5 questions: ANC economics head on Reserve Bank independence and the Bosasa effect at the polls

Enoch Godongwana. (Pic: Wynand van der Merwe)
Enoch Godongwana. (Pic: Wynand van der Merwe)

Sporting a fedora hat at a rakish angle, Enoch Godongwana, the ANC’s head for the economic transformation sub-committee, can often be spotted outside the party’s conferences, good-humouredly explaining policies to journalists. 

He has become known as the voice of reason, adding context to political rhetoric, which grows particularly loud around election season. 

Godongwana immediately came out to defend the independence of the Reserve Bank after the ANC’s election manifesto promised to expand its mandate to a focus on employment and economic growth while continuing with the current priority of maintaining price stability.

The party’s commitments around the Reserve Bank and resolve to investigating the possibility of setting prescribed assets for pension funds had some sectors of the business community and commentators in a spin, forecasting dire consequences for investment and policy certainty.

Fin24 sat down with Godongwana to discuss the ANC manifesto and electoral chances. 

Fin24:  Is the ANC speaking with one voice on the Reserve Bank?

Enoch Godongwana (EG): The ANC is united on this issue. Some of the commentary can’t distinguish and there has been conflation of complex issues. In terms of nationalisation, that relates to the ownership or structure and it’s not protected in the Constitution. Having private shareholders in a central bank is a historical anomaly and we therefore resolved to address this (at the ANC’s 2017 conference).

Fin24: Could government decide to adjust the inflation target band from the 3%-6% adopted in 2009?

EG: The monetary policy stance is split into two, the inflation target and the instrument. Even the International Monetary Fund in 2010 debated whether central banks should only target inflation. A debate on the macro-economic policy stance is not an attack on the independence of the SARB, everybody does that throughout the world. In terms of which instrument to deploy to control inflation, the Reserve Bank has independence.

Fin24: The asset management industry has been very critical of the possibility of prescribed assets, is this fair, considering some of the debacles at the Public Investment Corporation?

EG: The hysteria has largely been misplaced; if it does happen, it will be directed towards the infrastructure fund, not necessarily directed at state-owned entities - there's no intention to do that. Even in that context, people will find it attractive to invest in any event. If you look at independent power producers (IPPs), banks are running over each other to fund this, without being forced to do so.

Fin24: What impact will the Bosasa revelations and other allegations of massive corruption at the Zondo Commission of inquiry into State Capture have on the ANC’s electoral chances in May?

EG: People are seeing bad things everywhere, but they forget that no other liberation movement has ever opened itself up like this for scrutiny. The ANC is doing this to be able to improve and people understand this. The media puts undue pressure on the ANC to act but we have to allow due process to unfold. We are beginning to address this by fixing the National Prosecuting Authority and the Hawks.

Fin24: The ANC missed the 6 million job opportunities target, promised in 2014. How will you meet the extra 275 000 annual jobs commitment in the 2019 manifesto?

EG: You can’t create jobs if the economy isn't growing. President Cyril Ramaphosa is in the first phase, he’s building confidence. We are realistic, we are not going to do a miracle in two months. In 3-5 years, we plan to see 2%-4% economic growth.

The 275 000 jobs commitment is from the Jobs Summit, it’s a commitment with the private sector. Most people are missing that it’s a figure over and above the 300 000 jobs the economy usually creates annually.

This interview has been lightly edited for brevity.

Brent Crude
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