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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

South Africa President Cyril Ramaphosa re-assures
jittery investors about Central Bank independence

by Zenzile Khoisan CAPE TOWN South Africa (Xinhua) -- Amid growing market jitters over policy uncertainty over the mandate of the South African central bank, President Cyril Ramaphosa assured on Thursday that his government will maintain the independence of the bank.

As set out by the Constitution, the role of the bank, known as the South African Reserve Bank (SARB), is to protect the value of the currency in the interest of balanced and sustainable economic growth, Ramaphosa said in a statement issued by the ruling African National Congress (ANC).

Ramaphosa was speaking after ANC top officials gave conflicting remarks on the mandate of the SARB.

On Tuesday, ANC Secretary General Ace Magashule said the ANC’s national executive committee (NEC) had agreed at its meeting over the weekend to expand the mandate of the SARB to allow it to focus on economic growth and employment instead of only targeting inflation.

But Magashule’s remarks were refuted by ANC’s economic transformation head, Enoch Godongwana, who said the ruling party had not taken a decision to expand the mandate of the SARB.

Godongwana said Magashule’s comments risk "undermining policy certainty."

Finance Minister Tito Mboweni and SARB Governor Lesetja Kganyago also came out in defence of the SARB’s current mandate, saying any attempt to change its mandate would destabilize the market.

The SARB’s primary mandate "is to protect the value of the currency in the interest of balanced economic growth and development," Mboweni said.

The ANC’s policy confusion over the SARB has sent the local currency of rand plummeting by more than 2 percent against the U.S. dollar since Tuesday.

The confusion highlights the divisions within the ANC and further complicates Ramaphosa’s plan to turn around South Africa’s struggling economy, which contracted by 3.2 percent in the first quarter, its worst performance in a decade.

Referring to the confusion, Ramaphosa said the current spat among top ANC officials "is not helpful."

The government’s policy towards the SARB "has not changed," he stressed.

Unlike most central banks in the world, the SARB has been privately owned since it was established in 1921, but its shareholders have no control over monetary policy, financial stability policy or banking regulations.

Although the independence of the SARB is enshrined in South Africa’s Constitution, the bank has been criticized for failing to help boost the economy and create jobs.

There had been attempts by the ANC to nationalize the SARB so as to enable it to play a more active role in providing economic impetus.

In 2018, the ANC, which would like to see the government owning 100 percent of the bank’s shares instead of the current arrangement where the shares were held by a number of private shareholders, tabled a motion in Parliament to nationalize the central bank but later withdrew the motion due to strong opposition.

The SARB insists that changing the ownership structure of the bank would raise the level of risk and uncertainty for the country in both the financial and economic policy sense.

On Thursday, Ramaphosa said: "It is our desire for the South African Reserve Bank to be publicly owned. However, we recognize that this will come at a cost, which, given our current economic and fiscal situation, is simply not prudent."
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EARLIER REPORTS:

Policy uncertainty continues over mandate of South African central bank

CAPE TOWN South Africa (Xinhua) -- Policy uncertainty continued unabated on Thursday over South Africa’s central bank as the financial market fluctuated due to conflicting remarks by top officials of the ruling African National Congress (ANC) on the bank’s mandate.

This prompted opposition parties to urge the ANC to clarify its policy on the South African Reserve Bank (SARB), the country’s central bank.

"South Africa cannot afford the kind of reckless utterances coming from the ruling party as the consequent policy uncertainty will continue to compromise investment, economic growth and job creation," the Democratic Alliance (DA) warned.

The SARB was put under the spotlight on Tuesday when ANC Secretary General Ace Magashule said the ANC’s national executive committee (NEC) had agreed to expand the mandate of the SARB to allow it to focus on economic growth and employment instead of only targeting inflation.

Magashule’s remarks, however, were refuted by ANC’s economic transformation head, Enoch Godongwana, who said the ruling party had not taken a decision to expand the mandate of the SARB.

Godongwana said Magashule’s comments risk "undermining policy certainty."

Finance Minister Tito Mboweni and SARB Governor Lesetja Kganyago also came out in defense of the SARB’s current mandate, saying any attempt to change the mandate would destabilize the market.

The SARB’s primary mandate "is to protect the value of the currency in the interest of balanced economic growth and development," Mboweni said.

The ANC’s policy confusion over the SARB has sent the local currency of rand plummeting by almost 2 percent against the U.S. dollar since Tuesday.

Observers say the confusion highlights the divisions within the ANC and further complicates President Cyril Ramaphosa’s plan to turn around South Africa’s struggling economy, which contracted by 3.2 percent in the first quarter, its worst performance in a decade.

Unlike most central banks in the world, the SARB has been privately owned since it was established in 1921, but its shareholders have no control over monetary policy, financial stability policy or banking regulations.

Although the independence of the SARB is enshrined in South Africa’s Constitution, the bank has been criticized for failing to help boost the economy and create jobs.

There had been attempts by the ANC to nationalize the SARB so as to enable it to play a more active role in providing economic impetus.

In 2018, the ANC, which would like to see the government owning 100 percent of the bank’s shares instead of the current arrangement where the shares were held by a number of private shareholders, tabled a motion in Parliament to nationalize the central bank, but it later withdrew the motion due to strong opposition.

The SARB insists that changing the ownership structure of the bank could raise the level of risk and uncertainty for the country in both the financial and economic policy sense.

On Thursday, the DA urged Ramaphosa to take a stance on the SARB.

The president has remained silent as the debate unfolds.

The DA said Ramaphosa’s "quiet diplomacy" on the SARB is adding to the country’s economic crisis.

It is time that Ramaphosa publicly clarifies the ANC and his government’s position on the SARB, said DA Shadow Minister of Finance Geordin Hill-Lewis.

"The independence and current mandate of the SARB must remain intact," Hill-Lewis said.

"The DA will use all mechanisms at our disposal to strongly oppose any attempts to change the SARB’s mandate or compromise its independence."
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South African President Cyril Ramaphosa pledges
to revitalize state-owned enterprises

CAPE TOWN South Africa (Xinhua) -- South African President Cyril Ramaphosa on Wednesday pledged to revitalize state-owned enterprises (SOEs), some of them are facing severe financial and operational challenges.

At a meeting with chief executives of over 20 key SOEs in Pretoria, the president reaffirmed the government’s determination to strengthen these entities and ensure their sustainability.

Ramaphosa convened the meeting after the Statistics South Africa released figures on Tuesday which show that the country’s economy declined 3.2 percent in the first three months of 2019.

The president is under growing pressure to restructure SOEs, some of them are on the brink of bankruptcy due to poor management and alleged corruption, particularly electricity utility Eskom which is blamed for worsening power shortage.

Constant power blackouts in the past few months are believed to be one of the main factors that dragged the country’s economic development.

At the meeting, Ramaphosa noted that several SOEs, which are facing severe financial and operational challenges, pose great risks to the South African economy.

He emphasized the critical role of SOEs in meeting social needs and driving economic growth.

This engagement has raised several critical areas that limit the ability of SOEs to drive growth and development, the president said.

These range from inadequate capitalization and poor governance to outdated legislation and political interference, Ramaphosa said.

The government is committed to working with the leadership of SOEs and stakeholders to urgently address these difficulties, he said.

Ramaphosa said he appreciated the frank and open manner in which the executives had raised their concerns.

"Their insights and suggestions are truly refreshing and will greatly assist our efforts to revitalize our state-owned companies and ensure that they properly perform their mandates," he said.

According to Ramaphosa’s office, the meeting came to the conclusion that SOEs have considerable resources and capabilities that, if better coordinated and managed, could have a far greater impact on economic growth and job creation.
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Economist pessimistic after South Africa economy
contracts 3.2 percent in the first quarter of 2019

JOHANNESBURG South Africa (Xinhua) -- Institute of Race Relations chief economist Ian Cruickshanks warned on Wednesday that South Africa’s economic growth could face continued downward pressure.

Speaking to Xinhua on Wednesday, Cruickshanks said the fact that the gross domestic product (GDP) declined by 3.2 percent in the first quarter of 2019 was an indication of more bad news to come.

According to Statistics South Africa, seven of the country’s ten key sectors including manufacturing, trade and mining were on the decline in the first quarter of 2019.

While President Cyril Ramaphosa has reiterated his plans to boost the sluggish economy and attract investment, Cruickshanks said this would not happen overnight.

"Ramaphosa says he is going to resolve these problems, it will take a while to reverse the mismanagement of the last ten years," he said.

When asked about some of the factors behind the 3.2 percent GDP decline, he said several factors were contributing.

"It’s all about a lack of confidence by business sector, foreign and domestic investors.

"Fewer cars, trucks that are being sold, less overall economic activity because of the lack of confidence," he said, data showed that foreigners sold off 44 billion U.S. dollars of South Africa’s equities.

Consumer confidence and consumption were on the decline.

Cruickshanks believed that solving Eskom problems would enable the country to attract new investment.

"As long as Eskom cannot guarantee a reliable cost effective electricity supply, there will be no new investment. Businesses can’t survive when Eskom wants huge tariffs hikes," he said.

South Africa’s GDP recorded a 0.8 percent growth in 2018.

The World Bank forecasted the growth rate at 1.3 percent in 2019.
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South African president urged to take stance on farm murders

CAPE TOWN South Africa (Xinhua) -- President Cyril Ramaphosa has moral obligation to take a stance on farm murders as the scourge continues unabated in South Africa, a civil rights organization said on Wednesday.

AfriForum, which is dedicated to the protection of farmers in the country, made the remarks after Ramaphosa’s spokesperson Khusela Diko told media on Tuesday that the president will not specifically air his views on farm murders because it is the responsibility of the police.

On Tuesday, AfriForum released its latest statistics for farm attacks and murders since the beginning of 2019 till the end of May. AfriForum could verify 184 farm attacks and 20 farm murders in this period.

Farm attacks in the Western Cape province increased extremely, in such a manner that more than double the number of attacks were reported from January 1 to May 31 this year, compared to the same period in 2018, AfriForum said.

Last weekend, Stefan Smit, a wine farmer at the Louisenhof wine estate in Stellenbosch outside Cape Town, was murdered, sending shock waves across the farming communities.

This was the second farm murder in less than a month in the Western Cape province.

The opposition Democratic Alliance (DA) has called for an urgent meeting with National Police Commissioner Khehla Sitole to discuss how to curb rising farm murders in the country.

In South Africa which is among the countries that have the highest crime rate in the world, the rise in farm murders has become a focus of attention.
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South Africa ruling party resolves to grow economy and re-skill youths

JOHANNESBURG South Africa (Xinhua) -- South Africa’s ruling party, the African National Congress (ANC), will immediately implement a five year program to accelerate economic growth, reduce poverty and increase critical skills, said the party on Tuesday.

The ANC General Secretary Ace Magashule said this at a press briefing in Johannesburg. He was briefing the media about the resolutions of the just-ended party lekgotla and national executive committee meeting.

He stated that the ANC is addressing the issues which were raised by the people when they were doing door to door campaigns this year in preparation for elections.

"We want to transform the economy to serve all South Africans and create jobs. Jobs are not only created by the government.

"We want to create conducive environment so that investors can come and invest, provide technical skills and create jobs," said Magashule.

Magashule said the ANC would like to skill and reskill 3.5 million youth and reduce unemployment from 27 percent to 14 percent in the next five years.

He said the ANC is going to build a corruption-free, efficient government, adding all local and national government officials would sign performance forms and be removed from office if they do not deliver service.

"We want to build a better Africa and the world.

"We want to continue and sustain the relations we have with our global partners like BRICS countries.

"We know our reliable friends who have been with us during the struggle.

"South Africa is where it is because of the solidarity of many countries." he said.

Lekgotla is an annually meeting by the ANC and alliance partners and others like business where they take stock of their performance and craft measures to take the country forward.

             

 

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