Reserve Bank expected to cut interest rates marginally as inflation moderates:
The South African Reserve Bank will probably cut interest rates by 25 basis points — bringing the benchmark repo rate to 8% — when it concludes its latest monetary policy meeting on Thursday, given a moderation in inflation to its lowest level in more than three years and still sluggish economic growth.
According to the most recent data from Statistics South Africa, inflation dipped to 4.6% year-on-year in July from 5.1% in June, reaching its lowest rate it has been since July 2021.
In July the central bank’s monetary policy committee (MPC), which meets once every two months to make a call on interest rates, predicted consumer inflation to be at 4.9% this year, a downward revision from its previous forecast of 5.1%. The bank said it was concerned about high interest rates globally, including the United States, adding that rates may stay higher for even longer than markets anticipated.
In a statement this week, Nedbank said most of the upside risks cited by the MPC at its July policy meeting have receded.
“The rand strengthened significantly over August and held up relatively well in early September,” it said.
“With the US Fed [United States Federal Reserve] announcing its pivot towards rate cuts and most other major central banks already in easing mode, it seems unlikely that the higher-for-longer narrative will unsettle global risk appetites in the months ahead.”
Investec economist Lara Hodes said inflation has eased globally, as well as domestically, and the Fed is widely projected to cut the interest rate this week — by 25 basis points’ according to Reuters — the first reduction in four years.
Stanlib economist Kevin Lings said now is a good time for the Reserve Bank to gradually cut interest rates; by 25 basis points in September and another 25 basis points in November, which would effectively reduce rates by half a percent this year.
“I think the Reserve Bank can adopt a gradual approach to rate reductions, and if they feel that it’s justified, then obviously they could at any point, accelerate that,” he said.
“They can carry on cutting at every meeting next year, with the aim of getting the interest rate down to the repo rate down to 7%. Given that the repo rate is 8.25%, that would give you 125 basis points of cuts, and you would then be at a kind of a neutral interest rate, and you would then be looking to keep rates on hold and judge whether you need to do more from that point.”
Many global economies have been cutting interest rates recently, and South Africa has been rather conservative in its approach, Lings said, noting how the central bank has kept the domestic rate at 8.25% since May 2023. With the Fed expected to cut on Wednesday, it eases the pressure on other countries.
“That will help the world economy with the current interest rate cutting cycle, and it makes it easier for everybody to continue their rate cutting process. I think it would certainly help South Africa,” Lings said.
Some analysts have long argued for a rate cut, given a lacklustre economy which grew by just 0.4% in the second quarter of 2024 — after being flat in the first — helped largely by improved electricity supply. Weak economic growth, coupled with a slightly stronger rand, justifies a rate cut, Lings said.
Nedbank said it expects inflation to stabilise just below the Reserve Bank’s 4.5% target over the next three years.
“Headline inflation is forecast to remain at 4.6% in August before cooling to end the year at around 4.1%. Altogether, we forecast inflation to average 4.8% in 2024, 4.3% in 2025 and 4.4% in 2026,” the bank said in a note.
It said it expected another 25 basis point rate cut in November in addition to the one predicted this week, taking the repo rate to 7.75% by the end of 2024. At this stage, a further 75 basis point reduction in 2025 is possible, Nedbank added.
Lings said that if the Reserve Bank cuts the rate further, consistently, this will boost consumer confidence and lift the economy.
“Interest rates work immediately. There are some positive effects, but the full effect is generally felt in 12 to 18 months, and that full effect is massively enhanced if you can follow it up with additional interest rate cuts.”
Only a Pan-African industrial policy on critical minerals for renewable will unlock prosperity:
Mining in Africa is at a crucial crossroads. The smartphone revolution has brought the previously obscure cobalt into the global public conscience. But testimonies from the Democratic Republic of the Congo (DRC), which boasts an abundance of the mineral, tell a tragic story.
Destitute children rummaging through the mud, hauling basketfuls of rocks and working in heartrending conditions is the reputation of the country’s mining industry. The extraction of lithium, used in lithium-ion batteries in smartphone technology, is founded on one of the most spine-chilling cases of child labour.
As renewable forms such as solar, wind, geothermal and hydropower take over, coal, gas and oil will be phased out. This transition will take place off the back of critical minerals.
Cobalt, for instance, is a central component that will advance renewable energy technology. Its place in the ongoing global energy revolution to replace fossil fuels is undisputed.
Collectively called Critical Transition Energy Minerals (CTEMs), cobalt, lithium, manganese, nickel and others will lead this charge.
These mineral commodities are used in the construction, production and storage of renewable energy. They are also used to manufacture batteries for electric vehicles and storage, in solar photovoltaics and wind turbines.
More than three billion tonnes of minerals and metals will be needed for wind, solar, battery and geothermal power and energy storage, according to World Bank data. Deploying renewable energy on this scale will help the planet to remain below the 1.5°C global warming target by 2050.
Africa complements its resources with capabilities. We have the youngest labour force in the world. The demand for renewable energy, clean cooking and green public transport is growing. This effectively anchors African countries firmly on the global map of the energy transition and technological advancement.
For the continent to reap maximum benefit from this transition, the CETMs must be extracted, processed, transformed and recycled sustainably and equitably. But for the DRC and other producers to benefit from their mineral wealth through the clean energy revolution, a raft of reforms and actions must be undertaken.
Africans must demand and negotiate equal partner opportunities with China, the US and the European Union. It is also important that countries develop a united continental green industrial policy.
By 2040, the demand for lithium will grow by 40 times. Graphite, cobalt and nickel will also grow in demand by 20% to 25%. For copper, the demand will more than double during this period.
Its vast endowment in CETMS makes the just transition an attractive window of opportunity for Africa to leapfrog carbon-based industrial development to transition into a green industrial regime.
But what is Africa’s role in the CTEM industry?
Despite its mineral wealth, Africa’s current position is not different from the one during the last fossil fuel-powered industrial revolution. In that era, coal, gold and silver were highly valued. The structural design of the industry meant that Africans gained little in return even as their countries were stuck in commodity traps.
To date, erratic fluctuation of mineral prices often leaves African governments in precarious economic situations. Manufacturing countries are also inclined to stockpile raw materials, thus jeopardising the long-term financial stability of exporting countries.
Minimal progress in building the infrastructure to refine minerals during the commodity boom of the 1980s and 2010s is partly to blame. The DRC, for instance, holds 45% of all cobalt in the world yet China is responsible for the supply of more than 75% of refined cobalt. Today, China refines up to 50% of all copper globally, although the DRC owns about 20% to 25% of copper reserves in the world.
China’s dominance in the value chain of renewable energy draws a parallel with the current fossil fuels industry. The 13-member Opec controls about 40% of global oil production. Meanwhile, the control of processed critical minerals is tilted in China’s favour — lithium (50%), cobalt (75%) and more than copper.
By partnering with China, African countries can tap into its global leadership in the processing of critical minerals. Seizing such opportunities for industrial partnership would kick the continent up the manufacturing ladder.
But any new deals must avoid the mistake of past trade deals such as the Sicomines Pact that favours China over the DRC. While Zimbabwe has banned the export of raw lithium and received significant investment in the industry, smuggling of the mineral is rampant.
Africa can learn from Indonesia’s successful ban on the export of nickel ore. The ban attracted Chinese investment in the Belt and Road Initiative. In the end, the country gained from China’s transfer of manufacturing and refining technology.
Before the ban, Indonesia’s nickel was worth about $ 6 billion. By 2023, it was worth more than $ 30 billion. This upswing in value is a product of the country’s decision to refine its nickel.
Today, the Southeast Asian nation is developing an integrated Electric Vehicle Battery plant. This investment will move Indonesia further downstream the value chain where job creation, economic prosperity, quality life and sustainable development are found.
Africa’s past failures and the successes of other economies should serve as a guide on how the continent works with partners on the critical minerals front.
To secure the best deals for the continent in multilateral and other diplomatic processes such as the United Nations Framework Convention on Climate Change, the role of the African Union is key. Negotiating as a bloc would give Africa a stronger voice.
In the same breath, developing upstream, side-stream and downstream linkages across borders would be beneficial for the continent through the African Continental Free Trade Area Agreement.
Adoption of a collective African green industrial policy through critical minerals is, however, not a silver bullet. The complex nature of Africa’s mining industry and the environmental concerns involved require strategic approaches to solve.
Although the Indonesian model has generally been successful in transferring technology, it has also been characterised by adverse environmental impacts. For sustainability, therefore, adequate steps must be taken to minimise water stress and biodiversity loss that exist in the mining industrial complex.
The industry must also be founded on humane labour conditions that inspire job security and safety for artisanal miners. The new regime must also address transparency and accountability issues raised previously.
Africa failed to capitalise on the mineral boom of the 1980s and 2010s. The continent ended up with minimal industrialisation, sluggish economic growth and fiscal crises triggered by the fall in commodity prices. We cannot blunder this time.
Africans need to recognise that critical minerals alone will not help the continent to develop and become a manufacturing powerhouse. A Pan-African industrial policy cemented in the just transition is necessary for Africa to extract and use its mineral wealth with meaningful gain.
This approach will help to develop more inclusive economies with decent work opportunities and greater protection of the environment.
Kudakwashe Manjonjo is the Just Transition associate at the think tank Power Shift Africa and Dean Bhekumuzi Bhebhe is the Senior Just Transitions and Campaigns Adviser at PSA.
The sexual tension of a genocide:
Philosopher and academic Edward Said said that Orientalism allows the West to free it’s imagination from the forbidden and, therefore enter the world of magical thinking. The way in which the West has constructed the Orient makes it the holding space for the secret life of the id (the unconscious realm) — one of two unbridled basic drives: to connect with the other. In this case a genocide is the ultimate absorption of the other which in most healthy societies works itself out, some times a little risqué; in a dark room in the early hours of the morning.
Now, if philosopher, author and political activist Michel Foucault was alive, I am sure he would caution against this because in a world where an Aids vaccine is lacking, this would be unwise. Free love is on pause while toxic masculinities wage a pissing contest on the future of life itself. Moreover, what we are seeing in Palestine — and Sudan — with high levels of sexual violence being sanctified by holy men like the Rabbi Meir Mazuz, is the normalisation of the misuse of sexual tension for control.
German sociologist and writer Klaus Theweleit explored these concepts of toxic masculinities controlling pleasure in his work on the Third Reich in a book titled Male Fantasies. But usually in disciplined societies (and not to be confused with societies in discipline which are policed states), the healthy response to the other is through recognition processes such as ubuntu and the joy of seeing and being seen. Here we can think back to jouissance (joy) as a form of solidarity and resistance.
Recently, I was diagnosed with chronic post-traumatic stress disorder (PTSD). The constant livestreaming of genocide and ecocide has triggered my trauma and numbed me to the extent that I feel empty. To celebrate my loved ones’ triumphs in a state of chronic PTSD is a superficial joy because I am unable to fully experience the joy of the moment when I feel suspended in a trauma that can be triggered through my cellphone. Trying to evade images of mass death and destruction is futile because I also advocate for knowing and seeing as opposed to the denialism and erasure that comes with the narcissism of coloniality. Therefore, the bind that I face and, which I assume many others like me living with PTSD endure, is that our healing is suspended in this moment. We are living in a limbic hell. Now, the assumption is that in a country such as post-apartheid South Africa, this limbic hell is a collective experience because what we are witnessing is apartheid on steroids.
Consequently, the environmental impact of the ongoing wars in various parts of the Earth, destabilises the future (especially if we are fast tracking to doomsday). Frantz Fanon cautioned us: “Each generation must, out of relative obscurity, discover its mission, fulfil it, or betray it.” Subsequently, adding to the collective anxiety which is more acutely felt by younger generations, the trauma of a global pandemic that isolated people and arranged the ways in which we work, has not been processed before being confronted with the resumption of devastation aired on our news channels. If, like me, you feel sick from the consumption of these images (and here I am channelling Deleuze and Guattari and their work on how desire is manufactured through the market economy), imagine what it must be like for those children being sacrificed for the system to perpetuate control through fear and greed.
How far have we fallen down the rabbit hole when becoming a monster is a compliment because we have entered what was in the recesses of our imagination filed under (for want of a better phrase) the banality of evil. The sexual tension produced through genocide is not the same as grief sex. Grief sex is gentle and nurturing but this emptiness is devoid of connection; the empty sexual tension that comes with the misrecognition of the other. Much like rape. And, it feels like this op-ed is a justification to claim human because to laugh, to dance, to sing, to lanterfanteren or dolce far niente — these have become muted pleasures. We are all so lacking in happiness that Fanon referred to this as the colonial condition, in part as the management of the native to stave off collective suicide, an attempt to escape the banality of evil.
In times like these, the only radical hope is to love, fiercely and unconditionally. To see without blinkers the truth that stares back at us. To connect when connection feels fragile and to continue to build community and solidarity across multiple struggles against injustice. These are the ways in which to survive the emptiness of the narcissism of coloniality. And, as for the collective PTSD that we face as a people surviving historical injustice, we need to remember that a utopic future is only possible if we are able to overcome our momentary debilitation and collectively agree to social contracts that are based on the Fanonian dictum: to put the last first and the first last.
Nadira Omarjee is a decolonial feminist scholar affiliated to the Vrije Universiteit Amsterdam and to the University of the Witwatersrand. She has published two books: We Belong to the Earth: Towards a Decolonial Feminist Pedagogy Rooted in Uhuru and Ubuntuand Reimagining the Dream: Decolonising Academia by Putting the Last First
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