President Cyril Ramaphosa says government is doing what it can to shield South Africans from current and future price increases.
In his weekly newsletter to the nation, the President said these increases, particularly the price of fuel, are the consequence of events over which the country has little control.
“Though oil prices and extreme weather are events over which we have little control. There is still much we can do, as government, business, labour and communities to help the people of South Africa through this difficult time,” President Ramaphosa said.
Over the past few months, South African consumers have been hit by steep price increases that have dramatically affected their quality of life.
The President acknowledged that it has become increasingly more expensive to buy food and other essentials, to pay for basic services and to use public or private transportation.
He said that while these rising costs affect everyone, low-income households are feeling them the most.
The latest Consumer Price Index for April 2022 published by Stats SA showed that there has been little respite for hard-pressed South Africans with food inflation recorded at 6.2%.
“The most basic foodstuffs cost more than a year ago, with staples like cooking oil recording the highest increases. The price of fuel, which affects the price of almost everything else, has risen by a third in the 12 months to March 2022,” he said.
President Ramaphosa said South Africa is not alone in this regard, as a recently published poll for the World Economic Forum shows that nearly a quarter of people globally, including those in developed economies, are struggling financially due to rising prices.
“These increases, particularly the price of fuel, are the consequence of events over which we have little control. The ongoing conflict between Russia and Ukraine has had a significant impact on the price of fuel and food. Both countries are major exporters to international markets of fertilisers, grains and oilseeds that are needed for a range of items such as cooking oil,” he said.
Another factor, he said, is lower agricultural output due to extreme weather events caused by climate change, such as flooding and droughts.
“One of our greatest advantages as a country is a strong, independent Reserve Bank that has managed to keep inflation within a narrow target range, well below what many other countries are experiencing,” he said.
Improving the nation’s food security vital
Last week, government announced that the fuel levy will be suspended for another two months to August, which will bring some relief to households.
The President said the suspension of the levy has provided essential relief to South Africans since it began in April.
“Since the suspension of the levy comes at a significant cost to public finances, which affects other programmes of government, it will be difficult to continue this indefinitely. There are, however, other things we can do.
“Improving our nation’s food security is vital to withstanding this and future shocks. We have a strong agricultural sector that continues to grow and create jobs,” he said.
The statesman said that to further increase agricultural production and strengthen the country’s food sovereignty, government is investing heavily in improving local capacity, supporting commercial and small-scale farmers alike and helping more people to grow their own food.
Through the Presidential Employment Stimulus, input vouchers have been given to over 65,000 smallholder farmers, and work is underway to reach 250,000 such farmers.
Government is also providing subsistence farmers with fertilisers and equipment to produce food, and helping groups or individuals to start their own food gardens.
In provinces like the North West, small-scale farmers are supported with agricultural ‘starter-packs’ of seedlings and poultry, in partnership with local agricultural colleges.
“Through the Pro-Active Land Acquisition Strategy and the release of state-owned land for agriculture, we are supporting more small-scale farmers to expand their businesses and make them commercially successful. We are also focusing on establishing more public-private partnerships to support the expansion of black commercial farming through initiatives like the Partners in Agri Land Solutions and the Agricultural Development Agency,” the President said.
To enhance biosecurity and safeguard animal health against diseases like foot-and-mouth, he said government is strengthening the country’s animal movement control measures and vaccine production capabilities.
In addition to boosting local food production, he said, the extensive social grants system and zero-rating of basic goods helps to protect the poor from rising costs.
“Through free basic services like water and electricity for indigent households, we can ensure that no family goes without basic services. To get through this difficult period, all of society should get involved,” he said.
The President said that government will continue to monitor the situation closely and will do everything within its power to protect South Africans from unsustainable increases in the cost of living.
“Corporate South Africa should ensure that consumers do not pay more for food than they have to. We welcome the indications from food manufacturers and retailers that they are putting measures in place to help consumers get more for their money,” he said.
President Ramaphosa added that in March this year the Competition Commission released for public comment the terms of reference for a market enquiry into the fresh produce market.
It noted that the cost of fresh produce has been increasing at above-inflation levels, and that this has had a disproportionate effect on the poor.
He said the inquiry will examine if there are any distortions in the value chain that make food more expensive.
“We will use our competition policy to protect consumers against unjustifiable price increases and anticompetitive practices by businesses, as we did during the COVID-19 pandemic.
“The ongoing process of structural reform of our economy will support these efforts. Reforms in the energy, transport and telecommunications sectors aim to reduce the cost of electricity, logistics and data in the long term through greater competition and efficiency. We should be paying less, not more, for these services in the future,” he said.