Rédaction Africa Links 24 with Ed Stoddard
Published on 2024-03-18 19:54:28
Lesetja Kganyago was first appointed as governor in 2014 and is set to serve until November 2029, potentially becoming the second-longest serving governor in the South African Reserve Bank’s history. As South Africa faces the uncertainty of coalition politics after the upcoming election, Kganyago’s continued leadership offers a beacon of stability in the economic landscape.
The South African Reserve Bank (Sarb) has maintained its independence since 1996, even as the governing African National Congress (ANC) has faced challenges related to corruption and policy failures. The Sarb’s primary mandate is to protect the value of the currency and promote balanced and sustainable economic growth. To achieve this, the Sarb implements inflation-targeting policies, with a target range of 3% to 6%.
Kganyago’s tenure has been marked by a strong focus on inflation, with a commitment to steering inflation back to target levels over a realistic timeframe. The Sarb’s success in inflation targeting has been attributed to its flexibility, simplicity, and accountability. By maintaining clarity and transparency in its policies, the Sarb has gained credibility and anchored inflation expectations.
Despite facing external shocks such as global food and fuel price increases, the Sarb has successfully managed to keep inflation within its target range. This success has been attributed to factors such as luck and independence from political interference. Kganyago emphasized the importance of maintaining focus on public service and avoiding patronage networks within the institution.
In contrast to the challenges faced by countries with weak central bank governance, such as Turkey, Zimbabwe, and Venezuela, South Africa has benefitted from the Sarb’s independent and credible approach to monetary policy. By prioritizing price stability over short-term economic goals, the Sarb has been able to protect the economy from the ravages of hyperinflation and economic instability.
Critics who advocate for a more accommodative monetary policy to stimulate economic growth must consider the risks of high inflation and its detrimental impact on both individuals and the economy as a whole. The Sarb’s steadfast commitment to maintaining price stability ensures that South Africa is better positioned to weather economic challenges and promote sustainable growth.
As South Africa approaches a period of political transition, the Sarb is likely to remain a model of stability and prudence in the face of potential populist pressures. Kganyago’s leadership and the Sarb’s commitment to independence and transparency will continue to play a crucial role in safeguarding the country’s economic stability and fostering long-term growth.
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