Mangosuthu Buthelezi's Weekly Newsletter to the Nation -
Petrol and Food Price Increases
My dear friends and fellow South Africans,
It is time, as the Economist (Feb 14) admonished us last month, ‘to tighten the belt’. Beside post Polokwane political gloom and electricity black-outs, the steep rise of interest rates over the last year are hitting consumers hard. One can palpably feel it when one is out and about on the streets, at the supermarket and in the shopping malls. Everyone is talking about it. Just as the economy seemed to be motoring along nicely, the central bank hit the brakes hard to try and bring down inflation, pushed up to 8.6% in December back into the 3-6% target band it left last April.
But, of course, more expensive borrowing is “flattening” the sales of cars, houses (which are ridiculously overvalued and out of reach for ordinary South Africa’s) and durable goods, as well as foreign direct investment. This is in keeping with the trajectory of the weakening global environment. As my old friend, Lady Thatcher once famously exclaimed: “you cannot buck the market!”
On the macro economic level, President Thabo Mbeki’s government has taken the right policy decisions, albeit late. The IFP welcomed the budget's thrust last month of stimulating growth through foreign direct investment and job creation, rather than by simply fuelling consumer consumption through personal income tax cuts and irresponsible credit lending.
In the meantime, as always, it is the millions of people living in poverty and the jobless who are hit hardest by the rising prices of food and transport. Last month, The South African National Taxi Council (Santaco) warned that many taxi owners were planning to raise fares by as much as R1 a ride (Cape Argus, 03 March).
The Santaco chairperson in the Western Cape, Junaid Peters, said individual taxi owners ultimately decided whether to put their prices up. But, given the extent of the rise in petrol prices, most owners were expected to raise fares soon. "In the end, it is not the taxi owners who are going to suffer. It is the people, they are the ones who will end up paying more because of the petrol (price)". So it is lower income earners like manual labourers and domestic workers, not the middle class earners, who are going to be hit hardest.
Please allow me a slight, but relevant, policy detour here because, in any case, the option of carrying on as petrol guzzlers does not exist. Some creative ‘out of the box’ thinking is required.
At the moment, public transport by taxis roughly accounts for 65% of the transport total against 20% for buses and 15% for rail. In an industry consisting of over 150, 000 public minibus taxis and with an annual turnover in excess of R17 billion, the taxi industry plays a strategic role in the economy. The lion’s share of the market that the taxi industry enjoys will have a fundamental impact upon the development of an integrated transport system, as well as for economic growth and sustainable development in the twenty-first century.
The taxi industry, I believe, has a strategic role to play in banishing poverty because, as I just mentioned, the majority of South Africans still live on low incomes and are dependent on public transport. The ubiquitous taxi ranks throughout South Africa are literally lifelines of commerce and communication.
But as IFP spokesperson for Minerals and Energy Eric Lucas put it so pithily on Tuesday, “although the fares of public transport keep on rising, the service is not getting better.”
I therefore see a role for the state here (yes, sometimes intervention is right) to introduce a subsidy for a single monthly ticket that can be used on all public transport from trains to buses to taxis. Students, jobseekers, old age pensioners should also be able to travel free of charge during off-peak hours on local transport, just like in the UK and Europe which has subsidised local transport.
The taxi industry must become an integrated part of Mass Rapid Public Transit networks which are slowly, but surely, gaining currency in the development of integrated transport strategies in the metropolitan areas. As is well-known, this system is being used in many developed and developing countries. Simply put, in our case, taxi services should be integrated with other transport providers like busses and trains so that commuters, particularly in the townships, can walk to the taxi rank and then continue their journey to work by bus or train. This would help alleviate the fuel crisis, not to mention reducing the nation’s carbon footprint.
Whilst I am naturally sceptical about the role of government in regulating movement and imposing carbon levies, if we can create more smoothly-flowing traffic, more car drivers would be encouraged to use taxis and busses too. This would ease the demand for petrol. It seems absurd to watch cars snarled in long delays bumper to bumper usually carrying just one passenger, the driver. Out of town ‘park and ride’ schemes must also be encouraged in the development of Mass Rapid Public Transit networks.
Turning to food prices, in a domino effect, agriculture is negatively affected by fluctuations in the energy market. The distribution of grain is directly impacted by transportation costs, tying grain costs to oil prices. This, in turn, feeds the demand for bio fuel which exacerbates shortfalls in the food system.
Another related problem is corruption. Corruption is rampant among grain distributors in areas suffering scarcity. According to a recent report, SA has seen a 200 percent increase in the wheat prices in the past year, which is, in part, attributable to pervasive price-fixing amongst the bread and diary sectors. Government must redouble its efforts to root out industry collusion, which is threatening the country’s food security. If we cannot guarantee food security for all our people, the state has failed.
Finally, I would like to, once again, call upon government to practice austerity in these lean times. The initiative of Taking Parliament to the People - an absurd contradiction in terms if there ever was one - has consistently been criticised by the IFP as a waste of the taxpayers' money. The IFP believes that the taxpayers have sent MPs to Parliament to do a job. It is scandalous for parliamentarians to hold glitzy izimbizo to tell the electorate what a fabulous job they are doing. It is downright patronising, self-serving and wasteful.
Scare resources must rather be used to ensure food security for all our people and to create an integrated transport system fit for the demands of the twenty-first century. Elections are the time for politicians to persuade the electorate that have fulfilled their mandate. And they will get a chance soon…
Prince Mangosuthu Buthelezi MP