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Lately I've noticed a trend in the local newspapers. They all seem intent on convincing us, the South African consumer, that we are much better off financially than the people living in Europe or the United States of America. To do this they mention petrol prices, new car prices, etc. The prices charged abroad are then multiplied by the exchange rate and, as if by magic, everything is cheaper in South Africa. Well, I say that is the biggest load of nonsense since the 2002 Zimbabwe election results.
My reasoning is based on the fact that we earn Rands in South Africa and the citizens of the countries being used for comparison purposes are earning their income in their local currency. No conversion takes place before spending your income in your own country, therefore I feel that it would be a fairer reflection of the situation if the actual buying power is calculated. Although I have used a bookkeeper in the example the calculation has been done with a large cross-section of professions and the results are all similar. I have chosen the one profession for the sake of brevity.
I think the equation is quite simple. My research reveals that a bookkeeper (no qualifications) can expect, on average, to earn ZAR 90,000 p.a. in South Africa. In the UK the same job will earn you GBP 25,000 and in the USA USD 34,000. I will not bother to convert this into a common currency as this is irrelevant to my calculation. We are earning Rands, they are earning Pounds and Dollars respectively. The question is, what can we buy with our earnings? I will show my calculations for petrol and car prices so that you may follow my reasoning.
Petrol
The current price of lead replacement petrol (LRP) at the coast is 8.01 per litre or .00890% of the bookkeepers' annual income. In the UK petrol costs 1.0675 per litre or 0.00427% of our bookkeeper's annual salary. In the US regular gas (as they call petrol) costs 3.284 per gallon which equates to 0.87 cents per litre or 0.0025% of the bookkeeper's annual income.
Conclusion - in South Africa petrol cost approximately twice as much in the United Kingdom and about three and a half times as much as in the United States.
New Vehicles
Not the easiest comparison as vehicle models offered differ from country to country. I eventually found the BMW 335i Sedan which is common to all three countries. In South Africa this BMW will cost you 423,500 or 470.55% of our bookkeeper's salary. The same vehicle in the UK costs 31,660 or 126.64% of annual income. In the USA the BMW costs you 38,900 or 114.41% of annual income.
Conclusion - In South Africa the BMW costs three and a half times more than in the United Kingdom and more than four times more than in the United States.
In the table below I show the price comparisons for some products, the calculations having been done as in the examples above:
| Product |
RSA% |
UK% |
US% |
UK |
US |
| Petrol LRP |
.00890 |
.00427 |
.00250 |
2.08 |
3.56 |
| BMW 335i |
470.55 |
126.64 |
114.41 |
3.71 |
4.11 |
| Fuji S5700 Camera |
2.2222 |
.51600 |
.52938 |
4.31 |
4.20 |
| New release CD |
.13784 |
.03592 |
.03222 |
3.84 |
4.28 |
| New release DVD |
.14195 |
.04792 |
.05291 |
2.96 |
2.68 |
| Whirlpool Tumble Dryer |
3.1755 |
.60000 |
1.0294 |
5.29 |
3.08 |
| Sony K750i Cellphone |
2.4444 |
.47996 |
.73526 |
5.09 |
3.32 |
The columns RSA%, UK% and US% represent the percentage of our fictitious bookkeeper's salary that is required to purchase the product in the respective countries.
The UK and US columns represent the factor by which the price of the product is more
in South Africa than in the UK and the USA.
The products listed were randomly selected. I'm in no way alluding that these manufacturers are at fault. The fact is that these results stay virtually constant irrespective of the manufacturer which would suggest that either the wholesalers or retailers are the culprits.
From my point of view this proves that we are being screwed. You can do this calculation for virtually any commodity and/or service and the answers all point to the fact that we are an excessively expensive country. My personal opinion is that this situation was created during the sanctions era. Our prices in South Africa spiralled due to the additional shipping costs, many items only being able to reach South Africa via a roundabout route. Once sanctions were lifted the wholesalers and retailers, instead of adjusting the prices downwards to reflect the cheaper shipping costs, just pocketed the additional profits. Don't even try and do this calculation for monopolies like Telkom and Eskom, you may not survive the shock. Despite the claims made by these two fat cat monopolies many authors have already proven that their assertions to being cheap are blatant lies. Of course the fact that the Government has a vested interest in both does not in any way help the situation. Besides these interests the Government also receive many millions from the sale of petrol as well the tax revenue generated by the excessive profits made by big business in South Africa. At some stage the Government will have to wake up to this massive fraud that is being committed, the victim being the South African consumer. If not South Africa will be facing a bleak future with only the super-rich being able to afford anything more than the absolute basics, a sure-fire way to kill economic growth and with it any chance of this country ever becoming anything but another banana republic.
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