A Respite From Checking Their Balances

JOHANNESBURG, South Africa —  What do you wish for when the money in your wallet has lost nearly a quarter of its value in the past several weeks and experts warn that the squeeze is not over?

A weekend.

South Africans of all colors, means and political persuasions--even those with no interest in things religious--were basking Sunday in the Day of the Lord, perhaps more appropriately known in recent weeks as the Day of the Merciful Currency Gods.

For the first time since the previous weekend, the morning news was not ticker-tape reports from New York, London and Johannesburg announcing record lows for the South African rand against the U.S. dollar. With the markets closed for the weekend, South Africans enjoyed the peace of mind that comes here now only with quiet on trading floors a hemisphere away: the assurance that their vanishing earnings would vanish no more--at least not until this morning.

A year ago, a rand was worth about 22 cents. But then the so-called Asian contagion--the turmoil plaguing the economies of Asia--developed a nasty South African strain that economists are still hard pressed to explain. The best they can say is that emerging markets everywhere are being swallowed up and that South Africa seems to be the flavor right now.

Last month, the rand fell to 19 cents; by Friday, after its worst weeklong battering yet, it was trading at just over 15 cents, about a third below its value in June 1997. As prices, mortgages and interest rates rush to keep up, many South Africans are losing more than a week’s wages each month to the mysterious currency black hole.

“The market is looking at some of the Asian currencies as a guide, which had 30-40% knocks,” said Magan Mistry, senior economist at Nedcor, one of South Africa’s largest banks. “Whether that will be enough remains to be seen.”

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The ravaging of a currency by international traders has never been one of the prettier sides of free-market capitalism. But the crash of the rand comes at a particularly vulnerable time for South Africans. Many people here are fed up with the belt-tightening that the ruling African National Congress insists is needed so that South Africa, long an international pariah under apartheid, can rejoin the world economy.

All the world’s big financial players agree with the government’s hard-line policies, which have kept inflation and budget deficits down but have fallen short in most other measures.

Four years after the end of white-minority rule, the economic transformation has yet to catch fire. The economy is shedding jobs, not creating them. Poverty is worse than ever. Foreign investment is a fraction of expectations. And government projections for economic growth have been abandoned, with some economists even saying that the country is headed toward recession.

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With elections a year away, the ANC is under growing pressure from its erstwhile revolutionary comrades--and current partners in government--to abandon its coat and tie for more worker-friendly garb. A rand in free fall, even if beyond the understanding of most ordinary people, sounds so bad that the naysayers are looking better every day.

In short, says trade union leader Mbhazima Shilowa, less capitalism would do South Africans a whole lot of good. What the country needs, he says, is more government intervention and regulation to guide the economic transformation.

“The reality is that most of the problems that we find ourselves in stem from the ills of capitalism the world over,” said Shilowa, a self-described Marxist who heads the Congress of South African Trade Unions, a partner in the ruling coalition. “Many of the countries facing high unemployment, growing poverty and inequality are not socialist.”

The South African Communist Party, which ended a weeklong party congress here Sunday, has been equally critical of the country’s economic direction. The assault is particularly sensitive to the ANC because the Communists are historic allies and have members in both Parliament and the Cabinet.

Top Communist officials have declared that the government’s economic program “throttles the good social and economic transformation we are, at the same time, endeavoring to embark upon.”

While recent public criticism demonstrates that the country’s newfound democracy is at work, economic analysts say it also has contributed to the impression that the ANC does not have control over its coalition partners--and perhaps the economic program itself. That, in turn, could make the rand even more vulnerable.

With that in mind, the ANC last week brought out its two biggest guns--President Nelson Mandela and Deputy President Thabo Mbeki--to give the Communists a stern lecture. Mandela, wearing the Communists’ red T-shirt and cap, described the economic program as “the fundamental policy of the ANC” and pledged: “We are not going to change it because of your pressure. . . . We do not represent just the workers. We represent the entire country.”

Mistry, the bank economist, said that was precisely the message international currency traders needed to hear. Even so, economists say, there’s no telling how much longer South Africans will go on dreading Monday morning.