We all throw up our arms when Eskom rolls out its “load shedding” schedule; we get angry, and then we make a plan.
But it doesn’t help: at the end of the day we lose business. When Eskom falls behind on its infrastructure plans - because it doesn’t have the money to continue the entire supply chain is affected. Dolphin Bay customers who supply treated poles for carrying power lines are now left with large stockpiles and have stopped future orders.
It doesn’t end there. Banks, already under scrutiny from the financial regulators, are increasingly reluctant to lend money. The construction industry, reliant on demand for new residential and office space, has also hit a stumbling block as developers struggle to raise necessary funds. Again, our business, which relies heavily on this sector, is affected.
Another blow was when Moody’s Corporation downgraded the credit rating of Standard Bank, Absa, First National Bank (FNB), and Nedbank. It warned that South Africa’s weak economic growth and high inflation rates could put pressure on already indebted consumers, and lead to higher credit costs for banks.
You could argue that 2014 has been the most challenging year for South Africa’s economy since the advent of democracy. A number of factors contributed.
The economy suffered a major blow when miners went on a five-month strike that brought the industry to a halt. Once ranked as the largest economy in Africa, we slipped to second place behind Nigeria. South Africa’s manufacturing industry was hard hit and a United Nations Industrial Development Organisation report stated that this was dragging down growth in sub-Saharan Africa.
A further downgrade by Moody’s in November did not help. Economists warned that South Africa could lose its investment grade status within the next five years if it did not recover from the current economic slump. Following this news, the Rand dipped to its weakest level in a month and by Monday, 24 November, the US dollar hovered around the R11.30 mark.
In an interview with Dolphin Bay, Efficient Group Chief Economist Dawie Roodt said that when the Rand performs poorly, importers are the hardest hit and are forced to pass rising costs on to their customers.
“What makes things challenging for manufacturing is that the industry is globalised and directly affected by any changes to the global economy.” There is a positive side to this, he emphasises, which is to push up the export markets. "The weak Rand can make our products attractive, but this means we need to sharpen our focus.
"A weak Rand however, does not automatically mean greater exports. The global market is competitive and unless we export a world-class product, such as those we provide let me add, we will not be able to benefit from a weak currency," says Bertus.
“We would like to thank our customer base for accepting our price increase. We fully understand the impact this has on your business as we also experience increases linked to the exchange rate. We remain committed to providing sustainable services and prices, to ensure the continued success of our businesses," said Bertus.