Morning Brief – Expensive furniture

Charles Porter
Thu 8 Dec 2022

Expensive Furniture

At the time of writing at least, ANC leader and South African President Cyril Ramaphosa has managed to hang onto power. When the President found himself at the centre of a South African political scandal, there was a lot of concern and risk surrounding the nation and its assets. International attention was cast over a scandal that threatened to rob the President of office and disturb his and his party’s prospects at the forthcoming elections. Without wanting to get too down and dirty with the speculation and rumours, for those of you that did not hear about the story here’s a summary.

In excess of 500 thousand US Dollars of undeclared income was stashed in paper form in the back of a sofa. For those of you all too familiar with Foreign Exchange rules in South Africa, that’s a breach in itself. That sofa was then stolen from a game reserve under his ownership. The theft was not reported to authorities and it is suggested that some dubious attempts were made to identify its whereabouts and retrieve the over padded cushions. If you delve deeper you may find references to Sudanese businessmen and Buffalo but the above should suffice for a taster. With a history of corruption within the ruling African National Congress, it is easy to see why this story prompted such a violent jump in perceived political risk within the nation.

When this story was gathering pace there was a serious risk of impeachment of the President. Ahead of elections for the party leadership next week and a general election only a little more than one year away, this was a significant derailment of political expectations. The Rand had just about been supported by the rate rises the SARB has provided in the face of persistent inflation. However, one trading session last week alone saw most major Rand crosses lose in excess of 4/5% as confidence in the Rand collapsed. The local currency has since recovered some ground since this story broke internationally especially whilst the President remains in office. 

Discussion and Analysis by Charles Porter

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