NUMSA STATEMENT ON THE APPOINTMENT OF MR LESETJA KGANYAGO AS NEW RESERVE BANK GOVERNOR
7 October 2014
The National Union of Metalworkers of South Africa (Numsa) has consistently called for the nationalization of the Reserve bank, for the abandonment of the neoliberal macro-economic policies which have ruined the manufacturing sectors of this country and led to massive shedding of jobs, and for the abandonment of inflation targeting by the Reserve Bank and its replacement by employment, and all rounded development of the people and economy of South Africa.
All successive Reserve Bank Governors have miserably failed to protect the majority of the people of South Africa, who are the working class. The Bank's instruments for managing the value of the rand have all failed, as witnessed by the abnormal levels of unemployment in South Africa today and the ever-deteriorating value of the rand itself against other currencies.
Numsa notes with great concern the public announcement by President Jacob Zuma regarding the appointment of Mr. Lesetja Kganyago as the new SA Reserve Bank Governor - a person well known for his neoliberal capitalist bent.
Consistently, Mr. Kganyago has been a model neoliberal financial mismanager of note. Indeed, his appointment opens old but unhealed wounds among workers, given Mr. Kganyago's brutal and ruthless pursuit of neoliberal capitalist financial policies when he was Director-General at the National Treasury.
Mr. Kganyago' s appointment re-affirms the ANC government's ongoing reliance upon the failed, neoliberal capitalist policies and strategies.
Mr. Kganyago has done nothing to protect workers and the broader society from the global and national capitalist crises.
To illustrate, the collapse of the African Bank because of inadequate supervision and regulation by the SA Reserve Bank is so notorious that the Wall Street Journal (28 September 2014) described it "as a small drop in a bigger bucket of trouble for South Africa's banking system. The problems are amounting to a subprime-loan crisis for the country. The South African Reserve Bank has managed to rescue the failed bank and avert a panic, but it has not been able to prevent a large bad-debt pile from getting larger."
Why would workers and the broader society have confidence in the deputy Reserve Bank governor with this record?
Behind the gamble the SA Reserve Bank and Finance Ministry have taken by allowing such a high level of unsecured loans by loan-shark type banks, is their policy of maintaining extremely high interest rates. These rates are killing indebted working-class people, with more than half our country's twenty million borrowers now ‘credit impaired,' according to the National Credit Regulator.
NUMSA pressured former Governor Tito Mboweni on this point beginning in 2008 and we were rewarded with rates cuts, but it was too little too late and under Governor Gill Marcus's continuation of what we consider ‘sado-monetarist' policies, by 2011 the prime rate charged in SA was second (amongst our major trading partners) only to Greece's - not a good sign. The nominal interest rate the Reserve Bank sets is still far too high.
Our country's financial stress has been worsened by the Reserve Bank's incompetent mismanagement of exchange controls - as witnessed in Mark Shuttleworth's Supreme Court of Appeals victory last week - and its relaxation of exchange controls several dozen times since 1994. As a result, we are reaching disastrous levels of foreign debt, because far too much SA money leaks abroad through licit and illicit capital flight.
This partly reflects how generous the Reserve Bank has been, allowing huge multinational corporations (such as former SA firms Anglo, De Beers, Old Mutual, SAB Miller, Investec, Didata, Gencor, Liberty, etc) to take profits and dividends offshore. This outflow has helped cause the country's foreign debt to rise from $25 billion in 1994 to $140 billion today, a ratio (to GDP) as high as the mid-1980s' debt crisis.
We call on the new Governor to introduce new and fresh mechanisms to control price increases, fight poverty, promote creation of decent work, and abandon the policy of inflation-targeting. He must lower interest rates and tighten exchange controls, and move towards social control of our society's banking assets, at the same time eradicating the moneylenders' usurious policies and practices.
We reiterate our call for the nationalization of the Reserve Bank.
Statement issued by Castro Ngobese, NUMSA national spokesperson, October 7 2014
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