ANC wants explicit jobs mention in central bank remit

South Africa’s governing African National Congress supports the central bank’s inflation-targeting policy and independence but would like an explicit mention of job creation in its remit, Finance Minister Enoch Godongwana said.

“The mandate of the South African Reserve Bank is to protect price stability in the interest of balanced and sustainable growth — implied in that is employment creation,” Godongwana, who is also a high-ranking member of the ANC, said Thursday in an interview in Johannesburg.

The central bank considers a range of issues including employment when implementing its constitutional mandate, and a direct reference to jobs won’t affect its operations, the minister said.

Godongwana’s comments come after President Cyril Ramaphosa on January 9 played down suggestions that an amendment to the mandate is imminent. Gwede Mantashe, the chairman of the ANC, said last week the party had agreed at its national conference to change the remit, a prospect that rattled investors worried that modifications would weaken the Reserve Bank’s independence and commitment to its inflation target.

“Price stability is sacrosanct,” Godongwana said, echoing Reserve Bank Governor Lesetja Kganyago’s stance.

The central bank targets price growth in a band of 3% to 6% but its policy makers prefers to anchor inflation expectations close to the midpoint of that range.

It has doubled the benchmark rate since November 2021 to 7% in response to the worst global inflation shock in a generation. While the move drew criticism from some politicians and labor unions, its stance meant South Africa hasn’t experienced target misses of the scale experienced by some of its African and developed-market peers, and interest-rate hikes haven’t been as large as in other emerging markets.

The central bank, under Kganyago, maintains that the poor will be hit hardest if inflation isn’t kept in check and has repeatedly said that clearing obstacles that would bolster job creation and economic growth fall outside the scope of monetary policy.

Kganyago hasn’t formally raised the prospect of lowering South Africa’s inflation target range, Godongwana said.

The Reserve Bank is seen by investors, business and ratings companies as one of few pillars of institutional strength in an economy hollowed out by state graft during former President Jacob Zuma’s presidency. A 2017 proposal by now-suspended graft ombudsman Busisiwe Mkhwebane to change the bank’s official mandate and curtail its independence sparked concern before it was blocked by the courts.

The ANC’s previous attempts to make changes at the central bank have stalled and it won’t be able to effect a constitutional amendment on its own. It controls 58% of seats in the National Assembly, meaning it would need backing from opposition parties to push through any amendments.