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Cape Town - The Congress of South African Trade Unions (Cosatu) is enraged by SA Reserve Bank (SARB) governor Lesetja Kganyago.
The labour union federation on Friday issued a sweeping statement charging that the Reserve Bank is entrenching apartheid economic policy.
This followed Kganyago's remark relating to fears that the bank's independence is under threat. “The independence of the Reserve Bank was enshrined in the interim Constitution,” he said following the repo rate announcement on Thursday.
Kganyago explained that when the Constitution was adopted it was subject to the Constitutional court to ensure it remained consistent. Whatever changes to be made must be consistent with the original Constitutional principles that have been laid out.
He added that no president or finance minister had ever attempted to tell the SARB how to go about executing its mandate.
"As we are sitting here, we are standing on the shoulders of the giants that preceded us."
Kganyago made it clear that the bank has very strong governance structures to ensure that anyone thinking they can instruct it would face a significant rebuttal. "I don't think anyone wants to try it this time around either."
However, Cosatu has taken issue with this view expressed by Kganyago.
"The statement by the Governor of the Reserve Bank, Mr Lesetja Kganyago that no one can change the independence of the South African Reserve Bank and that they stand on the shoulders of the giants is evidence of what is wrong with the Reserve Bank," said spokesperson Sizwe Pamla.
"The only giants that Mr Kganyago and his friends are standing on top of are people like Dr Chris Stals and other apartheid 'giants', who ensured that the post 1994 dispensation was going to be about preserving the inherited privileges and ill-gotten gains of apartheid beneficiaries."
Pamla claimed that prior to the adoption of the Constitution "various apartheid commentators and intellectuals" argued that the interest rate policy cannot be used on a discriminatory basis and that any intervention in the market should be through inflation targeting using interest rates to control inflation and not through administrative controls.
"The current policy of low inflation has entrenched apartheid economic policy of separate development, income and asset inequalities. An ordinary person without a job would prefer a job over inflation. Better some job whose pay has declined in real terms by a few percent than no job. Low inflation has resulted in financial instability, recession, layoffs and no job security," according to Cosatu.
The labour union federation is calling for a central bank that will pursue an inclusive monetary policy and that will regulate the financial sector. Cosatu said it wants this to be done with a view to ensuring that there is redistribution of income and wealth to all South Africans as mandated by the freedom charter.
"Focusing only on inflation is wrong when a large part of the cause of inflation is imported in the form of oil prices and food prices and when the only beneficiaries of this policy are bond holders."
Cosatu also claimed that the independence of the Reserve Bank is a myth. "The bank is currently only notionally independent as it generally subscribes to the dominant and conventional, but failing policies received from finance capital – even at the expense of real producers of wealth in mining and manufacturing."
The labour union federation said it will continue to fight for a fully publicly owned Reserve Bank that will account to the public through their representatives in Parliament.
"This also means that the appointments to the bank must also be subject to the same parliamentary processes. The Reserve Bank should be taken from the banks and restored to the people to whom it belongs."
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