…analyst says de-link not an option2018RSVP
By Hilary Mare
NAMIBIA will be directly impacted by any shocks to the Rand that may come if South Africa goes ahead with its planned land expropriation without compensation, analysts have confirmed.
South Africa’s President, Cyril Ramaphosa earlier this month said that the ruling African National Congress (ANC) will push ahead with plans for the expropriation of land from white farmers, without compensation.
Ramaphosa said the ANC will try to amend the Constitution with the support of the left-wing Economic Freedom Fighters.
Speaking to Confidente this week, Claudia Boamah, an economic analyst at Capricorn Asset Management said that Namibia is directly impacted and there is no escaping it.
Boamah added that whilst these implications are real, delinking the Namibian dollar to Rand is not an option.
“The idea of de-linking our currency from theirs becomes appealing in times like these, when the ZAR is not doing so well. We have to appreciate that almost all currencies experience noticeable volatility in the short-run. By the time the process of establishing a currency independent of the ZAR is complete, it may very well be that it would have recovered. Would we then attempt to reverse the de-linking because the ZAR has appreciated?
“Currency volatility is unavoidable. The ability of a small open market economy such as our own to bounce back would be difficult. Therefore, until our economy grows bigger or unless we can find a resource to back the NAD it’s probably best to stick with the ZAR link for better or worse,” Boamah said.
The issue of land ownership is one of the most contentious in South Africa.
Concerned voices point to the case study of neighbouring Zimbabwe, where the economy collapsed after land reform was carried out. “There has been policy uncertainty towards future land ownership in South Africa as the government seeks to change the current structure in owning land. As such the rand have been vulnerable reflected in the depreciation of nearly 10 percent in August against the US$. This trend does not bode well with the inflation outlook after continuous rising trend observed in headline inflation since March,” Milner Siboleka, assistant portfolio manager & economist at First Capital Treasury Solutions told Confidente.
Recently, The Prime Minister of the United Kingdom Theresa May said that South Africa will face embargoes and sanctions from the UK, EU and USA if land is expropriated without compensation
May said she is giving Cyril Ramaphosa a warning and a picture of what will happen if the country proceeds with expropriating private land without compensation.
May called the act of expropriating land without compensation undemocratic and a crime against humanity.
“That’s a crime and we will definitely react a very bad way if Ramaphosa goes ahead with his plans.
“The UK, EU, USA and Australia have already agreed to impose embargoes and sanctions on South Africa should they go ahead with their evil plan,” she said.
May further said she is aware that South Africa is a big exporter to the UK and the EU and if they care about the relationship they will stop the madness.
Confidente. Lifting the Lid. Copyright © 2015