Raising the interest rate to increase South African government spending to relieve South African Poverty, it is going destroy the investors’ confidence.
South African Reserve Bank has increased interest rate by 5% within last two years. Rand is reaching the lowest level in the past 6 years. New financial minister still cheers up, the fundamental South African economy is strong, no need to cut interest rate.
After the pressure of ruling party, the former president resigned. Then lots of ministers has to resign because the political conflict inside the ruling party.
The former defense minister Lekota who resigned last Friday, said a new South African party would be formed on December 16 and he would welcome a coalition with smaller opposition parties.
Lekota thought South Africa was already spending too much on welfare; free economy government policies would help end South African poverty.
Zuma the current ruling party president has no conflicting idea on the current economic policy, but he emphasized many times to increase the government spending on welfare to increase the process of wealth redistribution.
The desire to keep consumer inflation between 3% and 6% has seen the central bank raise interest rates by 5 percentage points in the past two years
If the Mbeki was the left, Zuma will be far worse. Political uncertainty ahead of next year’s elections can be a great risk for foreign investors.
Sometimes,for true change to happen, some things have to go.The Ministers who resigned in South Africa may give temporary opportunity for others to lead.They may give an impression to the world that they have good intentions and they are not part of the problems, but if they go back into the Government through the back doors wanting to lead at all cost through their coalition.It’s mere recycling dysfunctional leaders’ syndrome.A diseases Africa needs cure from.On the other hand, the redistribution of wealth to undeveloped minds which Zuma has been stressing will eventually lead to national scarcity and resource wastage.Capacity building, empowering people,enlightening people. providing jobs,loans,Insurance,security and more; may be a better approach.
–Olaotan Odunuga
http://olaotanodunuga.wordpress.com/
Comment by Olaotan Odunuga — January 2, 2009 @ 6:43 am