sars wages

Image credit: Pixabay/stevepb

“Difficult times are still ahead of South Africa” – Dawie Roodt suggests investing offshore

Dawie Roodt, an economist who specialises in fiscal and monetary policy, believes South Africans would be wise to take their money out of South Africa.

sars wages

Image credit: Pixabay/stevepb

Speaking to Business Tech, Roodt explained that it is due to the current political tension in the country, but added that the situation might be different for each person, based on individual criteria. He said the South African economy is not doing well, and added:

“The second major issue is that of politics and uncertainty. For example, we have the issue of confiscation – although government calls it by the fancy name of ‘expropriation’ – which is the sort of thing that worries investors.”

Also read: SA recession: Six foreign investment deals set to boost the economy in Q3

Difficult times ahead

When it comes down to business, there are better opportunities abroad, mainly because Roodt believes South Africa’s difficult times are still ahead of us and that the next few years are going to be crucial. He cited the financial drama around the South African Airlines as one example.

According to Roodt, South Africa is a “high-risk environment”, but that just means that there is potential for higher profits and higher returns as well.

Businesses, for example, would benefit from staying in SA instead of trying to make it on the international scene. Companies capable of “identifying the risks” and managing it accordingly would fare even better, Roodt says.

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It was also reported back in May that South Africa is losing direct investments to other African countries, and that many South Africans were pushing their spare cash towards offshore markets, especially since it’s becoming easier to manage international finances from within the country.

Many South Africans already diversify their portfolios offshore, most commonly by physically moving their money out of the country and investing in foreign financial instruments, or indirectly moving it out by investing in South African businesses or financial instruments with large offshore exposure.

There are a large number of South Africans who are heeding the advice of economists like Dawie Roodt but choosing a more modern vehicle to hedge against an uncertain economic future.

South Africans are turning to cryptocurrency

Not surprisingly cryptocurrency is becoming an alternative for many South Africans. If the economists are right, this is just the beginning of a long, difficult period in the South African economy.

With cryptocurrencies levelling out and exhibiting less of the volatility that marked its rapid growth and decline last year, South Africans staring down the barrel of a recession may just have an alternative way to preserve the value of their money.

A survey conducted in October found that 80% of respondents who currently owned cryptocurrency viewed it as an investment, while a minority used the digital currency to transact or transfer money to friends and family overseas.

“About 70% of South Africans have heard about virtual currencies, and most people have been using them as a hedge against inflation and exchange volatility” the report states.

Also read: Listen: How to save enough money to buy an island