Kganyago says reforms hold the key to escaping low growth
South African Reserve Bank Governor Lesetja Kganyago says domestic reforms can reverse weak growth, while monetary policy must contain inflation. The bank projects growth of 2 percent by 2029 despite disruption from the Middle East conflict.
A 3 percent anchor
Kganyago said current policy settings are sufficient, according to the bank's modelling, to return inflation to target after the fuel shock passes.
Since March 2026, the South African Reserve Bank (SARB) has raised its policy rate by 50 basis points.
It will act as needed to stop higher inflation becoming entrenched in expectations, wages and broader price-setting.
In July 2025, the SARB preferred 3 percent inflation within the then 3–6 percent range.
November 2025 brought a 3 percent point target with tolerance of one percentage point either side.
Inflation was at target when the Middle East shock began, expectations were moderating and policy was moderately restrictive.
Kganyago said price stability supports investment but cannot replace structural reform.
Investment loses its foundations
Growth averaged 4.3 percent in 2000–2007 but just 0.8 percent in 2015–2025; per capita income fell over the past decade.
Investment declined from about 20 percent of output in 2008 to around 14 percent today.
Power cuts cost 1.7 percentage points of growth in 2023, when output could otherwise have expanded at least 2.5 percent.
Unemployment exceeds 33 percent.
Kganyago cited better electricity supply, Operation Vulindlela reforms, improving fiscal credibility and credit rating upgrades, while calling for faster implementation.
Rates cannot repair infrastructure
Kganyago places the burden of durable growth on structural reform and state capacity, not interest rates.
The SARB can stabilize demand and inflation but cannot fix logistics, skills or public services.
His growth outlook therefore rests on institutions delivering reforms together.