Yesterday South Africa was removed off the Financial Action Task Force white list and placed on the grey list. Nigeria was added to the naughty boys list as well joining an elite bunch of what you might call unsavory countries. Imagine being thought of in the same category as Pakistan, Syria, Turkey, Yemen and Nigeria not exactly countries anyone would want to invest into.
Countries that are in the grey list are graded for good reason as they are more likely to have money laundering and terrorist activities happening. Since 9/11 this has been ramped up and monitoring what securities are in place is important.
Grey List (Warning): Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list.
The problem with being on this list is there are some consequences as Botswana found out being added in 2018. Investors are hard to come by and those that have invested could possibly pull out as Botswana found out the hard way.
Business becomes more expensive as banking costs rise du to increased international fees all down to the extra admin and risk involved. Borrowing and lending of money increases and South Africa's international debt just got that much more expensive.
The Rand took a knock yesterday which is not a surprise really as this is seriously negative news. With so much corruption amongst the Government this actually may not be so shocking as they are most likely moving serious funds off shore and why the lax procedures are in place as they need a loophole to move their ill gotten wealth.
When a country has tough FOREX laws for it's citizens you wander why this could be happening as there are laws for some and none for others depending on who you are. I have often been concerned about terrorist funding from this part of the world as the open border policy doesn't exactly give you much confidence as so much is unknown.
A further hit is South Africa's involvement with the AGOA Agreement which is a Trade deal between the United States and African countries. This allows for free trade between the two nations based upon a rule of law, human rights and respect for core labor standards. South Africa doing military/naval trials with the Russians and Chinese this month has not gone down well and can see them getting the boot.
This is the problem when you start to choose sides as SA joined BRICS then aligned with Russia on the war with Ukraine expecting cheaper fuel. You cannot be having all the cake as it has to be one or the other and this is going to be a hard lesson learned. This is all down to greed and filling the coffers so they can plunder more and nothing else as the concern for the people is not important.
Whatever way you look at what is happening in South Africa currently everything is a negative. The cost of living is sky rocketing with inflation due to increased costs of having to supply extra power. Businesses are on the precipice and more job losses are on the cards as this is going past survival mode. Why anyone would invest here knowing this as the Rand is going to be severely hit if this continues much longer. Hw much worse can this become is unknown as the country is not being governed with the best interests of the country right now and is more about how much we can take before everything comes crashing down.
