an address by lesetja kganyago, governor of the south african reserve bank, at the university of limpopo, 05 september 2023 dealing with the high cost of living : south africa ’ s experience introduction ladies and gentlemen, it gives me great pleasure to be here in limpopo and to address you today. this province is home to the baobab tree – a symbol of growth amid adversity, which bears a stark resemblance to the domestic economy ’ s resilience, despite its challenges. the province ’ s contribution to commodity exports has also helped south africa withstand the headwinds to growth in recent years. over the past three years, the global economy has endured multiple large and overlapping adverse supply shocks. this was at a time when the covid - 19 - induced expansionary fiscal and monetary policies were firmly in place. this confluence of factors pushed global inflation to multi - decade highs, eroding real incomes and forcing consumers to make some difficult choices. today, i want to talk about how the high cost of living has impacted households globally and relate it more specifically to how the typical south african consumer has fared. in doing so, i will discuss how the resilience of global demand has perpetuated high inflation ; how global inflation has propagated into the domestic economy ; and how we, as the south african reserve bank ( sarb ), have responded to this inflation scourge. global backdrop to provide context, i will begin by providing the global backdrop. global inflation averaged 8. 7 % in 2022 ‒ its highest level in four decades. the genesis of this inflation was a confluence of factors, including supply chain pressures occasioned by the covid - 19 - induced lockdowns and higher international food and energy prices brought about by russia ’ s war in ukraine. expansionary fiscal and monetary policies meant to cushion economies from the ravages of the covid - 19 pandemic inadvertently became accelerants to inflation as demand recovered faster amid constrained supply. early in the recovery, consumption shifted to the less contact - intensive goods as mobility restrictions held back services consumption across the world. goods consumption benefitted from pent - up demand due to lockdowns as well as from the savings accumulated during the pandemic. unfortunately, constrained supply chains could not cope with the sudden pick - up in demand, and shortages of goods became the order of the day, which resulted in soaring goods prices globally. you may recall

ready. an important issue for the financial sector is the state of preparedness of providers of infrastructure services ( e. g. electricity, telecommunications ). these, too, are reporting that they are year 2000 ready. with all the effort, time, and resources devoted to the task, it is not surprising that a number of knowledgeable year 2000 commentators have singled out the canadian financial sector, especially the banking sector, as one of the world leaders in year 2000 preparedness. that is a strong vote of confidence, which should help reassure canadians. still, we cannot afford to be complacent and relax our efforts. computer systems will continue to be monitored and retested right up to the end of the year. there is also a need for ongoing clear, responsible communication to keep the public well - informed and confident in a smooth year 2000 transition. at the same time, increasing attention is rightly being paid to contingency plans. in this connection, the bank of canada has recently announced a number of arrangements to provide an additional measure of confidence to financial institutions and the general public. we are putting in place a special line of credit to assure these institutions and the users of financial services that if there is any unusual demand for liquidity around the turn of the year, it will be met. and the bank is prepared to accept a wider - than - normal range of collateral to support any liquidity loans it provides. we have also made arrangements to counter any unusual pressures on money market interest rates during this period. all this should be enough to reassure the vast majority of canadians that the safest place to keep their money is with their financial institutions. in fact, they should prepare for the century - changeover weekend much as they would for any other long weekend. nevertheless, there will be some who still feel that they need to take further precautions. those who prefer a little extra reassurance in the form of additional cash can rest easy – it will be readily available. the bank has increased considerably its inventory of bank notes. and it has been working with financial institutions to ensure that the system can meet an increase in demand for cash across canada. but let me reiterate that there is no reason for canadians to feel that cash is the only way they can pay for goods and services over the new year ’ s weekend. overall, the bank of canada and other financial sector participants have every confidence that canadians can plan on it being “ business as usual ” in the financial sector heading