The global economy has fallen out of bed — and alas, we are part of that economic order. We sell things to it and buy things from it. Thanks largely to massive investments by government in infrastructure and to the stability of our financial institutions, we have been relatively insulated from collapsing global markets.
But the growth figures out this week, which showed that the economy contracted by 1.8% in the last quarter, suggest that the worst effects of the global meltdown are beginning to be felt here too.
Liquidations jumped 68% in January from last year to 270 companies, while the National Credit Regulator says that 4 500 South Africans are applying for debt counselling every month.
South Africa’s largest company, Anglo American, has decided for the first time in 70 years to cut its dividend, is shelving new projects and slashing jobs. It has received a debt rating downgrade.
Things are so bad that the car industry is reported to have taken a begging bowl to government in the hope of a bail-out. The industry, made up for the most part by some of the biggest brand names in the world — Toyota, Volkswagen, General Motors, Ford, BMW, Mercedes and Nissan — is playing its cards close to its chest, but it appears that what it wants, in essence, is cheaper money.
Well, so do we all.
What is additionally disturbing is that despite the visible signs of economic downturn, sections of the economy are showing price resilience — particularly food, where prices increased between December and January by an annualised 16.1%. The only item to eclipse this was financial services charges, where bank charges according to Stats SA played a large part in the 17.1% year-on-year increase.
These food and services items pushed the official inflation rate in January, compared with the same period last year, to a disappointing 8.1% against expectations of 7.3%.
But one should not take this too seriously — overall, inflation is on a strong, downward trajectory, having moved steadily down from its 13.7% peak a few months back. At 8.1%, inflation is not too far outside of the 3% to 6% target range.
With prime rates at 14% and the repo rate at 10.5% there is room for a rate cut before the monetary policy committee’s next scheduled meeting on April 14.
By calling an early indaba the man with the beaded knobkerrie, Tito Mboweni, will be acknowledging that there is room for a cut and that this is no time to err on the side of caution.
If Mboweni has any doubt that this is the right thing to do, he could peruse the international data — which continues to highlight the fact that monetary policy in South Africa remains hawkish compared with 27 of our peers.
The South African economy needs a bail-out in the form of cheaper money — for all of us.
And just as in the United States, where a tsar has been proposed to oversee the restructuring of the car industry, there is room in our country for an inflation supremo to name and shame those parties and sectors that keep on driving up their prices, to the distress of the rest of us.
We nominate Pick n Pay’s Nick Badminton for the job.
Please Fifa, we want more
The boundless celebrations of 2004 that kicked off the biggest collective party in the country when South Africa won the privilege to host the 2010 Fifa World Cup are still fresh in our memories.
Historically an African football fan could only dream of being at a World Cup final. The cost alone of getting to Europe or the Americas — the likely destinations for finals — is simply a luxury the majority of us could not afford.
It was against this background that the news of Africa’s first World Cup was greeted with euphoria across the continent. African football fans could at last realise their cherished ambition of being part of the global spectacle of the number one sport in the continent.
However, the high hopes appear to be diminishing with each passing day. It turns out that we may well be mere spectators in our back yard as richer tourists from overseas descend on the country and snap up most of the available tickets.
It is our strong view that the two systems for purchasing the three million available tickets that went on sale last week militate against the average African fan. Applications for the tickets can either be made online or obtained at First National Bank.
Africa is a Third World continent with the greater population having no access to a computer, let alone the internet. It is no wonder that after the first 48 hours of sale, South Africa was the only African country in the top eight countries from which the initial 300 000 applications were received. Results from the FNB applications have not been made public but the rural populace and those with no access to computers have, in all seriousness, been locked out of the stadiums way before kick-off.
Moreover, from the three million, Fifa is to grab one million for its affiliates and special guests — leaving about two million for the public.
We therefore implore Fifa to formulate an alternative that ensures more of our neighbouring brothers and sisters enjoy the fruits of Africa’s first World Cup.