close menu

Can the Rand make a comeback? Or is it too late?

by Andrew Rissik | Oct 20, 2017
  • The Rand is in a state, and I think it will continue to devalue as long as the chaotic economic policy framework and populist rhetoric in the Republic fails to attract long-term “sticky” capital. This decline may not be immediately apparent, but in the run up to the ANC’s elective conference in December, there are many potential pitfalls for the troubled local currency.
    rand spiral blog

    More out than in

    South Africans have invested more offshore than foreigners have invested into South Africa this year. This is frightening, as it has an extremely negative impact on the local currency. We need to consider both short-term sentiment and longer-term fundamentals when looking at the downward trend in the Rand.

    According to RW Johnson, author of “How Long Will South Africa Survive?”, there are various structural issues that need to be addressed and fixed in order to reverse the fundamental downward drivers. These are:

    • The liberalisation of the labour force
    • Education on a primary and secondary level
    • A huge decrease in the number of civil servants
    • The allowing of inward skilled migration
    • Stopping state-owned enterprises from losing money

    What we all know for certain is that the current government will do none of the above. This will push South Africa towards further downgrades and ultimately an IMF bailout. The Finance Minister recently announced considerations to use state pension fund money to save the ailing SOE’s. Need I say more?

    The next trigger point for South Africa is going to be the ANC National Conference in December this year. Jacob Zuma stepping down will be seen as a positive and markets may well improve after Christmas. This short-term sentimental uptick may be short-lived, depending on how Zuma’s successor deals with his populist rhetoric.

    How our next president handles things like the National Health Insurance scheme, flailing state-owned enterprises and a civil service that is set to increase in size by 5% next year will be vital for the Republic. If these issues are not addressed, you can bet on more skilled South Africans continuing to emigrate.

    Can we turn this ship around?

    So where to now for South Africa? In all likelihood, we will bumble along until the elections in 2019. If we need a bailout, the harsh reality is that the IMF is the only option, as our new-found friends in BRICS do not have the kind of funding mechanisms that would allow us to be bailed out effectively. With an IMF bailout, severe conditions are applied and they will most likely aggressively focus on the structural issues that I mentioned earlier.

    Take away all the political noise and what it boils down to is more education and job creation. This could be the turning point for South Africa – perhaps we can start to climb out of the hole that we are fast falling into.

    Keep in mind that this has been the quietest time since 2011 regarding outflows from South Africa. Pessimistically, we could say that all the money that can move, has moved offshore. Another way of looking at it is that there are some very wealthy South African businesses and private individuals who are hoping that the country can turn itself around and become a premier investment destination once more.

    Need advice on what to do with your Rands? Send a mail to, or call our forex team on +27 (0) 21 657 2153.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

    • Cross-border payments
      How to make cross-border business payments and collections simpler, cheaper and faster
      Aug 23, 2019  |  by Calvin Matsaure
    • Boris Johnson portrait
      How Boris Johnson’s election has caused trouble for the Pound
      Jul 31, 2019  |  by Sable International
    • Arrow and man sliding down
      Why the Rand is tanking
      Jun 10, 2019  |  by Sable International
    • Currency Solved
      Introducing a better way to pay and get paid: Currency Solved
      May 17, 2019  |  by Anton Van Teylingen
    • forex partner program
      Earn passive income with our Partner Programme
      May 09, 2019  |  by Anton Van Teylingen
    • Businessman-balancing
      Brexit: How to protect against currency fluctuations
      Mar 13, 2019  |  by Anton Van Teylingen
    • Rand-pound-sterling
      Britain - a good time to invest? Make use of your 2018 investment allowance
      Nov 14, 2018  |  by Andrew Rissik
    • trust-handshake
      But, do you know your forex broker’s name?
      Oct 10, 2018  |  by Saskia Johnston
    • risk-ahead-sign
      Increase your business’s bottom line with currency hedging
      Jun 06, 2018  |  by Calvin Matsaure
    • dollar-euro-birdcage
      Is your forex broker saving or costing you money?
      May 15, 2018  |  by Tim Smith

    South Africa

    Cape Town

    Regent Square
    Doncaster Road
    Kenilworth 7708 +27 (0) 21 657 2120


    25 Richefond Circle
    Umhlanga 4320 +27 (0) 31 536 8843

    United Kingdom


    One Croydon
    12-16 Addiscombe Road
    Croydon CR0 0XT +44 (0) 20 7759 7514



    9 Yarra Street
    South Yarra
    VIC 3141 +613 (0) 8651 4500

    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services Licence issued by ASIC to deal in foreign exchange (1st Contact Group - AFS Licence number 335 126).

    We use cookies to provide the best website experience for you. Using this website means that you agree to this. How we use cookies.