Pravin Gordhan’s latest latest fraud charges could have a major impact on South Africa’s exchange rate and subsequently tech purchasers in South Africa.
The poor exchange rate has often been pointed out as the cause for exorbitant hardware tech and game prices in South Africa.
While we’ve been in a steady decline in recent months, our currency’s stability wasn’t helped today when finance minister Pravin Gordhan was summoned by the NPA on fraud charges.
By 10:40 the rand had dropped by more than 3.5%, to R14.29 – a mere 40 minutes after the official announcement.
Of course, that’s not to say that we will see these effects on our tech prices, as distribution takes place months in advance and prices are typically set in stone long before currency fluctuations hit.
Distributors take out “forward cover“, which is basically a form of insurance that will protect them specifically from circumstances such as this where the exchange rate fluctuates wildly.
There’s also stock currently available in the country and en route, meaning that those units will be sold before any official price changes take effect.
Finally there’s also a number of other factors like distribution, import, and markup that need to be taken into account before we can make a direct conversion.
So why is this an issue?
If things don’t change and the Rand doesn’t bounce back, we could see similar repercussions to the previous 9/12 Finance Minister reshuffle that sent the Rand into a spiral.
That means a 25% year-on-year increase in game prices as well as a new threshold beyond the now-standard R1,000 price point for games.
It also means that graphics card and other hardware prices will continue to increase as transportation costs, customs duties, VAT and markup are also affected.
Perhaps most importantly, the cost of living will increase across the board, making it a lot harder to justify the purchase of any expensive tech items in South Africa.