“BUSINESS CASE FOR RESERVE BANK TO DIRECTLY MONETIZE PRODUCTIVE SECTORS OF THE ECONOMY”

FOREWORD

SOUTH AFRICA, NO ONE IS COMING TO SAVE YOU! No foreign government! No foreign institution! and certainly no heritage fund!

It is the proposal of this document for the South African Reserve Bank to provide productive credit for massive industrialization and associated infrastructure development to the tune of R100 billion per annum for the next 10 years. The private sector can match the same investment. We need to turn the country into a construction site to create jobs for 10 million unemployed South Africans.

Many progressive economic analysts, i.e Duma Qgubule, Redge Nkosi, Chris Malikane, Buddy Wells, etc have demonstrated how SARB has capacity to directly intervene in the economy. Duma Qgubule argues the following:” South Africa is a sovereign state that issues its own currency. Therefore, it cannot fail to meet its financial obligations in its own currency unless it chooses to do so”.

This document outlines sectors of the economy where capital resources from SARB can be directed to boost economic growth and job creation and how the funds can be distributed to curb corruption. We need to build a new economy of the future that can provide opportunities to millions of young people. Without radical intervention in the economy, we risk subjecting majority of South Africans to intergenerational perpetual poverty.

The unemployment crisis, particularly amongst young people is a ticking time bomb. If riots of July 2021 are anything to go by, we should brace ourselves for similar chaotic scenes, if not worse, in the future. It cannot be business as usual. Inequality and joblessness are not sustainable. In the end, we all stand to lose.

According to a report by OECD, it will take 9 generations (approximately 225 years) for those born in low income families to reach mean income levels in South Africa. This speaks to unequal income levels between racial groups in South Africa. It is inconceivable how to this day the situation continues unabated when the country has the means to deal decisively with this crisis. It is incomprehensible how we have one of the highest unemployment in the world given capital resources at our disposal. We are the 2nd largest economy in Africa with an impressive GDP per capita of USD 6100.

There is paradigm shift in the world economy towards a green economy. South Africa has once-in-generation-opportunity to create jobs and boost economic growth. A green energy transition has potential to address joblessness, boost economic growth and ensure energy security, while also addressing economic inequality and mitigating climate change. We need to ensure a just energy transition.

South Africa has had jobless economic growth since the dawn of democracy. This can largely be attributed to an economy driven by private capitalism and is demonstrated by large cash reserves of top leading JSE listed companies running into trillions. There is an opportunity to achieve an inclusive and equitable economy which can be done through state driven capitalism. China and other South East Asian countries are good examples of how this can be achieved. We need to look within our own economic levers, i.e. South African Reserve Bank, to build an inclusive and equitable economy of the future.

We are looking to engage office of economic development on this subject.

We have a full document available to send to your office.

Kind regards,
Nhlanhla Sophaza