Why this economist thinks the SARB should widen its mandate to tackle socio-economic challenges

The recent inflation data in South Africa has sparked discussions about the upcoming meeting of the Reserve Bank's Monetary Policy Committee. Development Economist, Ndumiso Hadebe, shared insights in an interview with CNBC Africa. The inflation figure of 2.9 percent for February 2021 was close to expectations and is not likely to prompt a change in the repo rate at the upcoming meeting. However, Hadebe highlighted potential inflationary pressures in the future, citing factors such as the rising cost of food and the impending 15 percent increase in electricity tariffs by SCOM in April. These cost-push factors could lead to pass-through inflationary effects in the coming quarters, especially when combined with currency fluctuations linked to South Africa's fiscal performance. Hadebe emphasized the importance of analyzing the global macroeconomic environment, including the distribution of vaccinations and its impact on the global and domestic economic recovery. He also discussed the role of exogenous factors and highlighted the need for creativity in leveraging monetary policy to address socio-economic risks in South Africa. The conversation shifted towards the debate on widening the mandate of the South African Reserve Bank. Hadebe stressed the need to balance the extension of the mandate with considerations for growth, employment, and price stability. He called for a nuanced approach, taking into account the impact on other statutory institutions like the National Treasury and assessing the implications for various sectors of the economy. Addressing the resistance to broadening the Reserve Bank's mandate, Hadebe pointed to both domestic and global political economy factors. He noted the influence of global macroeconomic policies and highlighted the historical context of the debate in South Africa as factors shaping the current discourse. When discussing the potential benefits of expanding the mandate to include employment, Hadebe expressed cautious optimism, noting that while there may be challenges in implementation, it is an experiment worth exploring. He underlined the need for detailed planning and careful consideration of the statutory requirements to ensure the success of such a move. In conclusion, Hadebe applauded the integrity and fundamental focus on inflation containment demonstrated by the Reserve Bank over the years but urged for more creativity in leveraging monetary policy to address the socio-economic challenges facing South Africa. He called for a strategic approach that integrates growth, employment, and price stability objectives to drive inclusive economic development and address the country's pressing socio-economic issues.