Exchange controls in SA provide no economic guarantees of stability, but drive up the cost of cross-border relationships for everyone
Wednesday, October 1st, 2014
The South African Supreme Court of Appeal today found in my favour in a case about exchange controls. I will put the returned funds of R250m plus interest into a trust, to underwrite constitutional court cases on behalf of those who's circumstances deny them the ability to be heard where the counterparty is the State. Here is a statement in full:
Exchange controls may appear to be targeted at a very small number of South Africans but their consequences are significant for all of us: especially those who are building relationships across Southern Africa such as migrant workers and small businesses seeking to participate in the growth of our continent. It is more expensive to work across South African borders than almost anywhere else on Earth, purely because the framework of exchange controls creates a cartel of banks authorized to act as the agents of the Reserve Bank in currency matters.
We all pay a very high price for that cartel, and derive no real benefit in currency stability or security for that cost.
Banks profit from exchange controls, but our economy is stifled, and the most vulnerable suffer most of all. Everything you buy is more expensive, South Africans are less globally competitive, and cross-border labourers, already vulnerable, pay the highest price of all - a shame we should work to address. The IMF found that "A study in South Africa found that the comparative cost of an international transfer of 250 rand was the lowest when it went through a friend or a taxi driver and the highest when it went through a bank."