COSATU statement on the South African Reserve Bank’s decision to increase the interest rates

  The Congress of South African Trade Unions (COSATU) has noted the South African Reserve Bank’s decision to increase the repo rate by 25 basis points in response to the rising inflation levels. Unfortunately, in the current reality where 27 million people are on welfare and workers’ wages remain stagnant, runaway inflation cannot be allowed to continue erode worker’s meagre stipends.  

The Federation acknowledges that price stability is important since we currently depend on capitalists for job-creation and growth.  The persisting global crisis continues to weigh down heavily on the South African economy. Like much of the rest of the world, the South African economy continues to suffer from the fallout from the Russia-Ukraine war and the sky rocketing price of fuel.  

But there is a lot that government can still do at a macro level to cushion South Africans from this crisis. There is an urgent need to move the country away from being overly dependent upon the ever increasing and volatile international oil prices and other factors spurring inflation.    

These include expediting short-term relief and the cushioning South African consumers from volatile prices.  Finance Minister Enoch Godongwana and Mineral Resources and Energy Minister Gwede Mantashe must release relief proposals urgently that will be meaningful to consumers.  A 3 cents relief will not suffice when the fuel price is being increased by Rands every month.  

COSATU has always been vocal on the need for a fuel cap in cases when the fuel prices continue to rise. Fuel caps are realistic, beneficial, feasible and easy to implement to protect financially stressed workers and the poor.     

Government needs to finalise an overhaul of the fuel price regime and place the Road Accident Fund (RAF) on a sustainable trajectory.  The RAF is the state’s largest liability at nearly R400 billion, after Eskom.  A large proportion of the fuel price regime is to fund a bankrupt RAF.  Government needs to reintroduce the RAF and RABS Bills at Parliament which will help reduce the bleeding at the RAF and place it on a sustainable path.  

Minister Mbalula also needs to get all Metro Rail lines operating again.  This is the most effective and affordable way of moving mainly urban workers from cars and off the roads into a more affordable public transport. The Department must implement the integrated public transport plan so that more workers can opt to use rail as opposed to other methods of transportation.   

There is an urgent need to finalise Eskom’s debt relief package.Reducing Eskom’s unbearable debt burden of R400 billion to a more manageable level of R200 billion will ease its financial crises and thus remove its need for constant above inflation and double-digit tariff hikes.  It will enable Eskom to focus on maintenance and investing in new generation and reduce load shedding.  This will help the economy to grow.  

South Africa also needs to drastically increase local manufacturing and the buy local campaigns.This will lessen our dependency on imported goods, reduce consumer inflation, protect, create local manufacturing, and value chain jobs. For decades now, the COSATU and its Affiliates have called for focused measures to increase employment on a mass scale through manufacturing and other identified potential growth sectors. The country cannot afford to fold its arms and accept our status as importers of unfairly imported manufactured goods that are subject to geopolitical instability. No nation has ever developed its economy and population by making itself the dormant recipient of finished goods from other countries   

The global COVID-19 pandemic and the Russia-Ukraine war have demonstrated the importance of national self-reliance in manufacturing. Covid-19 disrupted global supply chains and the war in Ukraine has resulted in spiraling shipping costs of imported goods.  

The Federation remains stridently opposed to the Reserve Bank’s narrow pursuit of the protection of the value of the currency.  Only focusing on inflation targeting is wrong when a large part of the cause of inflation is imported in the form of oil prices and food prices. The big challenge for government is to find a solution to the forever rising price of such critical supplies as fuel and electricity.   

The Reserve Bank needs to master the balance of maintaining inflation-targeting, protecting the value of the rand, living standards and the value of investment capitals, whilst still prioritising employment. The current situation needs imaginative and bold leaders at all levels if South Africa is to survive the global uncertainty and escape the current economic stagnation.    

Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)    

Tel: 011 339 4911
Cell: 060 975 6794