Weak GDP will empower reformers – governor

South Africa’s bad economic performance is unlikely to give more sway to populist voices and will rather empower reformers in the government to pursue the right policies, Reserve Bank Governor Lesetja Kganyago said.

“We cannot stop some people from saying populist things, but we can win the policy debates – and we are winning,” he told an investor conference on Thursday in New York. “Bad economic outcomes, in this case, seem to be supporting better policies.”

Previously, Kganyago had said the nation spent too much time debating populist issues, such as the proposed nationalisation of the central bank, instead of focusing on steps to boost the economy, which fell into a recession in the second quarter.

Gross domestic product has not expanded at more than 2% annually since 2013, complicating the government’s task of trimming a 27% jobless rate and reducing poverty.

The ANC decided in December it would pursue changes to SA’s constitution to make land expropriation without compensation easier and that the Reserve Bank should be state owned, like most other central banks.

In August, the Economic Freedom Fighters (EFF) tabled a Bill to change the ownership of the Reserve Bank.

“South Africa has its share of populists who want to do radical things,” Kganyago said. “But it’s increasingly clear that the centre will hold. We have strong institutions and we have the better arguments.”

The country aspires to growth rates nearer its historical trend levels, he said. “We are recovering from a period of self-inflicted injuries and there are good growth opportunities that we can exploit when we have recovered our health,” he said. “Our politics have taken a reformist turn, which should permit a constructive response, rather than a destructive reaction to the disappointments of the recent past.

“I am confident that South Africa tomorrow will be better than South Africa today.” – Bloomberg

Moneyweb

Ernst & Young’s (EY) latest Africa attractiveness report, Turning Tides, confirmed South Africa and Morocco as the joint top destinations for foreign direct investment (FDI).

The report, based on 2017 statistics, analysed FDI into Africa and showed that Africa attracted 718 projects – up 6% from the previous year.

The surge was buoyed by infrastructure investment in emerging sectors such as manufacturing, infrastructure and power generation.

Africa’s attractiveness was also propped up by the sluggish global growth environment, while African currencies remained weak, presenting a cost advantage.

Despite the economic turbulence, SA (the largest intra-African investor) held its investments steady at 29 projects, while Morocco’s

The centre will hold. We have strong institutions and we have the better arguments.

Lesetja Kganyago Reserve Bank governor