Rand/Dollar In Perspective

IN The Namibian of July 27, 2004 (page 9) Hepundjua Kenny Wenort asked if there is somebody who can tell him why the Namibia dollar is not accepted or used in South Africa while the Rand is “tolerated” in the “Land of the Brave”.

Yes there is. (He also wanted to know why our dollar is deducted 7% in RSA.I shall explain this too.)Our dollar is not used in RSA because it is not a legal tender there.The Rand is a legal tender in Namibia and is, therefore not ‘tolerated’ but accepted and demanded.It is demanded because we know that we can exchange it easily almost everywhere in the world.When travelling to Zimbabwe, Zambia, or Kenya, for example, you will have no exchange problems that you would have if you had our dollars.The Namibia dollar is officially (i.e. politically) pegged to a Rand in Namibia (but only in Namibia).The real value of the dollar is determined by the famous invisible hand that normally determines all prices in open markets including money markets.It is the market that pegged our dollar to 7% below the S African Rand.If we want our dollar to work in RSA the way their Rand works here, Kenny, we must persuade Pretoria to declare our currency a legal tender equal to their Rand in RSA.And if we ban the use of Rand here, as you propose, and detach our dollar from the Rand our prices will generally go up by 7%.Our economy is weaker than that of RSA and so is our currency.It is we, and not the South Africans, who are benefiting from the current arrangements.Changing them will only make matters worse for us.Also, brother Kenny, there is another benefit we get from the arrangements you propose to change.According to our current national budget we expect to receive N$90 200 000 as a compensation for the use of the Rand this year.If we happen to ‘play the cards right’ as you suggest we shall incur additional budget deficit of that amount.And remember, our Minister of Finance is already struggling with a budget deficit of N$589,0m this year, domestic debt of N$ 9.8552 billion, and foreign debt of N$2.1334 billion.We can only improve our situation and empower our dollar by working more than talkingAnd Also Shebeens…FOR dear Rachil Cloete of Hardap Women’s Voice (same page) whose question is “How can a pastor say that shebeens are income-generating?” the answer is as follows: Shebeens are there to generate income and, generally, they do.Any pastor is supposed to tell the truth, and the pastor in question did just that.Very many unemployed Namibians depend on shebeens for a living.But shebeens tend to sell more after hours and during nights.If we want to combat alcoholism we should probably go beyond shebeens.There are larger actors in the arena of alcohol.Brewers and bars are probably more important than the shebeens.But the arena is more complicated than that.For example, the government is expecting to raise some N$1 000 000 from the Additional Sales Levy imposed on goods that include liquor this year.And remember, the government plans to raise more millions this year by increasing the excise duties on cigarettes, beer, wine, and spirits – the very constituents of a typical shebeen.But the most important actor may be the consumer.Yes, we need to reduce boozing drastically.Probably some work and influence on our moral character and ethical behaviour would be more important than work on the behaviour of the shebeens.This calls for urgent personal and community empowerment programs throughout our country.As long as we patronise the shebeens even after hours and during nights, they will always quench our thirst with unlimited interest.J Mwalundange Windhoek(He also wanted to know why our dollar is deducted 7% in RSA.I shall explain this too.)Our dollar is not used in RSA because it is not a legal tender there.The Rand is a legal tender in Namibia and is, therefore not ‘tolerated’ but accepted and demanded.It is demanded because we know that we can exchange it easily almost everywhere in the world.When travelling to Zimbabwe, Zambia, or Kenya, for example, you will have no exchange problems that you would have if you had our dollars.The Namibia dollar is officially (i.e. politically) pegged to a Rand in Namibia (but only in Namibia).The real value of the dollar is determined by the famous invisible hand that normally determines all prices in open markets including money markets.It is the market that pegged our dollar to 7% below the S African Rand.If we want our dollar to work in RSA the way their Rand works here, Kenny, we must persuade Pretoria to declare our currency a legal tender equal to their Rand in RSA.And if we ban the use of Rand here, as you propose, and detach our dollar from the Rand our prices will generally go up by 7%.Our economy is weaker than that of RSA and so is our currency.It is we, and not the South Africans, who are benefiting from the current arrangements.Changing them will only make matters worse for us.Also, brother Kenny, there is another benefit we get from the arrangements you propose to change.According to our current national budget we expect to receive N$90 200 000 as a compensation for the use of the Rand this year.If we happen to ‘play the cards right’ as you suggest we shall incur additional budget deficit of that amount.And remember, our Minister of Finance is already struggling with a budget deficit of N$589,0m this year, domestic debt of N$ 9.8552 billion, and foreign debt of N$2.1334 billion.We can only improve our situation and empower our dollar by working more than talkingAnd Also Shebeens…FOR dear Rachil Cloete of Hardap Women’s Voice (same page) whose question is “How can a pastor say that shebeens are income-generating?” the answer is as follows: Shebeens are there to generate income and, generally, they do.Any pastor is supposed to tell the truth, and the pastor in question did just that.Very many unemployed Namibians depend on shebeens for a living.But shebeens tend to sell more after hours and during nights.If we want to combat alcoholism we should probably go beyond shebeens.There are larger actors in the arena of alcohol.Brewers and bars are probably more important than the shebeens.But the arena is more complicated than that.For example, the government is expecting to raise some N$1 000 000 from the Additional Sales Levy imposed on goods that include liquor this year.And remember, the government plans to raise more millions this year by increasing the excise duties on cigarettes, beer, wine, and spirits – the very constituents of a typical shebeen.But the most important actor may be the consumer.Yes, we need to reduce boozing drastically.Probably some work and influence on our moral character and ethical behaviour would be more important than work on the behaviour of the shebeens.This calls for urgent personal and community empowerment programs throughout our country.As long as we patronise the shebeens even after hours and during nights, they will always quench our thirst with unlimited interest.J Mwalundange Windhoek