Editor’s Note: January 17, 2019

South Africa needs to stop mincing words on the economy

South African president Cyril Ramaphosa has said the country’s ruling African National Congress (ANC) has no intention to “tamper or tinker” with the central bank’s independence.

His comments are an effort to reassure markets after the party called for the Reserve Bank to pursue a more flexible policy – taking into account wider issues like employment and growth – in its manifesto for elections expected in May.

This risks fueling anxiety about policy direction amid wider concerns about central bank independence, and a gloomy outlook for emerging markets.

It raises an obvious question – why include it in the manifesto?

The likely reason is to mend divisions and shore up support within the ANC ahead of the vote.

This context is important, but South Africa is walking a fine line. Policy uncertainty has been a big contributor to its waning economic fortunes.

The World Bank has just cut it’’s growth forecast for the country, citing policy uncertainty as a contributing factor.

The hope was that Jacob Zuma’s removal would lead to more clarity, but contentious land reform plans and a sluggish economy have dented confidence in Ramaphosa’s pro-business agenda.

Reigniting a Zuma-era debate – the idea was first floated in 2017 – will not help.

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