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The impact of weakening ZAR is devastating for digital marketing companies

I am not sure if this is an open letter to President Jacob Zuma, the Treasury and the ANC at large. While I am not writing this blog with that in mind, maybe this shoe fits.

The current state of economic affairs is woeful for eNitiate’s business – an eight-year old digital marketing and insights company that is based in South Africa and that mostly uses cloud-based software solutions for its B2B services. Reason is that prices of these solutions are Dollar denominated.

 

10-Year $/R exchange trend

 

Source: www.xe.com

eNitiate was founded on 1 November 2008, at the height of one of the worse economic downturns. Rationale beings will ask what I was thinking picking such a trying time. Research shows some of the greatest companies of all time were founded during these crazy times. More than 8 years on, we are still around and going strong. By association, eNitiate will ….

 

Interpretation of the USD/ZAR graph

Back to the graph above. When we entered the digital marketing space, 1 USD bought us just over R11. South Africa’s currency briefly strengthened until end of April 2011 at best 8-year low of R6.57.  The monthly Rand cost of a basic Buffer plan – at $10/month – was R65.70 at that stage.

The cost of using this social media integration software that was founded in late 2010 has since doubled – thanks only to ZAR that has been progressively weakening against the USD. Today, the same platform costs us R138 per month.

I picked an example of one of the least costly software solutions above to make the point. We do lots of social listening and analytics as part of our service offering. I shudder to think how we were going to afford a premium tool such as

We do lots of social listening and analytics as part of our service offering. I shudder to think how we were going to afford a premium tool such as Brandwatch, which charges $25,000 annual licence fee! I am grateful for the presence of Brandseye that is ZAR-based. But this is one of a few software solutions that we are using from a dozen or so.

 

Parting shot

With South Africa’s credit rating having been condemned to a junk status by the key ratings agencies, what impact is this going to have on the already limping ZAR?

Should I start preparing to pack up and join the employment queue? Will I even find a job given the current high unemployment rate? What is going to happen to the jobs of 6 other people who work at eNitiate?

Clearly, this is not business as usual.

 

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