"FOR us, it is not a matter of whether, but when these controls will be phased out" — Nelson Mandela, opening of Parliament, February 1996.
A falling rand and mounting inflationary pressures have meant that the Reserve Bank has raised interest rates to the distinct detriment of the weakest members of our society. A more nuanced approach would be for it to harness the power of the international markets to assist in restoring the rand.
To do this, it must finally free up the foreign exchange (forex) market and allow it to go to work naturally. Exchange controls in the modern world can be traced to Nazi Germany, which introduced them in an attempt to stop wealthy Jews from converting their money into other currencies.
After the Sharpeville massacre of 1960, Hendrik Verwoerd, the architect of apartheid, also instituted these controls over the convertibility of our currency in a deeply flawed and now ascertainably failed attempt to prevent citizens from escaping his "laager".
After the democratic elections in 1994, the new South African government began to gradually relax forex controls and to allow South Africans to legally hold more of their money in other currencies. Apart from former president Mandela’s own commitment, quoted above, in 1995, then finance minister Trevor Manuel announced a "phasing-out process" over the next five years.
In 1997, Mr Manuel undertook the "phasing out of the remaining controls". In 2003, he said "the rand is not under our control … many factors influence (it) … decisions made in the White House or Baghdad".
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