Rethinking the SARB Mandate for Inclusive Growth
The Institute for Economic Justice (IEJ) has submitted critical recommendations to Parliament’s Joint Constitutional Review Committee regarding proposed changes to the mandate and independence of the South African Reserve Bank (SARB). SARB mandate reform is key for aligning South Africa’s monetary policy with pressing developmental needs, including employment creation, green industrialisation, and reducing poverty and inequality.
The SARB’s current narrow interpretation of its constitutional mandate—focusing primarily on inflation targeting—has proven detrimental to balanced and sustainable growth. While clause 224 (1) of the Constitution outlines a broader objective, the SARB operationalises this through high interest rates that constrain economic demand and discourage productive investment. This approach has failed to address the root causes of inflation, which are often external factors such as volatile oil and food prices and the impacts of climate change.
The IEJ advocates for a broader, more inclusive mandate that enables the SARB to support employment-rich, climate-resilient growth. This would be in line with the dual mandates adopted by many central banks globally, balancing price stability with developmental outcomes.
Further, the SARB’s independence must be tempered with stronger provisions for regular coordination with the Minister of Finance, as required by clause 224 (2). Current practices fall short of enabling the necessary fiscal and monetary policy synergy to drive inclusive growth.
Climate change further intensifies the need for reform. The SARB and National Treasury must coordinate to finance a just transition to a low-carbon economy that promotes long-term resilience and macroeconomic stability.
The IEJ’s submission recommends:
- SARB mandate reform must be expanded to include employment, poverty reduction, and green structural transformation.
- Strengthening mechanisms for coordination between the SARB and the Executive to ensure monetary policy supports national development goals.
A reformed SARB can play a powerful role in shaping a just, inclusive, and climate-resilient economy.