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By Vukosi Maluleke

Digital Journalist


‘Our economy is not growing’: Lesetja Kganyago says SA is behind

Sarb Governor blames load shedding and poor logistics infrastructure.


South African Reserve Bank (Sarb) Governor Lesetja Kganyago says the South African economy is not growing – blaming load shedding and SA’s logistical challenges.

Kganyago delivered the keynote address at the Financial Sector Conduct Authority (FSCA) Industry Conference in Bryanston, Johannesburg on Wednesday.

The two-day conference aims to share insights on evolving trends in conduct regulation and their implications for the financial sector.

During his speech, Kganyago said the country’s economy had not grown much in recent years, showing a marginal 0.6% growth in 2024.

“Our economy is also not growing, and there are many signs that our living standards are falling. The gap between South African growth and world growth is now double its longer-term average. We are falling behind.”

“A big reason for this is that other places have functioning rail networks, ports and electricity – something that we lack.”

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FATF Greylisting

Another pain point Kganyago noted is high government debt which he explained had grown rapidly, consequently causing SA to lose its sovereign investment grade credit rating.

“This is costing us dearly through higher borrowing costs and lost investment funds.

“Furthermore, we are on the FATF (Financial Action Task Force) grey list and have been there for just over a year – since February 2023.”

The global financial watchdog grey-lists countries for failure to comply with international standards for preventing money laundering, terrorist financing and proliferation financing.

“We got this high-risk designation partly because of poor conduct by institutions and the exploitation of vulnerabilities in the existing financial frameworks relating to anti-money laundering regulations,” Kganyago explained.

However, he is confident the worst is nearly over.

“We feel confident that South Africa will be removed from the grey list by the next review date in 2025 – given the fixes we implementing. But this has been a costly episode for us,” he said.

Kganyago said a lesson learnt from SA’s greylisting is that joint efforts are required to look after the integrity of the county’s financial systems.

“We all suffer when this is compromised,” he said.

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Rand manipulation rumours

Emphasising the importance of a trustworthy financial sector, Kganyago said the industry’s public image is not everything it should be.

He said the recent “conspiracy” on rand manipulation by South African banks signified the lack of information on the financial sector.

“It was remarkable with the allegations last year about banks manipulating the exchange rate of the rand, how ready people were to believe [that] there was in fact a great conspiracy to rig the rand, and that this had seriously weakened the exchange rate, pushed up inflation and raised interest rates.”

Kganyago said experts understood that even if there had been market manipulation by some traders, the macro effects of the exchange rate being a few cents weaker or stronger for an hour or so would have been trivial.

“The impact on inflation and rates would have been zero.”

The Competition Appeal Court ruled in January that there was no evidence of market manipulation.

“Most people could tell that traders were behaving unethically, plotting in chatrooms, and the misconduct was so obviously wrong. It eclipsed other analysis,” Kganyago said.

He said a key takeaway from the issue is that public trust in the financial system is not as deep as it should be.

“I worry about our ability to have well-informed policy conversations in potentially more stressful circumstances, if bad analysis can get this kind of public traction.”

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Resilient financial system

Kganyago said that despite economic challenges in recent years, South Africa’s financial system had proven resilient.

“The ability of the market to get through catastrophic events like Covid has been clearly demonstrated,” he said.

“Capital buffers have held up. We have not seen a rise in defaults that could indicate irresponsible risk lending, or large-scale evergreening of loans designed to conceal losses,” he added.

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