Parties fail to address rising cost of living – economist

An economist who has been keenly following campaign trails of different political parties ahead of Wednesday's elections has observed that parties have not come up with direct ways to address an issue that faces South Africans, the rising cost of living.

Duma Gqubule said this year’s election campaigns were focused mainly on overthrowing corruption instead of tangible solutions to deal with the second biggest problem after unemployment – the high cost of living.

He said political parties had not come up with direct ways to address the rising cost of living.

“I know dealing with corruption is important, but you cannot build your whole campaign round corruption alone. What are you doing to address the lived experience of the majority of South Africans?

“Our politics are not focused on those two things [unemployment and cost of living]”

According to a FinMark Trust’s study, living expenses of South Africans account for 85.3% and that 40% of the country’s citizens constantly resort to borrowing money to buy food.

The study also said two in every five adults have gone 12 months without electricity supply because they could not afford it.

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Gqubule said factors driving up the cost of living such as high food prices, oil price and exchange rate which have a knock-on effect on the economy, affect citizens who struggle to pay for high taxi fares and electricity tariffs.

He said there were some reforms the government could introduce to alleviate people from the burden.

“Increasing the interest rate will not solve this for the ordinary person. I believe that we have to increase free basic electricity and provide more subsidy for electricity. Electricity bills are unaffordable even for middle class people,” he said.

He said government also needed to address economics of the taxi industry, as taxi operators pay exorbitant prices for finance which can be up to 27% per transaction capital with no subsidy from government and that the trickles down to the consumer who has to pay more to and from work.

“Everywhere in the world public transport is subsidised to constantly generate profits sufficiently. Taxis should get subsidised just like buses do. The government must find a mechanism to provide direct low-cost financing for taxis through a state bank.”

These, he said, were the two main cost drivers to the average South African.

Chief economist of the Agricultural Business Chamber of SA, Wandile Sihlobo, said the problem was not the pricing of food items, but more an income poverty problem in SA which could be solved through reforms in the agricultural sector.

“If you look at food inflation it has been moderating. Whether a loaf of bread drops from R20 to R15, if you have no money you still cannot afford it. A lot needs to be done to support the rural economic growth which has the potential to unlock employment possibilities,” he said.

“A rough scan of various political parties’ manifestos showed that agricultural matters were well-featured, with varying views on land reform.

“lt is so evident this time there is an appreciation of what the sector could continue to contribute to the rural economy, job creation and the national food security.”

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He said a closer look at crime and how it affects economic growth was also critical.

“Stock theft and other forms of crime undermine investment in agriculture and the growth of small towns. This is, again, an area outside the department of agriculture, land reform and rural development, but the department’s leadership should raise it in various forums and ensure that improvements are made.”

Sibiyan@sowetan.co.za