South Africa must take uncomfortable risks to accelerate economic growth and achieve fiscal sustainability, central bank Governor Lesetja Kganyago said.
“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.”
For more than a decade South Africa has grown at less than 1% a year on average, hamstrung by graft, crime and snarl ups in sectors including energy, water and logistics.
“The fundamental question we need to ask ourselves, as country, is: do we truly want to grow? It seems the answer is obvious, but it is not,” Kganyago 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.”
While efforts to implement reforms, spearheaded by Operation Vulindlela, a unit within President Cyril Ramaphosa’s office, have begun to bear fruit, progress has been slow, Kganyago cautioned.
One of the reasons has been the consequences of institutional destruction during the years of former President Jacob Zuma’s rule — a process often called “state capture” to describe what happens when institutions are corruptly run for private gain rather than public benefit.
“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.
To break from stagnant growth, South Africa 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,” he said.
BLOOMBERG
