Why South Africa’s Ruling ANC Party is Taking Aim at Central Bank

South Africa’s ruling African National Congress wants the central bank to play a more active role in fostering employment and economic growth, and is debating whether its inflation-fighting mandate should be expanded. That prospect has rattled investors, with the rand slumping against the dollar after party Chairman Gwede Mantashe said a change had been agreed — an assertion that other top officials later downplayed. The South African Reserve Bank has said repeatedly that bolstering economic output and job creation fall outside its remit, and the poor will be hit hardest if inflation isn’t kept in check.

Under Governor Lesetja Kganyago, the Reserve Bank has doubled its key interest rate since November 2021. This helped to keep inflation in check last year even as it soared in many other major African markets. However, some ANC officials say the bank’s stance has hamstrung the economy and contributed to a 33% unemployment rate. With opinion polls showing the party risks losing its national majority in 2024 elections, its new leaders who were elected in December are considering whether adjusting the central bank’s role could help it win back lost support. Business leaders and credit rating companies say the government would do better to fix energy shortages, improve transport links and cut red tape to spur the economy.