The Faculty of Economic and Management Sciences (EMS) at the University of the Free State (UFS) hosted Lesetja Kganyago, Governor of the South African Reserve Bank (SARB), for a guest lecture titled Monetary Policy and Inequality – Post-Pandemic Lessons.

The lecture took place on 15 August 2024 in the Education Auditorium on the UFS Bloemfontein Campus and was well attended by staff and students at the UFS. These include Prof Philippe Burger, Dean of the Faculty of Economic and Management Sciences; Prof John Klaasen, Dean of the Faculty of Theology and Religion, as well as a group of matriculants from St. Bernard’s High School who were keen on hearing what Kganyago had to say.

Insights from the lecture

Kganyago’s address focused in detail on the inequality-raising effect and aftershock of COVID-19 and went on to highlight the role of monetary policy in responding to these challenges. He indicated that “COVID-19 was a massive shock, one that put at risk the remarkable reductions in global poverty and inequality achieved over the past three or four decades”. An indication of this is the significant impact of the pandemic on the poorest part of the population. In fact, Kganyago highlighted that “in 2020 alone, the number of people living below the extreme poverty line rose by more than 70 million − the largest one-year increase since global poverty monitoring began in 1990”. In addition, Kganyago highlighted that some proof of the inequality caused by the pandemic is seen in how – while some countries were able to recover faster – income levels in most countries remained below their pre-COVID-19 trend.

Furthermore, Kganyago went on to explore how this inequality materialised in the South African context, indicating that more than two million jobs were lost, which forced people from low-income households into deeper poverty. As such, even with a slight decrease in the unemployment rate since the pandemic struck, there is still a need for job creation. This is just one of the examples he touched on.

As he concluded his address, Kganyago expressed that there are several key lessons to be learned from the pandemic. One such lesson is that macro-economic policy reactions to shocks ought to be adjusted faster, as unintended and long-term costs start to emerge. Another lesson he shared was that “While we live in a world characterised by large economic shocks that need to be offset with policy, we need to be more aware of their long-term consequences”. He explained that while there is no doubt that the pandemic required substantial fiscal and monetary responses without much space for policy, policy must be agile to avoid any future problems.