South Africa Offshore Funds
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South Africa Offshore FundsVictoria Hartley discovers investment houses are circling in South Africa as the country’s authorities relax outward investment rules Banking deregulation in South Africa is just one of the multi-pronged government efforts to inspire confidence in an economy held back by the weight of the past. The relaxation of the foreign exchange allowance to R750,000 (£63,000) has opened the financial floodgates in two directions. As investors are potentially surveying the horizons, the South Africa-based multinational banks are preparing to spring, or have already done so. Despite a strong start in 2000, the rand has laboured under depreciation and volatility. So South African investors are continuing to place investments abroad at almost double the rate that funds are flowing back into the country from the rest of the world. South Africa Offshore Funds - Foreign InvestmentForeign investment, direct or indirect, is desperately needed. The arrival of direct investment in the form of foreign car manufacturers, such as Daimler-Chrysler and Mercedes-Benz in the eastern Cape, has revived employment prospects. But manufacturing alone, without further investment in service industries in the region, is unlikely seriously to impact on current unemployment rates of 50 per cent. Distribution of wealth remains divided down the race line in South Africa and in the poorest eastern Cape region annual disposable income for blacks rests at R5,000 (£422), in contrast with R45,000 (£3,800) for whites. As such, the financial services sector in South Africa has traditionally ploughed two disparate furrows. At one end, the recent relaxation in foreign-exchange regulations has had an impact, causing reverberations around the competitive high net-worth banking sector. This sector now has more reason than ever to cater solely to its narrow and wealthy client-base. South Africa Offshore Funds - Fund HousesThe sector has seen many changes, deregulation in 1994 saw an influx of foreign bank representative offices and fund houses. The resulting increase in competition between these banks has been a double-edged sword in terms of the creation of a more democratic South African market-place.
Claire Gebhardt-Mann, general manger for Strategy and Communication at the Banking Council of South Africa, the industry ombudsman, says the new liberalisation should eventually bring consumers a better deal. “Any foreign investment is a good thing and increasing competition between multinational banks will give a push to the spread of e-commerce. Although now the HNW banking sector, which before liberalisation was a well-protected market, is no longer willing to subsidise government attempts to get poorer people to open their first account.” The government has been looking at the creation of ID cards to enable paper-free social services payments, along the lines of the British post-office bank idea, says Gebhardt-Mann. But now the big-hitters in the banking fraternity are concentrating on getting their own houses in order. For more relevant news items and magazine articles please click the links below:
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