Thursday, 21 November 2024

The Economic Freedom Fighters (EFF) notes the decision of the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) to reduce the policy rate by a mere 25 basis points to 7.75% per annum. While this offers limited relief, the extreme conservatism demonstrated by the SARB reflects its continued failure to act decisively in the interests of the people.

South Africa’s economy remains in a dire state. Economic growth has averaged below 1.5% annually over the past five years and is projected to grow by less than 2% in the next 3 years, and unemployment remains extremely high. Over 12.2 million South Africans are unemployed, with millions more trapped in precarious work conditions as the number of employment continues to increase in the informal sector while it is decreasing in the formal sector. This persistent economic stagnation is compounded by the SARB’s reluctance to embrace proactive monetary policy that would stimulate growth and create jobs.

The SARB’s decision comes at a time when headline inflation has significantly declined, reaching 2.8% in October 2024. This validates the EFF’s long-standing position that the so-called inflation risks cited by the SARB to justify its punitive monetary policy were overstated and disingenuous. The SARB could have implemented a 50 basis points rate cut in the previous MPC round, and another 50 basis points cut now would have provided much-needed relief for the working class, small businesses, and struggling households.

Instead, the SARB persists with a cautious, conservative approach influenced by Western financial trends, prioritising the profitability of the financial sector over the needs of the South African people. The obsession with balancing inflation targets while ignoring unemployment and stagnant wages exposes the SARB’s lack of commitment to fostering economic growth and industrialisation.

The EFF reiterates that the SARB operates outside the national interest. The central bank’s mandate must be overhauled to prioritise economic growth, job creation, and industrialisation. This requires the nationalisation of the SARB to ensure that its policies align with developmental objectives. The private ownership of the SARB by banks and foreign entities perpetuates an economic system that privileges profit in the financial sector over people in the name of attracting foreign investors who are only interested in short term gambling gains in the stock exchange but don’t want to build factors and invest in long term.

Furthermore, the SARB’s failure to integrate monetary policy to address societal challenges highlights a broader economic incompetence within the finance cluster of government. The deliberate separation of these critical policy areas has stifled meaningful progress in addressing South Africa’s economic challenges.

The EFF demands immediate action to implement structural reforms that will rebuild the economy. This includes the nationalisation of the SARB to ensure it serves the people rather than the financial elite. It is for this reason that we will continue to push for the finalisation of the EFF’s Private Member Bill introduced by the President and Commander in Chief Julius Malema after public hearings.

Additionally, monetary policy must be reoriented to support industrialisation and job creation, which involves issuing low-interest loans for public infrastructure and strategic industries. Furthermore, the financial sector must be reorganised to prioritise long-term investments in manufacturing, agriculture, and other labourintensive industries over speculative trading and short-term profits.

The current monetary policy trajectory ignores the urgent need to address South Africa’s developmental crises. A bold and proactive approach is necessary to stimulate economic growth, reduce unemployment, and ensure that the benefits of democracy are shared by all.

The EFF remains committed to fighting for an economic system that places the needs of the people above profit. The SARB’s conservatism must be replaced with a revolutionary commitment to building an inclusive and industrialised South Africa.

ISSUED BY THE ECONOMIC FREEDOM FIGHTERS

Leigh-Ann Mathys (National Spokesperson) 082 304 7572

Thato Lebyane (Media Enquiries) 078 304 7572