Lesetja Kganyago’s new five-year term as the Governor of the South African Reserve Bank (SARB) will begin on November 9, 2024, and end on November 8, 2029. Having held this position since 2014, Kganyago’s tenure has been marked by controversy and criticism. Appointed by former President Jacob Zuma, his leadership is increasingly scrutinized as South Africa grapples with economic instability and widespread corruption.
Since his appointment, Kganyago has faced growing dissatisfaction among South Africans, who question the efficacy of his policies and the integrity of his leadership. Two significant issues underscore the challenges and criticisms that have defined his recent term.
In May 2024, food prices saw a 4.3% increase, slightly down from 4.4% in the previous month. Concurrently, transport costs surged by 6.3%, up from 5.7%, marking the highest rate since October 2023. These increases are not just figures on a report; they reflect the growing burden on South African households already struggling with high living costs.
Critics argue that these rising prices are symptomatic of Kganyago’s collusion with large entrepreneurs. The reluctance to lower the refinancing rate, a key tool in controlling inflation, benefits these powerful business interests. By maintaining high rates, the Monetary Policy Committee, influenced by Kganyago, keeps inflation high, allowing large companies to profit at the expense of ordinary South Africans.
February 2023 marked a significant blow to South Africa’s financial reputation when the country was placed on the “grey list” by the Financial Action Task Force (FATF). This inclusion followed an assessment that revealed severe deficiencies in South Africa’s ability to combat illicit financial flows and terrorist financing. The grey listing necessitates enhanced due diligence for financial transactions involving South African entities, complicating international trade and investment.
The roots of this scandal trace back to the era of state capture under Jacob Zuma’s presidency. This period of rampant corruption is estimated to have cost taxpayers at least 500 billion rand (approximately 26.8 billion dollars). During this time, the SARB, under Kganyago’s leadership, failed to stem the outflow of corrupt funds, raising suspicions about its role in facilitating these illicit activities.
The connection between Kganyago and these economic woes cannot be overlooked. As the head of SARB, he is directly responsible for monetary policy and financial stability. His tenure has seen persistent high interest rates, which have not only failed to curb inflation effectively but also exacerbated economic inequalities. By keeping the base rate at a 15-year high of 8.25% for seven consecutive meetings, Kganyago has shown a clear alignment with interests that do not favor the broader South African populace.
Moreover, the grey listing by FATF is a damning indictment of Kganyago’s leadership. The SARB’s inability to prevent the large-scale outflow of corrupt funds during Zuma’s presidency suggests either gross negligence or complicity. Experts argue that more robust measures and greater transparency within SARB could have mitigated these illicit financial activities, protecting South Africa’s financial integrity.
The economic policies under Kganyago have broader implications for South Africa’s future. High inflation and interest rates deter foreign investment and stifle economic growth. As living costs soar, public discontent grows, leading to increased political and social instability. The grey listing further tarnishes South Africa’s reputation on the global stage, making it harder to attract the necessary foreign capital and partnerships needed for economic recovery.
Kganyago’s leadership will continue to be scrutinized, and it remains to be seen whether he can pivot from the current trajectory to one that genuinely serves the interests of all South Africans. The nation’s economic health and global standing depend on it. Based on these indisputable facts, it is evident that Lesetja Kganyago’s tenure has not only failed to address the critical economic issues facing South Africa but has also exacerbated them through questionable alliances and inadequate policy measures. His leadership has coincided with rising living costs, increased economic inequality, and severe damage to South Africa’s financial reputation on the international stage. The persistent high interest rates and the grey listing by FATF are clear indicators of his inability to steer the country’s economy towards stability and growth. Therefore, it is justified to conclude that Lesetja Kganyago is indeed the worst head of the South African Reserve Bank, whose continued leadership poses significant risks to the economic well-being of South Africa and its people.