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What Shuttleworth’s R250 million Would Be Worth Today

If Mark Shuttleworth manages to get the R250 million that the SARB took from him as an “exit levy” in 2000/01, it would have only 16% the purchasing power that it did back then. In other words, R250 million in 2001’s money is worth roughly R1.5 billion in today’s money.

The easy way to work this out is to compare the rand to a stable measure of value, gold or the JSE All share index.

The gold price is up from R2,000 in 2000 to R12,413 per ounce today – a 6 fold increase. If he had put R250 million into gold in 2000, it would be worth R1.5 billion today.

If Shuttleworth had put the money into the JSE Alsi, it would have grown from R250 million to R1.4 billion, as the index is up from 7,000 points to just below 40,000 points today – a 5.7 fold increase (excluding dividends).

ALSI

The reason the stock market and gold price have climbed so much is because the rand has lost so much value due to excessive money creation by the Reserve Bank and private commercial banks through the fractional reserve system.

Therefore, if Shuttleworth was to win his case against the SARB, to be fair, the SARB should pay him back around R1.5 billion to make up for the greatly debased value of today’s rand compared to the rand of 2001, not R250 million.

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Shuttleworth vs SARB

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Mark Shuttleworth is suing the South African Reserve Bank for the R250 million he had to pay them as an “exit levy” when he was forced to emigrate from South Africa in order to expand his business internationally back in 2001.

Capital and foreign exchange controls make it too onerous to run an international business from South Africa, which is why entrepreneurs are being forced to set up businesses overseas, especially those businesses where “IP” is involved such as in the technology sector.

Shuttleworth said in an interview with Techcentral that:

“The goal of this application to the court is to establish the rights of South African entrepreneurs not to have to emigrate in order to work on a global basis. The case seeks to ensure that South Africans can stay resident in South Africa and retain freedom of investment globally, subject to appropriate regulatory supervision in line with common practice elsewhere.

It is a great loss for South Africa to encourage people to emigrate rather than allowing them to build global operations from small beginnings at home, as other countries now do.”

The SARB’s Senior Council, Jeremy Gauntlett, doesn’t get Shuttleworth’s argument at all. Gauntlett said in comments quoted by Moneyweb:

“He couldn’t get his money out of the country. Now he wants to pull the whole system down. Why should this financial refugee, living on the Isle of Man, speak on behalf of the entirety of South African society?”

The point is Shuttleworth was forced to take his money out of the country because Section Nine of the Currency Act makes it too costly and prohibitive to run an international business from South Africa. It is because of capital controls that Shuttleworth was forced to take his money out the country.

Imagine the number of jobs Shuttleworth could have created had capital controls not been around and it was easier for him to invest his billions here to set up businesses to serve an international market. I know of other investors and entrepreneurs who would prefer to set up businesses in South Africa to serve an international market, but move offshore so they do not have to deal with very burdensome costs of forex and capital controls.

This is a very important battle that Shuttleworth is fighting. He has said if he wins, he will use the R250 million proceeds to fight future constitutional battles on behalf of the South African public.

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