Lesetja Kganyago, the South African Reserve Bank governor, talks about early life in the village where he used to pay 10 cents for a loaf of bread. Granted it is now four decades down the line and the price of bread is now R9 a loaf but this highlights the inflationary impact on ordinary citizens. And his challenge as governor got harder as this week saw the May inflation figure come in above consensus forecast at 4.6%. But his bigger concern must be the long term outlook, with some economists expecting inflation to breach the top of the target range of 6% in the first quarter of next year, and get as high as 8%. But inflation is not his only worry, as the movement of interest rates impacts a lot more than just prices. – Stuart Lowman
By Rene Vollgraaff
(Bloomberg) – South African Reserve Bank Governor Lesetja Kganyago returned to his rural village to issue new banknotes bearing his signature, taking his monetary policy message to ordinary people.
Kganyago, 49, spoke in the local Sepedi language to a crowd of residents that included his 82-year-old father, who had gathered on Friday in a white marquee in Moletjie Ga-Maribana, a village about 380 kilometers (236 miles) north of Johannesburg in South Africa’s Limpopo province. He then used the new banknotes bearing his name in block letters to buy cooking oil, peanut butter and corn meal from the local store, where he bought bread for his family as a young boy.
“The bank must get closer and closer to the people,” Kganyago told reporters in the shop, which had cement floors and a single bare lightbulb hanging from the ceiling. “The way in which ordinary people really interact with the South African Reserve Bank and feel that they are closest to the bank, is when they draw purchases, when they hold the notes and coins.”
Kganyago took over as governor from Gill Marcus in November after more than three years as her deputy. His task of keeping inflation within a target band of 3 percent to 6 percent has been made more complicated by rising energy costs and a weaker currency. The central bank left its benchmark repurchase rate at 5.75 percent last month, while warning that it may raise borrowing costs in coming months.
Also present at the event was Kganyago’s Grade 2 school teacher, Jerida Makweya, and his wife Zibusiso, who works in property development. Many people in the village of dusty streets and unpainted homes grow corn and rear sheep in their yards.
Kganyago said he paid 10 South African cents for a loaf of bread in the 1970s at the Makgotloana store, which has shelves stocked with candles, canned fish, washing powder, shoe polish and lollipops. A loaf now costs him 9 rand ($0.74).
“For many people, the way in which the bank touches them, is when they transact with the notes and coins that we have and for them seeing that the notes are bearing a signature that they would be familiar with, is actually a touching experience,” he said.