SACP’s Mapaila has owned up to raising the explosive issue of quantitative easing, which showed a massive division in the ANC
SA Communist Party (SACP) deputy general secretary Solly Mapaila yesterday owned up to being the source of the economic term – quantitative easing – that exposed the ANC as a house divided this week.
The rand went into a tailspin shortly after ANC secretary-general Ace Magashule said the party’s lekgotla had resolved to set up a task team to look into quantitative easing as a means of arresting rampant unemployment and poverty.
Mapaila told City Press yesterday, on the sidelines of a sitting of the SACP’s central committee, that he had raised the issue in the plenary of last week’s lekgotla.
“I had stood up to raise a question, which is a party position, about the expansion of the mandate of the Reserve Bank, [saying] that the mandate should include economic growth, as well as tackle unemployment,” Mapaila said.
The deputy general secretary went as far as to say that utterances by the ANC’s economic policy guru, Enoch Godongwana, and Tito Mboweni contributed to the reaction of the markets this week.
The two came out strongly against Magashule’s announcement, saying no such decision had been taken. Singing from the same hymn book, Reserve Bank governor Lesetja Kganyago said that it was clear “the barbarians are at the gate”.
Mapaila said the three men had displayed great “arrogance” in their posture and that Mboweni and Godongwana had, in fact, misconstrued the operational independence of the Reserve Bank with its policy independence.
Quoting the Constitution, Mapaila said the primary objective of the Reserve Bank was to protect the value of the currency in the interest of balanced and sustainable growth in the republic.
“We don’t have sustainable and balanced economic growth in this country; our economy has been shedding jobs. Is that sustainable economic growth? It is a chaotic economic growth – it is not sustainable,” Mapaila said.
He said the Constitution stated that there should be regular consultation between the central bank and the Cabinet member responsible for national financial matters.
“That is the minister of finance, in our case. It is clear once the policy mandate [about the Reserve Bank] has been clarified, it is independent. Its goes and functions.
“So, for a political party that has won elections, when it says ‘we want to change this’, it is not illogical, it is constitutional.”
Mapaila said after the ANC’s elective conference at Nasrec in 2017, it had a responsibility to clarify the decision [about the central bank] through an act of Parliament which it could then take to the Reserve Bank to execute.
“So Enoch comes out and creates an impression that it was not a collective decision of the ANC, it is wrong. It was. So, on the one hand, we don’t agree with Enoch and Tito in their posture [and] we think they exaggerated this matter in public, in fact they contributed to the response of the international market to this one by their response.”
The SACP leader warned against the matter being used as a political football by factions of the ANC. He said the SACP would not back down from its support of quantitative easing just because it had been adopted by a populist faction within the ANC.
“The measure of quantity easing is used for instance when an economy is faced with high rates of unemployment. In our case we have high unemployment and high interest rates. That is the reality so it means we have to lower interest rates. If you do that you allow more money into the economy and people can borrow money because it is not difficult to repay the money.
“We are saying we have a lot of debt in this country that is rand-denominated. For instance Eskom’s big debt is owing institutions like the PIC [Public Investment Corporation]. So if you owe the PIC, you are owing it in rands. What we are saying is that if you use quantitative easing measures within rand-denominated debt, you go and buy the debt of Eskom – the PIC debt in Eskom – when you buy it, it means now the PIC is free to use the money for other initiatives. But when you do so, you also guide that process, it is not unguided.”
Mapaila warned that public representatives served at the behest of the party and should not “defy the party and must be clear and consistent in its messages”.
The raging storm in the ANC and the alliance about this issue was calmed down only when the ANC’s top six met on Thursday and later issued a statement to the effect that while it was their desire for the Reserve Bank to be publicly owned, they recognised that this would come at a cost and was not prudent because of the prevailing economic and fiscal situation.
The statement was issued in Ramaphosa’s name.
A national executive committee (NEC) member said the approach taken by Magashule when announcing the Reserve Bank discussions at the lekgotla had been clumsy and the matter should have been handled in a similar fashion to the land expropriation without compensation debate, particularly the manner in which the party was able to marshal the financial markets.
“Dropping a bombshell on the market like that was not a strategic move and that is why all steps are being taken now to bring some clarity and certainty.”
However, said the person, Magashule correctly reflected the discussions at the lekgotla and those who lost the economic transformation debate in Nasrec were notoriously trying to open the debate again and win the battle in the media.
Another NEC member said the norm some years back had been that the final report, especially at the NEC meeting, was read out to everyone in the meeting before it was made public to ensure that it enjoyed collective support and there were no surprises.
Although the lekgotla was a much broader platform, including alliance, national, provincial and local government leaders and observers, Magashule should have had the courtesy to run the final report past the chairpersons of all the commissions that sat to ensure they agreed with the record of discussions and decisions.
“In a case like the one on the Reserve Bank it would have been ideal that the secretary-general consult the chairperson of the commission, the minister of finance and even the governor of the Reserve Bank to ensure that everyone is on the same page.”
The person said the problem with Magashule was not always that he was malicious, but that he was often too casual.
The person said his position as the engine of the ANC needed someone that would run a tight operation.
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