I’m late. Very late. The taxi drivers are on strike and blockading the M1. I’ve been granted a coveted interview with Reserve Bank Governor Tito Mboweni. He is stickler for time and I’m getting ready for a tongue-lashing.
But the gods are smiling on me and Mboweni is sympathetic with me and mad at the taxis instead. The authorities, he says, should not allow taxi drivers to hold the country to ransom.
He recalls a day in 1996 when long-haul truck drivers blockaded the N3 highway in Mooi River in KwaZuluNatal, demanding to see the minister of labour himself before they would call off their protest. He went to speak to them and they assured him they would move.
They reneged on the promise. Mboweni played hardball. With his Cabinet colleagues, he threatened to send in the military to tow the unruly trucks from the busy highway. When the drivers heard this, they put foot and cleared the highway.
Mboweni’s also been putting foot. The governor who ushered in the period of declining interest rates is slamming on the brakes. But why?
“Most of us, even those that are about 55 years of age, have never lived in a low interest rate environment,” he says, explaining why he has burst the bubble of people like me.
“So when interest rates start to come down, particularly after 1998 (where they reached the 25% peak) to levels below 10%, then people start to spend.
“Consequently, people have been borrowing. Household debt as a percentage is 70% of household income. Three years ago, it was about 50%.”
Mboweni is concerned that there are a lot of people building up debt. When looking at consumer demand figures, there is strong consumer expenditure. One just needs to look at the retail sector to see this.
“The party has been nice, but it needs to slow down now. We need to move from kwaito to slow music,” he says, chuckling. “Expenditure and debt levels are going to run ahead of people’s affordability.”
His strategy is simple and straightforward: to emphasise moderate consumption and savings. If people do not listen, the next option is to increase the interest rates and then continue emphasising the message.
“For a while — up to six months now — we spoke about these things. We began to look like a bulldog with a big bark but no bite. People only get the message when interest rates increase.”
The central bank believes inflation could even go above the 6% range and only then come down, depending on people’s actions.
Mboweni does not mince words or play politics. Last month, he colourfully told MPs that “by June next year your 4X4 vehicles and houses you cannot afford will be repossessed”.
“Arrogant!” the MPs screamed. Many expected Mboweni to be scared and run, whimpering, with his tail between his legs. But no, the resolute governor was happy the message “finally” got home.
“People have stretched themselves to the limit. I spoke to the black middle class and they were worried. I told them to moderate because globally the interest rate cycle is increasing. There are only three or four central banks that have not been increasing their rates.”
Mboweni says the central bank does not want to undermine economic growth, but that growth should be aligned with maintaining the inflation target and overall disciplined management of household expenditure.
“Some slow down is required,” he says. “The growth will still come, especially from the infrastructural expansion that has been happening. We are going to see massive development.”
Mboweni was South Africa’s first post-apartheid labour minister and was the architect of the laws that have restructured the labour market. Growth has also helped.
“This growth has created employment opportunities, but with that came a challenge on the supply side. We do not have a large of number of people who can occupy these positions [that have been created] and we should be honest with ourselves,” he says, in his brutally honest way that makes most love to hate him.
“Is this why you’d rather stick to your Afrikaners?” I ask, in reference to a speech, made at Investment Solutions in October, in which the governor lamented the speed at which he loses black talent and said that “his” Afrikaners stayed. Although he says he was quoted out of context, that he prefers his Afrikaners to black professionals, he concedes that there is a lot that needs to be done to address the lack of skills.
“It takes a long time for one to be proficient and fully au fait with the needs of the workplace. One needs experience, patience, stamina and the spirit of being agents of change in the workplace,” he says.
Mboweni says black people should assert themselves more in the workplace, do what they are appointed to do and not cry racism or resign because of obstacles from white bosses.
In fairness, our governor is an equal opportunity, rub everyone up the wrong way kind of central banker.
At the same breakfast, he spoke his mind about the recently imposed quotas to protect South African textiles from the Chinese import floods. Cosatu called him to order.
“The issue is whether our industries are geared for competition, and what can be done to make them geared while benefiting the consumer. The majority of people want to buy things that they can afford.”
And his criticism of quotas is not meant to protect his access to the best suits money can buy. “Nine out of every 10 suits I wear are tailor-made and made locally, far cheaper than at the shops,” he reassures me, straightening his tie for the umpteenth time.
“I do not mind confronting the issues as long as I can back them up intellectually. Let us discuss the situation and deal with things that can make us better, while agreeing to disagree.”
Mboweni’s tenure ends in 2009. He will have been in office for 10 years by then. Could he be moving further down the road, to the office that Mbeki will be vacating in the same year.
He does not respond to prompting. He says he wants to focus on the job at hand, “although I’d love to be the high commissioner to the Court of St James [in London]”.