[Letter] Wiser to ignore government

Chris Hattingh | 28 Jul, 2022
Inflation is likely to remain high given that there is little prospect that substantive structural reforms in both the policy and administered price areas will be implemented any time soon (“SA consumers at ‘tipping point’ as food inflation soars, says NielsenIQ”, July 27).

With consumers under pressure from all sides, the Reserve Bank has attempted to use its monetary policy tools to pour water on the inflation and rising prices fire (and through hiking rates). However, the Bank can only go so far. Administered prices from the government’s side, especially in the areas of fuel costs and electricity, feed through into the goods and foods South Africans need on a daily basis.

Opening up the country’s ports and rail networks to private sector skills development would go a long way towards reducing the higher costs farmers, manufacturers and other businesses must deal with when transporting their goods via road freight.

President Cyril Ramaphosa’s latest announcement regarding electricity reforms has been widely hailed. Optimism must be hedged with prudent observation regarding how reforms have thus far been implemented: cosmetically, only on the government’s terms, and in the case of mooted Transnet reforms, where the state-owned entity will retain custodianship over infrastructure investments.

If electricity reforms proceed along similar lines it is unlikely the country will get the required amount of megawatts to avert continued rolling blackouts.

SA businesses should not hedge their future prosperity on reforms promised by the current government. These would require the governing ANC to depart from its most precious ideological commitments, and the networks of influence it has established through cadre deployment.

Instead, businesses must work to ensure their operations can continue regardless of what the government does.

Letter originally published here.

 

CRA events are for subscribers only.

Click here to subscribe

Or click here to log in if you're already a subscriber