More pain as rand seeks equilibrium

IT’S a strange anomaly that while rand strength is a reflection of confidence in our economy, it is playing havoc with growth and job prospects and looks like it could cost the fiscus billions as export profits fall.

The frustrating spin-offs are summarised by Minerals and Energy Minister Phumzile Mlambo-Ngcuka who said this week: “When we do something right and the currency strengthens . . . the workers are punished.”

Her concern for the mining sector where tens of thousands of jobs are on the line, is understandable. But the pain in fact goes deeper.

The rand has strengthened by more than 25 per cent against the dollar so far this year and by more than 50 per cent over the past two years. And with raw material prices set in dollars world wide, the march of the currency has translated into a dramatically reduced rand return for SA producers.

According to Chamber of Mines economist Roger Baxter, at current rand and metal price averages, South Africa’s export revenue would fall by R14-billion this year, and the year’s tax revenues would be half of last year’s R12-billion. Half of SA gold mines may be unprofitable, he said.

Clearly then SA mines are under great pressure and more job losses will be inevitable as the rand holds present levels. There are those who believe our currency is overvalued and should be closer to R8 to the dollar, but just how much would that help?

As the sector sweats it out the situation exposes just how unrealistic the government’s proposed mining revenue royalties and some other interventions are.

There is no immediate win, win option in the rand conundrum, but only the prospect of pain and adjustment before gain, as the currency seeks its equilibrium.

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Cash crisis for those who care for the old

THE aged need peace and security and, as they grow older, kindness, care and a measure of nursing, too. They also need to be free of anxiety.

But who could blame many for feeling uneasy over the difficulties of Port Elizabeth’s Echo Foundation, an organisation committed to housing and caring for the aged, which now faces mounting costs and the problem of spinning out a State subsidy of R1,3-million a year which has not been increased since 1994.

Understandably, the organisation is looking at ways to handle this crisis and it must be said that some of the plans look grim indeed, particularly at Laubscher Park in Walmer where phased retrenchment of 117 employees is under consideration.

Foundation chairman Bill Allchurch has explained that most frail-care residents can’t contribute to increased costs. And so comes the decision to limit the admission of outsiders while concentrating on the ongoing care of those already in its retirement villages, flats and service centres.

It’s clear, though, that many of the elderly face an uncertain future if they cannot afford the sort of care offered by Echo and similar organisations.

The Government ought to be reminded that these foundations relieve it of a great burden. Increased subsidies – and its hard to see why they should have remained the same for so long – would do much to help.