lesetja kganyago : overview of the south african economy address by mr lesetja kganyago, governor of the south african reserve bank, at the 95th annual ordinary general meeting of shareholders, pretoria, 31 july 2015. * * * the bank has come through yet another difficult year, and the coming year looks no less challenging. at the global level, the past year has been dominated by the expectation of a sustained recovery in the united states and united kingdom. despite negative growth in the us during the first quarter of this year, partly due to adverse weather conditions, recent positive labour market trends appear to have remained resilient, and there are increased signs that the recovery will be sustained. although growth in the eurozone remains relatively weak, it has emerged from a recession and there appear to be some positive responses to the significant monetary policy stimulus implemented by the european central bank since earlier this year. the past few weeks were dominated by renewed concerns about the sustainability of greek debt and the possibility of greece leaving the eurozone. the near term risks from this crisis appear to have been averted for now, but the longer term sustainability of the greek debt burden remains a concern. growth in japan remains positive but very slow. the outlook for emerging markets deteriorated over the past year, with negative growth rates in both brazil and russia, and a slowdown in china, as the economy rebalanced away from domestic investment towards consumption. while there has been a general expectation that china would at worst experience a soft landing, i. e. growth of just under 7, 0 per cent, recent developments including the bursting of the chinese equity market bubble, and systemic risks to the financial markets and the property market, increase the downside risks to the outlook. the growth moderation has already contributed to the persistent decline in commodity prices that began in 2011, and accelerated in the past two months. the adverse effect on south africa ’ s terms of trade was ameliorated somewhat by the sharp decline in international oil prices that started in the middle of last year. although growth in african economies remains relatively robust, oil and other commodity producers face an increasingly difficult outlook. uncertainty regarding the pace and timing of us policy interest rate normalisation continued to dominate global financial markets and the pattern of global capital flows. the changing outlook regarding domestic us growth, labour market trends and inflation caused a great deal of volatility in financial markets. although an increase in the policy rate is expected sometime this year, the exact

and sustainability of the initiatives that have been put in place. in this regard, we are now embarking on our second financial inclusion strategy which will bring more of the underserved population into the formal sector by improving access and the actual usage of financial products and services. this will empower households and communities to effectively contribute to poverty reduction, improved quality of life and be agents for economic growth. why financial inclusion is important to government? ladies and gentlemen, financial exclusion can impose significant costs on individuals, families and our society as a whole and tackling financial exclusion requires actions across a range of areas and of key stakeholders, especially government departments. bis central bankers ’ speeches in 2015, the reserve bank together with afi and the pacific financial inclusion programme, carried out a demand side survey of financial access and usage. it is important to note from the results of this survey that more than a third of our adult population ( approximately 221, 000 people ) are excluded from any formal financial services. building inclusive financial sectors improves people ’ s lives especially the vulnerable and poor in our communities. improved financial access, such as a small loan, a savings account or an insurance policy, can make a difference to peoples ’ lives. when individuals and families are able put some money away for the rainy day, save and invest in education for their children, housing and health, they are better able to deal with the unforeseen events and from falling deeper into poverty. access will help people to better plan for the future. government ’ s role ladies and gentlemen, according to international best practices, financial inclusion is a collective responsibility that requires the buy in and support of the public and private sectors, civil society, donors and ngos. we have a model that is built along these lines. i am also pleased to say that our hard working prime minister has agreed to be a special advocate or a champion of financial inclusion in fiji. government has a very important role in driving and creating an enabling environment for greater financial inclusion that can incentivise the private sector to invest in technology and offer affordable products and services to meet the needs of all consumers, particularly those that are underserved and excluded. what perhaps can be improved is the coordination and collaboration between the public and private sector in the alignment of programs and budgets from the national development plans to the national financial inclusion strategies. it is pleasing to note areas where government is already involved in driving and creating an enabling environment for greater financial inclusion. some examples include promoting savings and cataly