Johannesburg — THUMBS up to International Monetary Fund (IMF) MD Dominique Strauss-Kahn for his efforts to reframe the debate on the rand.
At the end of a two-day visit to SA this week, Strauss-Kahn emphasised that improving the competitiveness of the economy would do a lot more for SA's exports in the long term than would a weaker rand. "Monetary manipulation is always the easy way to hide the real problems," he said.
Coincidentally, an IMF staff research paper this week found that an undervalued currency was better for growth than an overvalued one, so though Strauss-Kahn was quoted earlier in the week warning of the dangers of trying to weaken the rand, at least some of his colleagues wouldn't be averse to market-friendly measures to dampen the currency.
But we shouldn't be tempted to think that this will solve the underlying competitiveness problems of SA's economy. And that, essentially, is what Strauss- Kahn has warned. He drew attention this week to the failings in our education system as well as to the lack of competition in the economy. He picked on the banking, telecommunications and food sectors as examples of industries dominated by only a few big players, saying this was not in the interests of the economy.
Relevant Links
Why he chose these particular sectors is not clear: there certainly are others he could have mentioned. And his comments didn't go far enough. Competition in particular sectors is not the same as competitiveness, and the lack of competitiveness of SA's economy is as much to do with the public sector as with anything in the private sector.
It's no good focusing on big, private-sector dominant players without looking at the economy's most dominant companies - Eskom, SAA, Transnet - and the role they play in undermining or enhancing SA's competitiveness.
Strauss-Kahn could also have cited the red tape and bureaucratic inefficiency that hampers exports and growth. But perhaps he needed to be polite to his government hosts.
Comments Post a comment