M.Com. (Economic Development and Policy Issues) / Monetary policy is not only the process by which the monetary authority of a country controls the supply of money, but is furthermore a sufficient tool to overcome the problem of economic growth and unemployment. This can take place when the policy instruments – interest rates (Repo) and money supply growth (M3) – have significant effects on these macroeconomic variables. However, the issue of the efficacy of monetary policy on GDP growth and employment creation is at the centre of debates among researchers. Some researchers are of the opinion that the objective of monetary policy in achieving and maintaining price stability is founded on the idea that inflation is not good for economic growth, employment creation and income equality but, instead, only secures macroeconomic environment. In South Africa, the efficiency of different monetary policy tools, inflation and money-supply targeting, on economic performance has been questioned. Moreover, the issue of the high level of unemployment remains controversial among scholars. Therefore, the structural vector-error correction model (VECM) methods was used with quarterly data in order to investigate the impact of aggregate money supply (M3), interest rate (Repo) and real exchange rate on CPIX (inflation) , economic growth (GDP volume rate) and unemployment (joblessness rate) in South Africa for the period 1986 to 2010. The results show that both monetary-policy regimes have positively impacted on economic growth, but the impact of the pre-inflation-targeting regime is higher. Moreover, a weak positive liaison between monetary policy and unemployment is observed, but the post-inflation-targeting regime shows a higher percentage decrease in unemployment than the pre-inflation targeting period. Beyond any doubt, the research approves the engagement of the SARB to monitor (target) CPIX (inflation) due to its ability to ensure price stability and create a stable economic environment favourable to economic performance.

A research report submitted to the Faculty of Science, in partial fulfilment of the requirements for the degree of Master of Science, University of the Witwatersrand, Johannesburg. February 2015. / This study examines the practice of environmental impact assessments (EIAs) by South African mining transnational companies (TNCs) operating some mining projects in the Democratic Republic of Congo (DRC). It analyses whether and how South African mining TNCs carry out EIAs for their mining projects in the DRC, especially whether they follow (1) the DRC EIA policies, (2) the South African EIAs policies (3) international EIA policies, or (4) internal company policies. It also examines what motivates the companies to follow any of the policy path, by assessing whether financial or policy regimes evaluations motivates the TNCs to follow the certain path. Through the case studies of AngloGold Ashanti and Metorex (Pty) Limited, the study demonstrates the complexity involved in making decisions on choosing a policy path to follow which confronts TNCs. The conclusion we draw from this study is that TNCs do not follow a single policy path in carrying out EIAs but integrate a number of policies and standards and the integration of various policies and standards demands highly qualified and well trained staff as well as availability of an enabling scientific and research infrastructure within the host country.

Thesis (MPA.) -- University of Limpopo, 2017 / In 1994 the South African democratically elected government inherited one of the most inequitable access to basic service between rural and urban communities. Rural people used to live without access to basic services such as water, electricity, roads and sanitation facilities. South African government established the Municipal Infrastructure Investment Framework as the national Strategic Plan to outline the extent of basic infrastructure backlogs and to come up with strategies to improve basic service provision to the poor citizens. The Municipal Infrastructure Grant (MIG) is a municipal infrastructure funding which combines all the existing capital grants for municipal infrastructure into a single consolidated grant. MIG is aimed at assisting the poor to gain access to infrastructure. MIG funding can only be used for infrastructure for basic services. Polokwane local municipality and Blouberg local municipality are the beneficiaries of MIG. The purpose of the study was to investigate the causes of unspent Municipal Infrastructure Grants in Polokwane and Blouberg local municipalities. An extensive literature review has been undertaken to gather information regarding unspent Municipal Infrastructure Grants in the two municipalities in the Capricorn District; Polokwane and Blouberg local municipalities. The study provides an investigation on how Polokwane and Blouberg local municipalities monitor the Municipal Infrastructure funding. The study further investigate the capacity of the municipalities to implement MIG, and whether these municipalities have the capacity to effectively utilise the MIG for efficient and effective service delivery. The researcher utilised a qualitative approach to collect data through interview schedule. A satisfactory response rate of 98% was obtained. The results indicated that Polokwane and Blouberg local municipalities are capacitated to implement and to monitor MIG. However, the municipalities often spend less than the budgeted MIG, as a result progress in the access to basic services is hindered. The failure to adequately spend the MIG by these municipalities is due to the fact that there is poor planning and a lot of political interference in the Supply Chain Management processes. The study recommended that managers should do proper planning beforehand, avoid late appointment of service providers and make references on the service providers they appoint to avoid disputes from members of the community. The study further recommended that Polokwane and Blouberg local municipalities should do proper consultation of the project, budget accordingly, and appoint companies that will produce positive end results with value for money. The study recommended that political office bearers should not interfere in the supply chain management processes

Thesis (MPA.) -- University of Limpopo, 2017 / In 1994 the South African democratically elected government inherited one of the most inequitable access to basic service between rural and urban communities. Rural people used to live without access to basic services such as water, electricity, roads and sanitation facilities. South African government established the Municipal Infrastructure Investment Framework as the national Strategic Plan to outline the extent of basic infrastructure backlogs and to come up with strategies to improve basic service provision to the poor citizens. The Municipal Infrastructure Grant (MIG) is a municipal infrastructure funding which combines all the existing capital grants for municipal infrastructure into a single consolidated grant. MIG is aimed at assisting the poor to gain access to infrastructure. MIG funding can only be used for infrastructure for basic services. Polokwane local municipality and Blouberg local municipality are the beneficiaries of MIG. The purpose of the study was to investigate the causes of unspent Municipal Infrastructure Grants in Polokwane and Blouberg local municipalities. An extensive literature review has been undertaken to gather information regarding unspent Municipal Infrastructure Grants in the two municipalities in the Capricorn District; Polokwane and Blouberg local municipalities. The study provides an investigation on how Polokwane and Blouberg local municipalities monitor the Municipal Infrastructure funding. The study further investigate the capacity of the municipalities to implement MIG, and whether these municipalities have the capacity to effectively utilise the MIG for efficient and effective service delivery. The researcher utilised a qualitative approach to collect data through interview schedule. A satisfactory response rate of 98% was obtained. The results indicated that Polokwane and Blouberg local municipalities are capacitated to implement and to monitor MIG. However, the municipalities often spend less than the budgeted MIG, as a result progress in the access to basic services is hindered. The failure to adequately spend the MIG by these municipalities is due to the fact that there is poor planning and a lot of political interference in the Supply Chain Management processes. The study recommended that managers should do proper planning beforehand, avoid late appointment of service providers and make references on the service providers they appoint to avoid disputes from members of the community. The study further recommended that Polokwane and Blouberg local municipalities should do proper consultation of the project, budget accordingly, and appoint companies that will produce positive end results with value for money. The study recommended that political office bearers should not interfere in the supply chain management processes.

The volatility transmission in financial markets has important implications for investment decision making, portfolio diversification and overall macroeconomic stability. This paper analyses volatility transmission across four South African financial markets that is the stock, bond, money and foreign exchange markets, using daily data for the period 2000-2010. It also shows whether the volatilities in the SA financial markets present a different behaviour in bull and bear market phases. The effects of the international markets volatility to the local markets volatility was also looked at in this study. To obtain estimates of market volatility, the study experimented with various volatility models that include the GARCH, EGARCH and TARCH. To examine volatility interaction and the transmission of volatility shocks, a VAR model was estimated together with block exogeneity, impulse response and variance decomposition. The study found that there is limited volatility transmission across the SA financial markets. The study also found that the money market is the most exogenous of all markets since the other three financial markets volatility is insignificant to the money market (see impulse response results). For the bond market, volatility transmission was characterized with a decreasing trend. With regard to international markets volatility, it concluded that, the shocks in the international markets will eventually affect the movement in the local markets. The results also highlighted that, world and local markets are important in accelerating the volatility transmission in SA financial markets depending on whether they are in their bull or bear phases. In the case of South Africa, the study found that volatility transmission across markets is higher during bear market periods than bull market periods. Basing on the study results which show that the volatility transmission is limited across SA financial markets, the implication to local and international investors is that there is a greater potential for diversifying risk by investing in different South African financial markets.

The control of inflation requires a forecast of the future path of the price level and its indicators. Targeting inflation directly requires that the central bank (SARB) form forecasts of the likely path of prices paying close attention to a variety of indicators that shows the predictive power of inflation in the past periods. Inflation indicators might be cointegrated with the rate of inflation to predict the future inflation rates. Forecasting inflation may be very difficult at a particular period due to the fact that the array candidate indicators of inflation may neither be very stable nor very strong in their relationships with the rate of inflation. Although this might be the case, this research uses testable effects of each of the South African inflation indicators to the rate of inflation using econometrics tools to find that they have a long run trend with the rate of inflation in South Africa. It has been found that each of the indicator variables has a long run relationship with the rate of inflation. The major conclusion is that inflation indicator variables like money supply (M3), oil price, gold price, total employment, interest rates, exchange rates and output growth can be useful inflation indicators in targeting the future trends of inflation in South Africa according to the data used in this research although some studies in some countries find that inflation targeting is an insufficient framework for monetary policy in the presence of financial exuberance. The money supply, the oil prices, interest rates, the exchange rates, prices of gold, the employment and output growth are co-integrated with the rate of inflation representing a long-run relationship.

The causal relationship between financial development and economic growth is a controversial issue. For developing countries, empirical studies have provided mixed result. This study seeks to empirically explore the relationship and the causal link between financial development and economic growth in two sub-Saharan African countries between 1970 and 2006. The empirical investigation is carried out using time methods and the five most commonly used indicators of financial development in the literature. However, the causal relationship was carried out using two different methods which are the autoregressive distributed lag bounds testing (ARDL) and the vector error correction model (VECM). Using this above methodology the study first found that in both countries there is a positive and long-term relationship between all the indicators of financial development and economic growth which was proxied by the real per capita GDP. With respect to the causality test, the two methods used provide mixed results especially in South Africa. In Cameroon the study found that financial development causes economic growth using the two methods, whereas in South Africa economic growth causes financial development when the VECM method is used, while there is an independence relationship between the two variables in South Africa when using ARDL. / Economics / M.Comm. (Economics)

It has long been accepted that changes in monetary policy have real economic effects; however, the mechanism by which these policy changes are transmitted to the real economy has been the subject of much debate. Traditionally the transmission mechanism of monetary policy has consisted of various channels which include the money channel, the asset price channel and the exchange rate channel. Recent developments in economic theory have led to a relatively new channel of policy transmission, termed the credit channel. The credit channel consists of the bank lending channel as well as the balance sheet channel, and focuses on the demand for credit as the variable of interest. The credit channel is based on the notion that demanders and suppliers of credit face asymmetric information problems which create a gap between the cost of external funds and the cost of internally generated funds, referred to as the wedge. The aim here is to determine the size and lag length effects of changes in credit demand, by both firms as well as households, as a result of changes in interest rates. A secondary, but subordinate, aim is to test for a balance sheet channel of monetary policy transmission. A vector autoregressive (VAR) model is used in conjunction with causality tests, impulse response functions and variance decompositions to achieve the stated objectives. Results indicate that the interest rate elasticity of credit demand, for both firms and households, is interest inelastic and therefore the monetary policy authorities have a limited ability to influence credit demand in the short as well as medium term. In light of the second aim, only weak evidence of a balance sheet channel of policy transmission is found.

A voluminous literature attempts to explain the various channels of the monetary policy transmission mechanism through which central banks ultimately achieve price stability. However, most research focuses on interest rate pass-through and the demand for money phase, while there is limited research on the demand for credit. This study endeavours to contribute to the understanding of this neglected phase of monetary policy transmission by exploring the response of the real demand for bank credit by the private sector to changes in the real prime rate from 1990:1 to 2004:4 in South Africa. Firstly, the behaviour of the real prime rate in relation to the repo rate is explored using graphical analysis. The study observes that an increase in the repo rate causes an increase in the real prime rate, such that there is always a margin of three or four percentage points between the two rates. Secondly, using secondary data, the Johansen methodology is used to determine the relationship between the demand for bank credit and its determinants (GDP, inflation, real prime rate and real yield on government bonds). Two co-integrating relationships are found. The Gaussian errors from one co-integrating vector are used to model the Vector Error Correction Model, which provides the short-run dynamics and the long-run results, through the use of Eviews 5 software. The results of the study show that while all other variables are negatively related to the demand for bank credit in the long-run, GDP has a positive influence. In the short-run, yield on government bonds and inflation coefficients depict a positive association, while the coefficients of real prime rate and GDP are negative. The error correction coefficient is -0.32, which implies that a 32% adjustment to equilibrium happens in the demand for bank credit in a quarter and that the complete adjustment takes about three quarters to complete. Thirdly, the generalised impulse responses results indicate that the impact on the real prime rate affects the demand for bank credit from the first quarter. The study concludes that the real prime rate has a negative impact on the demand for credit both in the short-run and long-run.

The fact that South Africa has a floating exchange rate policy as well as an open trade policy leaves the country’s import, producer and consumer prices susceptible to the effects of exchange rate movements. Given the central role that inflation targeting occupies in South Africa’s monetary policy, it becomes necessary to determine the nature of influence of exchange rate changes on domestic prices. To this end, this thesis examines the magnitude and speed of exchange rate pass-through (ERPT) to import, producer and consumer prices in South Africa. Furthermore, it explores whether the direction and size of changes in the exchange rate have different pass-through effects on import prices, that is, whether the exchange rate pass-through is symmetric or asymmetric. The paper uses monthly data covering the period January 1980 to December 2005. In investigating ERPT, two main stages are identified. The initial stage is the transmission of fluctuations in the exchange rate to import prices, while the second-stage entails the pass-through of changes in import prices to producer and consumer prices. The first stage is estimated using the Johansen (1991) and (1995) cointegration techniques and a vector error correction model (VECM). The second stage pass-through is determined by estimating impulse response and variance decomposition functions, as well as conducting block exogeneity Wald tests. The study follows Wickremasinghe and Silvapulle’s (2004) approach in estimating pass-through asymmetry with respect to appreciations and depreciations. In addition, the thesis adapts the analytical framework of Wickremasinghe and Silvapulle (2004) to investigate the pass-through of large and small changes in the exchange rate to import prices. The results suggest that ERPT in South Africa is incomplete but relatively high. Furthermore, ERPT is found to be higher in periods of rand depreciation than appreciation which supports the binding quantity constraint theory. There is also some evidence that pass-through is higher in periods of small changes than large changes in the exchange rate, which supports the menu cost theory when invoices are denominated in the exporters’ currency.