PETER BRUCE | If only Transnet ran on Enoch’s track

For the first time in years, a South African finance minister has delivered a budget statement and immediately been rewarded by the markets. The reaction to Enoch Godongwana’s medium-term budget policy statement (MTBPS) on Wednesday was a lesson in clarity.

The MTBPS he delivered is a guide for financial markets on the outlook for the next three years. But he scored a crucial goal — announcing that, with immediate effect, the Reserve Bank will lower the inflation target it uses to adjust interest rates from a band of between 3% and 6% to just 3%.

It’s a courageous thing to do. While activists on the Left rage against high interest rates, the fact is that inflation is a pernicious tax on the poor. It’s why the DA was right earlier this year to oppose Godongwana’s attempts to raise VAT.

If we can anchor inflation at or below 3%, interest rates will fall in line. At the 6% top of the old inflation target range, you’re still paying double figures to finance a car. Cut that figure by half, and the lives of millions of middle- and working-class South Africans change for the better. Every time prices get out of hand, the Reserve Bank will crush them.

It’s an unmistakeable message of the kind markets cherish, not least because cost of living crises routinely trigger political upheaval. Donald Trump was let loose on the world because he promised to make life more affordable for Americans, and they foolishly believed him.

At the 6% top of the old inflation target range, you’re still paying double figures to finance a car. Cut that figure by half, and the lives of millions will change for the better

In South Africa we’re fortunate to have as close to a genuinely independent Reserve Bank as possible and it was Bank governor Lesetja Kganyago who pushed for the lower target despite initial scepticism from Godongwana. He’s my Man of the Year.

And it was no surprise that the markets, watching an act of financial discipline happen live on TV, started buying the rand, which within hours dipped below R17 to the dollar for the first time in years.

You can almost feel the dollar weakening as Trump attacks and threatens the Federal Reserve, the US central bank. Markets make a simple calculation — where once they could more or less calculate the path of US interest rates based on economic facts such as unemployment or home purchases, political interference is now making independent calculation really risky. Slowly they will look elsewhere for a currency they can safely trade in or with.

The European Central Bank is treated with respect by European governments and the euro is also much stronger against the dollar since Trump took office. The Chinese renminbi will always struggle to dominate global trade because China’s central bank takes political instruction.

But it’s still one thing to run your fiscal and monetary policy well and another to carry that over into factories and jobs. The ANC has always battled with the real world because it insists on being active in the economy while also refereeing it, giving the important jobs to supporters rather than professionals.

Last month the party’s national executive committee approved yet another economic turnaround plan, promising to use electricity tariffs to save our important ferrochrome, manganese and steel industries. Don’t hold your breath. Just two ferrochrome smelters are still working here. In 1994 there were more than 50.

More than a month after adopting this grand plan the government has still not been able to offer the remaining chrome smelters subsidised (which means you and I pay) electricity. Redundancy notices at the final smelters are about to be delivered. Where’s the leadership?

From Transnet we’re fed a daily diet of tremendous reform that will allow the private sector onto railway lines — but there’s zero detail. “Eleven private train operators now have slots on 41 routes across six [rail] corridors,” Godongwana said. But we don’t know who all the new operators are or how many slots they’ll get. I doubt it’ll be many.

Good fiscal policy may reassure currency markets but it can’t pour steel or run trains. Both Eskom and Transnet are now required to be open themselves to private sector competition on their own networks. Eskom was relatively easy. But Transnet is unbelievably complicated, involving trains, lines, terminals, ports and pipelines. To think it once owned SAA! “Reform” is asking embedded bureaucrats to upend everything they hold dear and, above all, hurry. But they don’t know how.

The best hope for the economy is you. Godongwana was good enough to admit the extra R19bn in taxes collected this year was “due to stronger household expenditure”, in other words a good old consumer boom.

The ANC has been trying to supplant consumer booms with mining and industrial booms for 30 years but it doesn’t know how either.