The real numbers: GDP numbers have a chilling effect on SA
THE REAL NUMBERS: Pali Lehohla is the former Statistician-General for Statistics South Africa
JOHANNESBURG – The report of the Statistician-General Risenga Maluleke on growth numbers for the second quarter had a chilling effect on South Africa and the markets reacted with a significant spike downwards in the value of the rand relative to the American dollar as well as the British pound.
A one unit rand has literally equalled 0.07 American cents and 0.05 cents British pounds.
In its heydays and for a prolonged period of time R2 equalled £1 and that was a standard. In 1980 US$1 was equal to R0.75 cents.
In 1979 South Africa created what it called a financial rand that ran parallel with the rand and was abolished in 1983.
The Rand had by then slid to almost R3.00 to a dollar. In 2001 December the rand declined very sharply and tangoed with the dollar at R11.00 and then stabilized back to about R 6.00. A level it maintained for a length of time.
The gross domestic product (GDP) report of Maluleke puts the Reserve Bank Governor Lesetja Kganyago in a tight spot on whether he increases interest rates or not. If he does he is damned and if he does not he is equally damned. He is in a typical Bapedi chieftaincy kraal, (khomo ea moshate ) where any choice has difficult consequences.
The tango of the duo, namely the statistician-general and the governor has been joined by another tango a trio -tango in different rooms but dancing to the same tune – transport costs.
The parties involved in this trio tango are the Honourable Minister of Transport Blade Nzimande, Honourable Energy Minister Jeff Radebe and the ANC. Maluleke’s growth numbers of a recession added to a few more cats amongst the already panicky pigeons.
Radebe has just provided long needed relief to consumers by dishing out half a billion rands to manage the menacing consequences in the increase of fuel prices. This of course happened after a citizens march on #priceofpetrolmustfall. The growth numbers and the fall of the rand suggests that Radebe has to find another half a billion to keep the petrol must fall marches at bay.
He has taken his appeal to petrol producers. Even if we wished him luck, unfortunately at Opec luck remains an unknown commodity.
For how long his tango will last is a matter of time and this is as Nzimade legitimately raises the question of the infrastructure having to be paid for.
Others had earlier suggested that the e-tolls should be paid through the fuel levy, but having failed to decide one way or the other Radebe has run ahead of Nzimande and dished out half a billion of the levy to buttress the strain of petrol prices on consumers.
Nzimande is red faced as highly placed people in the party tell him straight in the face that the e-tolls is a dead story – it is a story the premier knows about and the president too, so the tag line goes.
Nzimande has been on this lane before – to find money for #feesmustfall whilst he was the Minister for Education.
While the e-tolls remain unpaid, what will run out is also Radebe’s petrol “manna” and soon both Nzimande and Radebe will face the same plight given what Kganyago on the basis of Maluleke’s numbers might do.
Kganyago is less likely to hold the interests rates steady, given the shape of the rand and the price of petrol and compounding his woes is the technical recession South Africa has entered into.
His headache is not going to go away soon given the decision of the ruling party to nationalise the Reserve Bank.
While this possibility seems remote but the intensity of sporadic scuds in the direction of the implementation of the decision will give him sleepless nights. We are in a mess of our own calling.
In September 2017 as a parting shot, I released the poverty numbers as well as the GDP second quarter numbers and subsequently briefed Cabinet on this.
All these were telling a long struggle although some in Cabinet wanted an easy culprit and ascribed the evidence to drought.
I suggested to them that while I cannot predict the future, the past is so obvious that it is not drought that is the culprit, but inherently the demise cuts deep with endemic consequences on the state of our demography that has set in place a tempo that is irreversible.
The drought effects are neither here nor there.
In short like the mistakes of predicting the economy like Russian politician Boris Yeltsin, I said September 2017 was much better than September next year – 2018. That was the crystal ball. We would have certainly been a little cheerful if we saw a bit of green.
The growth numbers Maluleke has released will leave Radebe and Nzimande and the ANC on a long unending tango of e-tolls and petrol price – a consequence in part of our perpetual diversity in counsel and command.
Their woes are going to be compounded by Kganyago’s difficult decision on rates – a matter he said he will not hesitate to implement should the times dictate. The signs of the times are now obvious – Kganyago will act.
Faced with a tough year ahead of elections we better know now that our perpetual diversity in both counsel and command does not and cannot work as it leaves no one accountable.
South Africa will have to think hard about the urgent necessity for better and evidence based planning. That will make our tango rhythmic and national – A true Madiba Jive.
Dr Pali Lehohla is the former statistician-general of South Africa and former head of Statistics South Africa.
– BUSINESS REPORT
Source: iol.co.za