Kuben Naidoo is the newest deputy governor of the Reserve Bank. (Supplied)
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Removing policy uncertainty in South Africa, allocating new broadband spectrum and changing visa regulations could immediately boost the country’s flagging economy and reduce the crisis-level unemployment rate, Reserve Bank Deputy Governor Kuben Naidoo said.
While the central bank has long called on government for structural reforms to lift economic growth, its senior leaders have until now been reluctant to flag specific changes that could be made and have simply said these fall beyond the scope of monetary policy and the inflation-targeting mandate.
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South Africa’s central bank raised its benchmark interest rate for a second time this year in a decision that split the Monetary Policy Committee and as a political crisis engulfing the country hurts the currency.
“In every area of the economy, be it mining, be it agriculture, be it tourism, be it spectrum allocation, there are policy uncertainties that are hobbling investment,” Naidoo said Wednesday at a lunch with reporters in Johannesburg when asked about structural problems in the economy.
The government announced plans to issue a policy on licensing new spectrum before the country’s May 8 election, but it was only approved by cabinet last month and details about the auction have still not been released. While President Cyril Ramaphosa announced plans to introduce an electronic visa system and said government wants to attract 21 million tourists by 2020 up from 10 million last year, there haven’t been updates on progress.
Rolling out the 5G network to accommodate new spectrum allocation could boost direct investment by between 0.25% to 0.5% of gross domestic product, lower data costs and create new markets, Naidoo said.
Relaxing visa laws for tourists, which can be done “with a click of the finger”, could create as many as 300 000 full time and 600 000 part-time jobs for every 1 million visitors to the country, making inroads into the 29% unemployment rate, Naidoo said. Making it easier for skilled migrants to live and work in the country should be a “no-brainer” because that could create four unskilled jobs per skilled migrant, he said.
Africa’s most-industrialised economy hasn’t expanded by more than 2% since 2013 and potential growth lingers between 1% and 1.5%. The central bank projects GDP will increase by 0.6% this year.
Naidoo said the Reserve Bank usually avoids discussing structural reforms publicly because it didn’t want “government ministers to tell us what to do about interest rates”.