South Africa’s weak GDP won’t spur populists, Lesetja Kganyago says
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,” Kganyago told an investor conference Thursday in New York in his second reference to populism this week. “Bad economic outcomes, in this case, seem to be supporting better policies.”
Kganyago said on Tuesday the nation spends 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 hasn’t expanded at more than 2% annually since 2013, complicating the government’s task of trimming a 27% jobless rate and reducing poverty.
The ruling African National Congress decided in December it would pursue changes to the nation’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 radical Economic Freedom Fighters political party, which has won support by vowing to nationalise everything from land to banks, 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 center will hold. We have strong institutions, and we have the better arguments.”