South Africa Vision

Over the last 21 years of inflation targeting, the South African Reserve Bank (SARB) has largely succeeded in delivering on its objective, despite many challenges, says Governor Lesetja Kganyago.

Delivering a virtual keynote address on the country’s 21 years of inflation targeting, hosted by the University of Stellenbosch on Wednesday, Kganyago said lower inflation had generally benefitted the economy, including households of all income levels.

The public lecture coincides with the SARB’s 100 year anniversary and the rand turning 60 years old. This year also saw the commemoration of 25 years of central bank’s independence.

He said: “As lenders require less compensation for inflation, interest rates have come down. Furthermore, with expectations anchored inside the inflation target range, businesses no longer raise prices as soon as the exchange rate weakens. This credibility has helped us cut interest rates to record lows during the COVID-19 crisis – and we have been able to keep rates low during the recovery.

“This stands in stark contrast to some of our peers, where higher inflation has forced rate hikes, even though the pandemic is ongoing.”

Inflation targeting had asked a lot of the SARB and South Africans generally, “but not more than any of us could deliver”.

For a start, he said inflation targeting was more flexible than critics claim.

“It doesn’t require the central bank to cancel out every price shock using interest rates, or to have perfect forecasts. Shocks are inevitable, and so are forecast mistakes. What central banks need to do is convince people that they will do what it takes to steer inflation back to target, over a realistic timeframe.

“This is achievable and has repeatedly been achieved, with the key result that the expectations South Africans hold of future inflation have consistently been falling,” he said.

Similarly, said Kganyago, central banks have also tried targeting exchange rates – an objective that in many cases, including our own, has ended with billions of dollars thrown away for no tangible gain.

The country had avoided exchange rate adventurism throughout the inflation-targeting era, saying the policy had served South Africa well.

“The easiest way to destroy price stability in South Africa would be to insist on low interest rates because of unemployment. Our labour market is so dysfunctional, this excuse would rule out ever raising rates – a policy that would leave us in the worst case scenario of high unemployment and high inflation.”

This excuse, he said, “might have impressed people, and won us sympathy, but it would have been profoundly irresponsible”.

He said the country had not faced a tragic dilemma where there was no right answer – either jobs or inflation.

Responding adequately

“We have faced a necessary choice, to do the good we can do, understanding the limits of our powers. In making this choice, we have equipped ourselves to respond forcefully when there is a genuine cyclical downturn, beyond the structural labour market problems that have long blighted this economy.

While the COVID-19 pandemic had seen the country shed 1.5 million jobs, Kganyago said inflation was now back in the middle of the central bank’s target range, while interest rates were at record lows.

“If this were solely about inflation, we would have raised rates already. So never, let anyone tell you that the SARB only cares about inflation and ignores jobs. Rather, bear in mind that we have this power only because we put price stability first. We have anchored inflation expectations,” he said.

“We did not commit to an impossible mission.”

Since 2000, South Africa’s targeted-inflation had averaged 5.8%, which was within the 3–6% target range.

“It has been 4.5% over the past five years, exactly in the middle of our target range.

To some extent, the SARB’s success with inflation targeting also comes down to a fourth factor, which is good luck, he said.

“Unlike some other policy tasks, such as education, monetary policy can be delivered from a single head-office and maybe a few regional offices. Furthermore, thanks to factors such as our constitutional independence, we have been able to avoid State Capture, unlike many other organs of government,” Kganyago said.

He said this meant the central bank had remained focused on serving the public, instead of diverting resources to patronage networks.

“We must also acknowledge a helpful global environment. In pursuing low inflation, we have been able to draw on a wealth of global knowledge,” he said.

Source: South African Government News Agency

The South African National Parks (SANParks) will launch a 13-week reality TV series on 7 October 2021 at 21:30 on Mzansi Magic DSTV channel 161.

To be hosted by actress Rami Chuene and renowned life coach Romeo Mabasa, the series, Away for Repair, will showcase the heartfelt stories of ordinary people taking much-needed time away to mend broken bonds.

“Away for Repair will treat viewers to an emotional rollercoaster, as four teams of two undergo a relationship boot camp against the spectacular backdrops of seven of South Africa’s prime National Parks.

“Through this series, we will be showcasing the diversity of our parks to the Mzansi Magic audience, as well as the range of fun and educational activities available in these destinations.

“We also felt it important to emphasise the value of spending time in nature for emotional wellbeing, and how National Parks are places to escape to, to reconnect and revitalise, hence the relationship boot camp theme,” said SANParks Managing Executive: Tourism Development and Marketing, Hapiloe Sello.

Viewers will follow the series, as travel goes from the mysteries of Southern Africa’s first ancient African Kingdom in the Mapungubwe National Park, to the rugged coastline and deep forested gorges of the Tsitsikamma National Park through to the iconic Kruger National Park.

The series will see the teams compete in various adventures that will challenge them physically and mentally all in a bid to repair their broken bonds.

The teams include a pair of varsity friends dealing with a deep betrayal; sisters yearning for acknowledgment of past hurts; a married couple that has lost their foundation of trust, and a mother and daughter in deep need of unlearning their toxic behaviours.

The winning team will get an all-expenses paid weekend stay at the Skukuza Safari Lodge situated in the iconic Kruger National Park. The runners-up will walk away with an all-expenses paid weekend getaway to Golden Gate Highlands National Park.

Source: South African Government News Agency

Public Enterprises Director General Kgathatso Tlhakudi says government will no longer be funding bailouts, as they are known, for state owned enterprises.

Tlhakudi was speaking during a departmental briefing of Parliament’s Public Enterprises committee.

He said any funding would be given under strict conditions.

“What has been communicated very strongly throughout government is that the era of funding operational shortfalls are gone. Bailouts, financial contributions to SOEs or recapitalisation will be given when an entity is restructuring itself so that it is sustainable under its own steam going forward,” Tlhakudi said.

He said, however, that government would look at taking opportunities for expansion where they present themselves within SOEs.

“Where there are opportunities to grow the business, where they will be positive cashflows in line with best practice…funding will be provided under those conditions. But funding of bailouts as we know them…where businesses continue to declare losses and it must be propped up to continue operating – that will no longer be acceptable. It’s the right way to go because as we know there are many other demands put on our fiscus,” he said.

Restructuring of SAA subsidiaries

Tlhakudi also updated the committee on the restructuring of South African Airways (SAA) subsidiaries: Mango Airlines, SAA Technical and Air Chefs.

He told the committee that the restructuring processes for the subsidiaries have been delayed but remain on track.

“We had made a commitment to ensure that the subsidiaries are restructured…it took longer than planned because you need to have funding available if you are going to restructure. The R2.7 billion only became available this year in the budget…we are in the process now of restructuring these entities,” he said.

Tlhakudi added that the department was aiming to avoid putting SAA Technical and Air Chefs into business rescue.

“Mango [Airlines] is being restructured now through business rescue. SAA Technical and Air Chefs, there are discussions that are ongoing with the [labour] unions there to ensure that we have an orderly restructuring of those entities because we believe there are adequate resources to ensure that we do not have to [restructure] without having to go into business rescue or liquidation,” Tlhakudi said.

The Director General explained to the committee why government moved to find a strategic equity partner for the airline.

“The reality that we are facing is that government is no longer in a position where it can fund SAA and the funding that was made available was to ensure that we restructure the airline, we restructure its subsidiaries but, most importantly, that we position them going forward to be sustainable businesses with the risk of funding these businesses reduced and transferred to strategic equity partners. That is the process that started with SAA that led to the Takatso Consortium [being] the preferred SEP (Strategic Equity Partner) for SAA,” he said.

Source: South African Government News Agency