SIBONGAKONKE SHOBA | What’s behind lack of debate on minister’s decision?

In 2000, the ANC’s tripartite coalition was roiled by a heated debate over inflation targeting. The left within the alliance — the South African Communist Party and union federation Cosatu — protested the new monetary policy, complaining that it would sentence workers to poverty.The proponents of the policy argued that a 3% to 6% target would protect the currency, lead to economic growth of 6% and create jobs.But the left within the alliance argued that the target would lead to higher interest rates, slow down economic growth and lead to job losses. Instead, at some point, some on the left argued for a higher target.There wasn’t much debate in the alliance on the subject on Wednesday, despite our sister publication, Business Times, having revealed on Sunday that finance minister Enoch Godongwana planned to lower the inflation target when he presented the medium-term budget statement.Former Cosatu general secretary Zwelinzima Vavi became a lone voice, warning about the implications of revising the target down to 3%.The silence from the left in the tripartite alliance following Godongwana’s announcement is deafening. Of course, the SACP and Cosatu did issue lukewarm statements after Godongwana’s speech on Wednesday — but the tone is different to the loud pushback that followed the National Treasury announcement in 2000.“It is shocking that this decision hasn’t created much debate in the ANC and the government.”Godongwana was once opposed to this idea. He is a former unionist. Godongwana, himself a former trade unionist, was not so long ago opposed to the idea. “As a result of this announcement, an expectation has been created that the minister of finance will make an announcement at the medium-term budget policy statement confirming this move to a 3% target. Minister Godongwana has no plans to do this,” read a statement from Godongwana’s office on August 1. Godongwana then announced three months later that the Reserve Bank was to pursue a target of only 3%. “will decrease inflation expectations and inflation, creating room for lower interest rates”. Godongwana stated that these benefits are long-term. “outweigh” Short-term challenges “lower nominal GDP and revenue growth”It is unclear when Godongwana’s mind changed. Was it Kganyago’s convincing argument during their meetings, or was it after engagements with global investment firms, as suggested by Business Times?It is shocking that this decision hasn’t created much debate in the ANC and the government. There may be some merit to a lower inflation goal in the longer term, but SA does not have control over external factors, like crude oil prices, that cause inflation. Reserve Bank may be forced to raise interest rates if these factors are realized. The lack of a heated debate on this issue reflects a weakening trade union movement, and voices that are left-leaning within and outside of the ANC, and the tripartite coalition. Cosatu’s Naledi Institute produced data and research to support its opposition to inflation targeting. But the federation’s statement was pedestrian at best, and failed to raise the alarm that lower inflation would mean lower wages for their constituency. There isn’t even a threat to picket at Godongwana’s door.While the SACP statement captured the effects of lower inflation well in its statement, its promise to “continue mobilising, educating and organising to shift the terrain” The party has lost its influence in the alliance. The party has lost its influence in the alliance.The ANC, on the other hand, appeared to be clueless about the implications of Godongwana’s decision. In the past, the party relied on organisations like Macroeconomic Research Groups (MERG) which were later replaced by National Institute for Economic Policy to formulate economic policy. Luthuli House has been accused of being a place where economic policy is formulated by thumb sucking. Luthuli House is unable to deal with complex issues, and policy decisions are made by government resources. With cadres that follow the GNU’s line, the party can not hold and influence debates about such issues. MK Party is not able to mount an effective campaign for inflation targeting. The EFF is good at sloganeering, but hasn’t so far prioritised monetary policy.Without a strong voice from the organised working class and the vocal middle class, the National Treasury and the Reserve Bank have free rein.Sowetan
2025-11-14 09:02:35