South Africa’s Central Bank Chief Urges More Risk for Growth

Lesetja Kganyago Photographer: Waldo Swiegers/Bloomberg Photo by Waldo Swiegers /Bloomberg

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(Bloomberg) — South African Reserve Bank Governor Lesetja Kganyago said the country must stop obsessing about the type of economic growth it wants and be willing to take uncomfortable risks if it wants to expand at a faster pace.

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“South Africans love to gamble, but when it comes to growth, it turns out we are risk-shy,” Kganyago told a public lecture at the University of South Africa in the capital, Pretoria, on Tuesday. “We would be much better off if we could stop betting on sports and start betting on growth instead.”

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The governor also argued that while the country has made progress on reforms through Operation Vulindlela, a unit in President Cyril Ramaphosa’s office that is tackling longstanding constraints in areas including energy, ports and municipal governance, it has been slow.

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Part of the delay reflects the institutional damage inflicted during former President Jacob Zuma’s presidency, during which public institutions were systematically repurposed for private benefit.

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“It devastated capacity in national government; it just about broke the state-owned enterprises; and it persists in the municipal failures we see around us today,” Kganyago said. 

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Another obstacle to growth is South Africa’s fixation with debating what kind of expansion it wants, rather than pursuing the policies needed to achieve it. Those debates, he said, are hampering efforts to lift the economy out of its long-running malaise.

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For more than a decade, South Africa’s economy has expanded by less than 1% a year on average.

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If South Africa wants to grow, it can’t be a goal halfway down a wish list, Kganyago said. 

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“The fundamental question we need to ask ourselves, as a country, is: do we truly want to grow? It seems the answer is obvious, but it is not,” he said.

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“We can complicate this; we want a jobs-rich growth, we want a pro-poor growth, we want a development-centered growth, we want inclusive growth,” he said. “You don’t need ‘growth with adjectives’, where growth is only worth doing if it’s the right kind of growth. Just go for growth.”  

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South Africa also needs “to accept that growth means trying things that are risky,” the governor said. “This is not always comfortable, especially for people who already have power and wealth.” 

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—With assistance from Alister Bull.

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