Reserve Bank must have new policies as well as new head
The Congress of South African Trade Unions congratulates its former employee, Comrade Lesetja Kganyago, on his appointment as the new governor of the South African Reserve Bank (SARB) and wishes him well.
His appointment however must represent a fundamental change, not just in personalities but in policy. He must radically change the disastrous policies of his predecessors, which, together with those of the Treasury, have been one of the main reasons for our painfully slow rate of economic growth, the loss of thousands of jobs and the failure to implement government and ANC policies to radically restructure our economy and create decent jobs.
The government's priority is to escape from the chains of an economy imposed by former colonisers, the apartheid regime and white monopoly capitalists, which was based on looting our natural resources for export to the developed world, making huge profit to the companies involved, especially in mining and finance, but undermining the development of manufacturing industry which has to be the basis for an economy which will create sustainable jobs into the future.
In particular, the new governor must change the policy of seeing ‘inflation' as the main threat, and using this to justify high interest rates, even at a time when many other countries are reducing them to as low as zero. The resultant high cost of repaying loans has caused many small and medium businesses to fail and increased the cost of starting up new companies.
While rising inflation is a potential danger, it is far less of a danger than our massive triple challenge of unemployment, poverty and inequality.
So the Bank's strategy must be changed from ‘inflation-targeting' to ‘employment targeting', so that its priority is to pursue policies which will be compatible with the ANC strategy for the 2nd Phase of the Transition - a radical restructuring of the economy. Such a strategy is already there on paper, in such documents as the Industrial Policy Action Plan, the National Infrastructure Plan and at least parts of the New Growth Path, but which is being implement too slowly, in part because it is constantly being sabotaged by the conservative, neoliberal policies of the Treasury and SARB.
The Governor must stop being guided by ratings agencies, the World Bank and IMF and the spokespersons of big business, who keep calling for policies to give investors incentives to invest so that they can make even bigger profits for their class, but which are disastrous for the long-term future of the country. The new Governor's motto should be "No more business as usual!"
Finally Comrade Kganyago must insist that the SARB be nationalised. It is one of very few privately owned reserve banks in the world, and it is totally unacceptable that such an important institution should be privately owned and answerable to shareholders rather than to the government elected by the people of South Africa.
Statement issued by Patrick Craven, COSATU national spokesperson, October 7 2014
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