Lesetja Kganyago, governor of the South African Reserve Bank (SARB), spoke to CDE’s executive director Ann Bernstein about the South African economy, jobs, and growth. Former CDE chairman, Laurie Dippenaar, opened the event.
Kganyago argued that central banks should remain independent. Publicly elected officials who have promised to control inflation are often reluctant to inflict short-term pain for the longer-term benefits of lower inflation and higher growth, he said.
According to him, “Institutions in our democracy have been significantly weakened [over the past decade]. Some of them were totally gutted. That does not serve democracy. The Reserve Bank was not spared the attacks.”
When state capture threatened the Reserve Bank, it came in a “sophisticated” way, “in the form of a motion to remove the power to license banks from the central bank” and be handed to the Minister of Finance.
“When we saw state capture coming our way, we shut the gate of the Reserve Bank and said that you are not getting in here, because this is the institution tasked with the responsibility of executing a constitutional mandate,” said Kganyago.