Business Urges Manuel To Relax Exchange Controls

by Robert Lee, Tax-News.com, London

14 November 2003

South African Finance Minister Trevor Manuel has extended the Exchange Control amnesty for illegal and undeclared offshore funds to February 2004 whilst delivering his medium-term budget policy statement.

However, the statement presented an opportunity for business leaders to reopen the debate on exchange controls, with many repeating the call for more liberal rules to take pressure off exporters battling against what many consider is an over-valued rand.

"If you were to take a referendum of businessmen, more than 90% would be in favour. That would cause a weakening of the rand to more realistic levels for exporting industries," explained Leslie Boyd, Imperial chairman and Anglo American director, according to a Business Day report.

This is a standpoint shared by many of Boyd’s peers. For example, Brian Joffe, executive chairman of industrial conglomerate Bidvest, explained in the firm’s annual report recently: “Exchange control restrictions continue to inhibit the free flow of capital into and out of SA.” He argued that this “has restricted growth and depletes our intellectual and financial capital.

"SA's labour markets are unnecessarily biased by this monetary policy, which will, if it persists, severely damage the country's competitiveness," Joffe warned, adding that:

“We believe that government missed an ideal opportunity to further relax or completely remove exchange controls when the rand was weak and should not hesitate further as the rand continues to strengthen.”

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