South African Reserve Bank Governor Lesetja Kganyago outlined the Monetary Policy Committee’s (MPC) decision for the coming quarter last week amid a backdrop of economic challenges. However, the decision on the 25 basis points cut that reduces the repo rate from a 15-year high of 8.2% to 8% is too little, too late, says the writer. Picture: Simphiwe Mbokazi / Independent Newspapers Archives
By Trevor Ngwane
Too little, too late. That is how the interest rate cut announced by the South African Reserve Bank (SARB) on September 19 has been received by some critical observers. This is the first cut since 2020. It is a 25 basis points cut that reduces the repo rate from a 15-year high of 8.2% to 8%. It comes at a time when South Africa’s new government of national unity (GNU) is struggling to restore confidence in the state after 30 years of arguably disastrous ANC rule and a SARB that is suffering from a trust deficit and political controversy.
The SARB governor, Lesetja Kganyago, has angered many ordinary South Africans and been blamed for the social pain of high interest rates. He has steadfastly stuck to his guns insisting on A monetary policy that doggedly increases interest rates in order to keep the inflation rate between 3 – 6% despite the visible hardship and suffering caused to the masses. Apparently impervious to the economic turmoil engendered by the Covid-19 pandemic, his relentless interest rate hikes gave no respite to people facing constant money stress, rising living costs, healthcare challenges, pandemic-related price gouging, food inflation, load shedding expenses, etc.
Opposition to the bitter pill administered by Kganyago to South Africa’s economic community has led to questions about the role of the SARB, the wisdom of its monetary policy and its ideological underpinnings. Is Kganyago’s approach to interest rates too dogmatic? Should the SARB mandate be expanded to help the country address the crisis of poverty, unemployment and inequality? Can the SARB be redeemed?
To answer these questions, it is necessary to look at the political economy of the South African class structure. This country is a post-colony that has recently emerged from decades of racial capitalism and centuries of colonial invasion, plunder and violence. The anti-apartheid Struggle culminated in victory for the national liberation movement that ushered in a democratic order in 1994. Kwame Nkrumah, the leader of the anti-colonial struggle in Ghana, warned that unless vigorous countermeasures were taken, the victory of national liberation would lead to neo-colonialism whereby the victorious people would assume political office but without economic sovereignty.
Nkrumah’s contemporary, Frantz Fanon, had little faith in the post-liberation leadership of the national liberation movement in Africa, observing that it consisted of an aspirant national bourgeoisie that “must simply be stoutly opposed because, literally, it is good for nothing”. He argued that post-colonial government leaders were not interested in “transforming the nation” but in “being the transmission line between the nation and a capitalism, rampant though camouflaged”. Having no revolutionary aims, “the national bourgeoisie will be quite content with the role of the Western bourgeoisie’s business agent”.
The South African debate on the SARB is now taking place in the context of a GNU. The toenadering between the ANC and the DA is viewed with suspicion by leaders and organisations of the working class and the poor. The fear is that the ANC will abandon its mandate of national liberation, especially economic policies that aim to reverse the injustices of the past. The DA is viewed as representing vested interests – it is the protector of white privilege inherited from apartheid and colonialism. Where does the SARB and its governor stand in this struggle?
The ANC has been consistently following economic policies that reinforce the rule of capital, including that of “white monopoly capital”, since 1994. The Reconstruction and Development Programme (RDP) which emphasised people-driven and people-centred development served as its election manifesto and, once in power, was unceremoniously dumped and the ANC government implemented the pro-capitalist neoliberal Growth, Employment and Redistribution (GEAR) policy adopted in 1996. In February 2000, the SARB adopted inflation targeting as the alpha and omega of its monetary policy; henceforth, the developmental goals of the new state would be largely ignored by the bank.
GEAR was formulated with advice from the World Bank and the IMF. It is a neo-liberal economic policy which follows the diktat of these institutions whose ideological commitment is towards the big corporations and the ruling classes of the advanced capitalist societies. Their policies, such as the structural adjustment programmes, are designed to integrate post-colonial developing countries into the capitalist global order as junior partners and vassals of the imperialist countries, often their former colonisers.
These Washington Consensus institutions routinely advocate the reduction of social expenditure on healthcare, education, social security and other goods and services that are crucial for the well-being of the masses in poorer countries. They promote privatisation and other means of channelling public funds into private pockets. Through a battery of predatory policies that David Harvey described as “accumulation by dispossession”, the rich got richer and the poor poorer in an orgy of wealth transfer from the poor to the rich that was facilitated by liberalisation, deregulation, removal of exchange controls and the untrammelled movement of capital.
The SARB is a conveyor belt of World Bank and IMF monetary policy. It plays a crucial role in the continuation of the dominance and abuse of the colonised by the coloniser, of the poor by the rich, that began under slavery, wars of conquest, colonialism, apartheid and capitalism. Its financial abuse of the masses is made possible by the ANC government’s embrace of anti-working class and pro-capitalist policies and its willingness to accommodate itself to the continued dominance of white monopoly capital in exchange for satisfying the aspirations of the emerging black bourgeoisie.
The GNU is the political form of the surrender of the democratic government’s economic sovereignty to local and global capitalist interests. It is the culmination of the logic of 30 years of ANC rule. In its present form, the SARB is part of the problem and not the solution to the acute socio-economic crisis faced by the working class and the poor. It must either be radically transformed now or be consigned into the dustbin of history by a future revolutionary government of the working class.
* Dr Trevor Ngwane is an activist scholar and sociology senior lecturer at the University of Johannesburg.
** The views expressed in this article do not necessarily reflect the views of The African