This report examines the impact of rising fuel costs and interest rates on the South African and Limpopo economy (focusing more particularly on Capricorn District Municipality and Mopani District Municipality) in particular. It focuses on the macroeconomic effects, direct effects on the transport sector and impacts on households. The report concludes with a discussion of possible policy responses to issues raised in the analysis of impacts.
Increases in both the costs of fuel and interest rates have always created widespread concerns about its impact on economic growth, transport sector and on poor people. In 2008 South Africans experienced substantial high prices for both diesel and petrol. This was as a result of the higher prices of crude oil whereby in the middle of 2008 oil prices struck an all time record of US$144/barrel. During this period the price of petrol was R10.57 whereas the price of diesel was R11.43. Also during this period interest rates were very high, with the repo rates at 12.00% and prime lending rates at 15.80%. This increases coupled with the fuel prices meant that there was a big shift in the vehicle operating costs of public passenger transport which in certain instances led to the increases in fares. The scope of work covered the whole area of jurisdiction of the Capricorn and Mopani District Municipalities. Download the Final Report.