Page 123 - SARB: 100-Year Journey

The palpable contempt for the upper echelons of South Africa’s decision-makers was mixed with words of caution, which were prophetic at the time of publication, given what happened in later years. The Financial Mail (1975) article added: “The fact that the majority of the population, living as it does close to or below the poverty line, is unable to make such sacrifices is also cause for grave concern. One result is likely to be a groundswell of resentment which could erupt into violence if suitable compensating mechanisms are not quickly introduced.”
“So our massive rise in defence spending could well prove counter-productive. Military strength has been achieved; but at the cost of economic weakness and the risk of widespread discontent.”
The Minister of Bantu Education, who the article nicknamed “minister of BAD”, was admonished for “... [his] fast expanding army of petty bureaucrats [which] has drawn more and more potentially productive people into policing others instead of training and educating them.”
The Minister of Labour earned the ire of the publication and a spot on the list of nine men because he had “... failed to realise the urgency of relaxing racial barriers to productivity if SA were to pay her way. And he remains totally dominated by those White unions which continue to insist on the exclusion of Africans from most skilled jobs.”
At around this time, Dr Gerhard de Kock was appointed Chair of the Commission of Inquiry into the Monetary System and Monetary Policy in South Africa. Roger Gidlow, a former adviser to the SARB Governor, wrote an authoritative account in 1995 about the work of the Commission and how its recommendations had far-reaching implications on monetary policy.
For its part, by 1982 the Bank began changing its tone and was less optimistic in its assessments of the state of the economy.
The SARB was, for example, more frank about the declines across all sectors of the economy, except water and gas. Manufacturing had slowed down. The performance of the primary sectors, the mainstays of the South Africa economy, had also plunged by 7%.
Similar to the 1970s, “... [during] the 1980s the ... economy was buffeted by a series of economic and political shocks. ... Moreover, serious droughts plagued the country between 1983 and 1985,” notes Gidlow (1995, pp 11−12).
Furthermore, “... [a] high rate of inflation was an on-going phenomenon in the 1980s. In 1986, for instance, the average annual rate of increase in the consumer price index amounted to no less than 18.6%.” (Gidlow, 1995, p 18).
In its 1989 Annual Economic Report, the SARB raised four main concerns: rising inflation, a continuing increase in the rate of money supply and bank lending, low foreign reserves, and high government expenditure. These themes would go on to become the defining features of the transition period and the early days of a democratic dispensation.
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