The current repo rate will  do nothing to help the economy or reduce unemployment

25 January 2017

The Congress of South African Trade Unions {COSATU} has noted the decision by the South African Reserve Bank’s monetary Policy Committee to keep the interests rates on hold.  This decision falls far short of the urgent and necessary decrease in interest rates in order to stimulate the economy and create new decent jobs.

The Reserve Bank is sleepwalking into an abyss and unfortunately it is taking the rest of South Africa with it. It is totally astounding that South Africa continues to have high interest rates, when many governments around the world are slashing rates to save jobs.

This fanatical stance on interests rates has already made the South African exports uncompetitive and as a result has decimated many sectors of the economy. This makes a mockery of any commitment to reviving the ailing manufacturing sector ,because many companies are not going to borrow any money from the banks in order to expand their operations and create more jobs.

It is also ridiculous for government to keep on saying that small businesses are the ones that will help grow the economy and create jobs,  because the current high interests rates will deter them from raising capital and  expanding their current businesses or set up new ones.

These small businesses are already struggling with high administered prices such as electricity and transport costs and the non- availability of cheap finance.

While , we are livid about this blatant failure and indifference of the Reserve Bank to the plight of the struggling and poor majority , we are not surprised because they have proven to everyone for a long time that they are not there to serve nor represent the interests of the poor majority. They do not care about the millions of indigent communities , who are devastated by the   rocketing food, fuel and electricity prices. We can only wish that they cared as much about saving and protecting jobs as they do about saving their friends at Absa, Sanlam, Bankorp and African Bank.

We reiterate our call that the Reserve Bank’s mandate needs to be changed and moved away from the narrow focus of combating inflation to prioritise employment, economic growth and redistribution targets. The ultimate solution is for the Reserve Bank to be nationalised.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 25 January 2017