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Nzimande slams banks which are 'making a killing' off SA's poor
November 22, 2009
South African commercial banks are benefitting from monetary policy and high interest rates are "throttling" the poor, the SACP secretary- general Blade Nzimande has said.
The ANC is under increasing pressure from its allies in the SACP and Cosatu to introduce economic policies that help the poor.
"The major beneficiaries of the monetary policy in the past have been the banks. They have been making a killing. Yet the very same banks are not investing back," said Nzimande.
The Reserve Bank has cut its repo rate - at which private sector banks borrow rands from the central bank - by 5 percentage points to 7 percent between December last year and August to stimulate an economy that is in its first recession since 1992.
But despite the rate cuts, consumer spending is depressed and credit growth weak as households and company balance sheets remain under stress. Banks have also been criticised for high banking fees.
Nzimande, the Higher Education Minister, said the SACP was concerned the Reserve Bank was perceived to be a private bank with no representation from outside the bank on its interest-rate-setting monetary policy committee.
"You get all those private people who are sitting in that monetary policy committee with no input from anywhere else other than from among themselves - that's what we have a problem with".
The ANC, SACP and Cosatu agreed at a summit last weekend to look at broadening the mandate of the Reserve Bank beyond only controlling inflation.
"We have also allowed a policy where monetary policy has determined our economic priorities and it should have been the other way around," Nzimande said.
The communists and labour are demanding that inflation targeting be scrapped and the Reserve Bank focus on job creation after a million jobs have been lost so far this year.
With South Africa in the midst of its first recession in over a decade, Nzimande called for the government's institutions and policies to reflect a "growth and development" agenda. - Reuters
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