Falling rand exchange rate makes for fuller travel coffers

For Namibia holidaymakers from Europe or the USA, travelling in Namibia has become almost ten percent cheaper in recent weeks. The reason: the South African Rand (ZAR) has lost a lot of value against the Euro and the US Dollar. The Namibia Dollar is pegged 1:1 to the Rand.

At the beginning of April, one received 19.2 Rand for one Euro. Yesterday, the exchange rate was almost 21.13 Rand (see table on the website ExchangeRates.org.uk).

On Wednesday last week, the Rand fell to a three-year low against the US dollar. According to a report by the Reuters news agency, this was apparently triggered by the announcement of the power utility Eskom the day before that a power plant can only be put back into operation one and a half months later than planned. In most areas of South Africa, Eskom already has to shut down power for more than ten hours a day to avoid overloading the grid. The economy has been suffering from this 'load shedding' for years. In addition, winter is now setting in in southern Africa.

On Thursday and Friday last week, the rand exchange rate suffered another blow. The US embassy in South Africa reportedly accused the country of supplying arms to Russia. Many investors withdrew from South African bonds, fearing US sanctions against South Africa.

Namibia's travel industry is watching the decline of the South African rand with mixed feelings. On the one hand, the land of endless horizons becomes cheaper compared to other travel destinations. On the other hand, costs are rising because many goods are imported and paid for in US dollars or euros.

This includes fuel, which accounts for a large part of the costs due to long transport routes. Rising costs weigh on the bottom line of Namibian accommodation, car rental companies and tour operators because they set their prices up to a year in advance and usually cannot raise them at short notice.

Sven-Eric Stender