On Wednesday, April 18, the Atlantic Council’s Africa Center, in partnership with the Global Business & Economics Program, hosted a discussion with Mr. Lesetja Kganyago, governor of the South African Reserve Bank (SARB).

Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, and Mr. Bart Oosterveld, C. Boyden Grey fellow on global finance and growth and Global Business & Economics Program director, welcomed participants. Mr. Brian C. McK. Henderson, Atlantic Council treasurer, introduced Kganyago, with whom he had worked earlier in the central banker’s career.

In his remarks, Kganyago addressed the issue of South Africa’s fiscal resilience, and how the country is positioned to deal with shocks from the global economy. He laid out how strong fiscal institutions and a healthy regulatory regime allowed South Africa to weather the 2008 financial crisis and subsequent recession while many countries fared poorly. As the global economy has recovered, so too has South Africa, rebuilding its economic buffers, reining in inflation, and reducing its debt to GDP ratio.

Nevertheless, Kganyago warned of external risks to South Africa’s “going forward” policy. The rise of protectionism, trade conflicts, and public and private debt will threaten the world’s economy if left unchecked. Kganyago also warned that low interest rates and growth for several African countries have allowed political actors to become complacent, and that key structural reforms were not being undertaken, particularly in the continent’s most vulnerable economies.

Kganyago also acknowledged that, despite positive developments in South Africa’s macroeconomic environment, slow growth, a poor education system, and a stubbornly high unemployment rate—which is currently at 27 percent—preclude any monetary policymaker’s ability to address poverty, and urged structural reforms within South Africa. Despite this, Kganyago showed optimism in South Africa’s “robust democratic institutions” and “world-class constitution,” which have stood up to political challenges in the past few years. With a strong judiciary, Kganyago remained confident in the continued independence of the SARB and his ability to make sound fiscal policy decisions without political interference.  

A discussion, moderated by Pham, followed Kganyago’s remarks. In a question and answer session, he discussed ways that South African could stimulate economic growth, how to provide a social safety net to the country’s most vulnerable, the impact of land reform on the economy, and the role of financial technology in the country’s economic future. Kganyago also acknowledged that, despite its abundance of mineral wealth, South Africa does not fully harness the potential of its mining sector to contribute to the economy and create employment because political uncertainty over the relevant legal regime discourages the type of long-term investment required.