venezuela’s descent into economic ruin to date is also a reminder of the disastrous consequences of unchecked power and corruption leading to hyperinflation and economic crisis.

But every cloud has a silver lining. The rand’s volatile journey is a cautionary tale to learn from the mistakes of others. It will not be cured through central bank intervention. Reserve Bank governor Lesetja Kganyago was at pains to explain that the Bank paid dearly for its past mistake of intervening in the currency market under Chris Stals.

In 1998, the Bank ceased its policy of intervening in the foreign exchange market to influence the level of the exchange rate. Instead, it committed to building up the country’s international reserves to a net positive position to assure international investors of our country’s ability to withstand economic shocks. No central banker can stand against the market to successfully defend its currency.

It is imperative for the country to tackle the root causes of the erosion of confidence headon and take decisive action to restore faith in governance. That process begins with citizens taking responsibility for their future.

Transparency, accountability, and ethical leadership must become our guiding principles as a nation. We must demand these principles of ourselves and those entrusted to positions of leadership. We can successfully turn our fortunes around by tackling corruption, instituting robust checks and balances, and prioritising the welfare of the nation over personal gain.

The challenges facing the rand may seem insurmountable, and its tempestuous nature may seem cataclysmic, but to the optimist it is a call to action. A call to cleanse our beloved country of corruption, duplicity, and downright betrayal of the people’s trust.

It is an opportunity to forge a new path towards inclusive growth, where duty, service, and prosperity for all take centre stage. Only then can the tempest subside, giving way to a brighter future — one where the rand’s value reflects our resilience, stability and commitment as a nation.

IT IS IMPERATIVE FOR THE COUNTRY TO TACKLE THE ROOT CAUSES OF THE EROSION OF CONFIDENCE HEAD-ON