Administered prices are a tool by which governments cushion the poor and strategically shield primary domestic industries. It is a strategic government instrument through which governments intervene to ensure that the vagaries of markets do not harm the poor. So goods and services such as electricity, mealie meal, Lucky Star, tripe, samp, paraffin, diesel and transport cannot be priced above a government-set limit.
The late former governor of the South African Reserve Bank ,Tito Mboweni, invited the directors-general for dinner at the Bank early in 2000s. This was quite prophetic if one recollects the essence of the meeting beyond the wicked sense of humour that matured on him, especially that which accompanied his culinary skills.
The invitation had no agenda besides a meet and greet with some preliminary derogatory remarks on our manner of dress, the great dish the Bank had prepared and how worthy of being embellished it would be. When he started to address us the hidden agenda revealed itself. It was not about how we had not dressed presentably in governor-like striped “purelana” suits. The princely and pricey Living Standards Measure (LSM) 10, three-course meal was far removed from his post-service gourmet of the LSM 1 of Lucky Star and garlic meal.
Ours was to ensure that the prices of these goods and services were kept well below the level of inflation. But that was not to be.
His message was truly profound. It was focused on administered prices. Thus, some 22 years later , this message rises from the interment of his remains with such forceful impact. Shortly after that South Africa adopted inflation targeting. His message was about the management of the administered prices regime which when left unchecked could undermine the cushioning of the poor and basic inputs into industry.
What Mboweni talked to us about sadly came to pass. Ours was to ensure that the prices of these goods and services were kept well below the level of inflation. But that was not to be. The culpability of this failure manifests itself like crops germinating out of fields that were treated to broadcasting of seed during the planting season.
The municipalities in particular are where the plant and weed are indistinguishable and bear the brunt of the anger of citizens and the rage of central government.
Yet in this desperate situation, some municipalities have found pathways out of qualified audits and deserve our applause. But still they can only go that far, but can hardly move beyond the threshold of technical solutions. Poverty of citizens faces them just as equally.
Successive censuses reveal a dramatic point of inflection in progression towards a better life for all. The 2001 to 2011 censuses showed a monotonic decline in poverty in South Africa, but a serious point of inflection shows that from 2011 to 2016, a third of the municipalities reversed the gains they had in the preceding 10 years. In that period the rate of growth in the share of the unemployed as a driver of poverty doubled in half the time of the preceding decade. That acceleration can only herald disaster and cannot stop a vulture culture in the nation given the momentum of gross corruption and neglect that manifested itself in the 2016-24 period.
While municipalities bear the brunt of this sharp decline, culpability is all over our policy designs including the regulatory framework over which the Reserve Bank presides. Perhaps if the meetings Mboweni had initiated continued we could have had a prospect of dissecting our policy ecosystem and avoided the catastrophic real and metaphorical sewer we now live in.
With a looming water crisis the sewerage will be difficult to move and will form an unstoppable glacial cliff. Confronting the demon of poverty, inequality and unemployment is what we should expect from the MTBPS, with proof of foresight for directly impacting these wicked problems. May the soul of the former governor rest in peace and may his family find solace and the wound of loss heal.
Dr Pali Lehohla is a professor of practice at the University of Johannesburg, a research associate at Oxford University, a board member of Institute for Economic Justice at Wits and a distinguished alumni of the University of Ghana. He is the former statistician-general of South Africa
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