President Jacob Zuma’s decision to sack finance minister Nhlanhla Nene was not well received by the investment community, which in turn weakened the rand to its lowest levels in history.
Zuma’s subsequent appointment of Pravin Gordhan as Finance Minster also did little to claw back ground the rand has lost over the last year.
Many industries are facing higher costs because of the weaker rand, including local Internet service providers.
Webafrica’s head of Hosting and Connectivity, Greg Wright, said the weak rand has had a huge impact on their business.
“We purchase thousands of international domains – renewals and registrations – in US dollars,” said Wright.
He said they have also seen an increase in the cost of hardware – like dedicated servers and routers – and software licences.
These increases, which are a result of a weaker exchange rate, will have a detrimental impact on their business’s profitability.
This is bad news for consumers. “Inevitably, we’ll have to up the prices of certain domains to counter the effect of the weak rand, which is likely to happen sometime in 2016.”
“In terms of the increased cost of hardware where the impact is not immediately felt on the bottom line, we’ll need to assess the impact and make an informed decision.”
“Software on the other hand, which has a more abrupt effect on profitability (products such as managed VPS and shared hosting packages), may influence a decision to increase prices. However, at this stage a price increase is not on the cards”.
Weak rand has some advantages
Cybersmart CEO Laurie Fialkov said the weak rand has some advantages for local businesses, though.
“Local fibre duct manufacturers are now cheaper than similar products from China, which is amazing,” said Fialkov.
He said the weak rand also means local ISP’s prices are globally competitive. “A virtual server from Cybersmart is now cheaper than most providers in the UK.”