South African Reserve Bank (SARB) Governor Lesetja Kganyago has urged South Africa to be less risk-averse and take greater risks to support economic growth.
Kganyago welcomed the government’s decision to partner with the private sector to implement growth-enhancing structural reforms but said there is a need for greater urgency.
He noted that living standards are now lower than they were in the early 2000s.
He was addressing delegates at the Principal and Vice-Chancellor Public Lecture and Leadership Engagement at the University of South Africa (UNISA) in Pretoria.
Kganyago says while a strong private sector has helped sustain the economy, investment remains below the level needed to drive growth. He added that although South Africa, like many emerging markets, has shown resilience, economic growth remains subdued.
“Remember, we have a large and sophisticated private sector in South Africa, and that’s the reason we are still much richer than our neighbours, even if we don’t grow. But that private sector has been in survival mode. Investment has stalled. Firms are not pouring their energies into growing their South African business; the ones that are here are treading water, and the others are in places where things work, like Australia or Canada or Dubai,” Kganyago says.
Kganyago laments SA’s weak economic growth
He stressed that achieving stronger economic growth will require a greater willingness to take risks.
Kganyago says, “South Africans love to gamble, but when it comes to growth, it turns out we are risk-shy. We like protecting incumbents. We like detailed rules, regulations and controls. We are reluctant about shaking things up to make them more efficient. We would be much better off if we could stop betting on sports and start betting on growth instead.”
The Reserve Bank has forecast downside risks to economic growth, warning that the ongoing war in the Middle East could disrupt the expected recovery.
