I walked into a bank to change dollars and came upon the
force of the South African banking system.
I left the bank with rands, after
having given my temporary address, had my passport photographed and signed 4
papers. All for changing $100.
I discovered that this rigor in changing money
is the extreme intolerance of South Africa towards money laundering, and business
being conducted on non-taxed cash.
When cash comes into South Africa, it needs
to be declared at Customs, and if it is not, it cannot be deposited into banks.
I am sure crooks have figured out what to do with suitcases of cash favored by
citizens of some African countries; but South Africa has set up laws that do
everything possible to prevent this.
Building roads, bridges, schools, hospitals: anything large,
and I imagine smaller things, must be done through banks. Taxes need to be paid
on all transactions, and the South African company has to pay the taxes. Which
is a large disincentive for a South African firm to inflate an invoice at the request
of a customer.
If a customer pays 9 million rand (about 1 million dollars), the
South African company has to pay taxes on this amount. If the customer asks for
both a real invoice and a fake invoice for 30 million rand, the South African
company has to pay taxes on 30 million rand, because it has issued an invoice
for that amount.
If the South African company and the customer make a deal to
split the amount that will be paid by the customer’s company: well, I don't know. Paying taxes on an inflated invoice sounds like a tricky business.
I am assured that this does not, and cannot happen, because of
checks and balances and controls in the South African banking system.
Changing money in Nigeria has always been a far less formal procedure. I have been advised by all inside and outside Nigeria to never even think of changing dollars in a bank. No laws make this necessary, and the exchange rate is horrible. What I have always done is go to a market place to ask for Mohammed. Before that, the money changers mostly have found me first. After making sure I have the best possible rate, I change my dollars into naira.
And I have never seen anyone whip out a credit card or pay by check in Nigeria. Cash. For buying food, gasoline, construction, making movies. Cash or nothing happens.
The problem in Nigeria is that frequently I have heard of cash being given, and nothing happens. Hospitals are not built. Roads are not repaired. And more businesses leave Nigeria than start. A lot of cash comes into Nigeria from oil revenues, and remittances. And even more leaves Nigeria stuffed into suitcases, and in the form of first-class air tickets and professional education for the families of the receivers of cash. And a lot of houses are built from cash.
Building or buying a house is, and has been, a complicated business in
South Africa. The buyer needs to have a taxable income, proof of this taxable
income, and this income needs to be verified high enough to be able to support
repayment of a loan and a reasonable life for the buyer and her or his family.
South Africa has avoided the housing crash with rampant foreclosures that
resulted from easy credit in the United States.
In the New York City-based
organization the Caribbean American Chamber of Commerce and Industry, several
times, I have heard a board member say that the days are gone when loans were
given to anyone who both requested it and had a pulse. Those days have never
existed in South Africa. I have also been told that anyone defaulting in a loan
is out of their house within 6 months.
South Africa is working. Everywhere around me, I see prosperity.
I see malls that have been built recently that are empty of Fridays, because everyone
is working, and jammed on Saturdays.
South Africa, 19 years after the end of
apartheid, is open for business.