Nationalisation: Reserve Bank governor critical

Those debating the nationalisation of mines need to look at how well government-controlled entities function, before deciding “what works”, SA Reserve Bank governor Gill Marcus said in Soweto on Tuesday.

“We need to look at this not from an ideological point of view, but from the point of view of what works,” Marcus said in a lecture at the University of Johannesburg.

“If we want to look at the nationalisation of anything in South Africa, look at entities we do control and ask is that the most efficient and effective.

“I ask let this not be an ideological debate. It should be what delivers for the economy.”

Marcus said if South Africa had an efficient and effective state “a lot of issues” it was facing would be improved.

“Think about it quite carefully. It should be about what makes the economy work.

“Let’s face it if you want it to work, you have to have skills and capacity to do that,” she said.

Marcus said inflation was likely to come under pressure from a sustained major demand for oil. Conflicts in North Africa meanwhile, were expected to affect supply.

“Demand is likely to keep oil prices quite high,” she said.

“If you look at prices into future, it will impact on the question of inflation.”

Marcus said food inflation was likely to be high in 2010 as oil prices rose. “If we look at oil price increases… petrol for a year on year has risen by 12.3 percent. We know how that feeds through, if we have a petrol price increase.”

Southern Africa would have to look at food security and production, she said.

“South Africa is a drought prone country. The region is not. The region has areas very fertile. What is the food security strategy for the region?”

Marcus said if South Africa wanted to address its “huge” unemployment challenge, it would have “grow better”.

“It has to be growth that absorbs labour.”

South Africa had sustained growth of 5.5 percent for a number of years, yet unemployment had remained around 22 percent. The economy was expected grow at around 3.6 or 3.7 percent this year.

“Even when growing well, we weren’t really resolving the unemployment questions. The challenge for us is what is the structural question in unemployment. We all know the answer to that.” It was education and skills.

She said one recent report found that if South Africa had 60,000 artisans they would be employed “today”.

How the level of skills was tackled, she said, should be part and parcel of how unemployment was tackled.

A problem for the South African economy was that growth was being fuelled by consumers and not by investment.

“We want investment-led growth. At the moment it is being driven by consumers,” she said.

“Household debt is at about 77 percent of disposable income. This means you have only 23 percent of your disposable income to spend on something else other than servicing your debt.

http://www.moneyweb.co.za/mw/view/mw/en/page295025?oid=534284&sn=2009+Detail [date:] 2011-03-30

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