remarks by lesetja kganyago, governor of the south african reserve bank, at the annual dinner in honour of the ambassadors and high commissioners to the republic of south africa south african reserve bank, pretoria 31 july 2018 introduction dean of the diplomatic corps, ambassadors, high commissioners, counsellors and diplomats, ladies and gentlemen – a very good evening and a warm welcome to the south african reserve bank ( sarb ). i would like to extend my heartfelt gratitude to you for accepting our invitation to this annual event. this year, we celebrate the 100th anniversary of the birth of nelson mandela. earlier this month, for the first time in the nearly 100 - year history of the sarb, we issued a commemorative banknote series as well as a third commemorative r5 circulation coin in honour of the life of former president mandela. tonight, i would like to briefly reflect on what we can learn from tata madiba ’ s legacy, both as a statesman and as a champion of institutions. after all, it was under nelson mandela ’ s presidency that the defining characteristics of south africa ’ s foreign policy and trade policy, as well as our interaction with foreign investors, were established. madiba had a vision that south africa should be ‘ ready to play a role in fostering peace and prosperity in the world that we share with the community of nations ’. in 1993, a year before he became president, nelson mandela highlighted that ‘ our foreign policy will rest on the belief that economic development depends on growing page 1 of 6 regional and international economic cooperation in an interdependent world ’. 1 since madiba ’ s presidency, the foundation of all of south africa ’ s interactions with the rest of the world has always been strong domestic institutions and a robust macroeconomic framework that provides policy certainty, supported by our participation in multilateral institutions and forums that are transparent and fair. looking at the state of the global and domestic economies today, it is worth reflecting on the importance of institutions in managing risks and dealing with crises. reflecting on the global economy the global economy today looks very different from a year ago. last year, the backdrop for south africa and other emerging markets was generally constructive, as the recovery of the advanced economies continued on a steady path. the stronger demand supported higher commodity prices, while expectations of a moderate withdrawal of monetary stimulus in the advanced economies were supportive of strong capital flows to the emerging markets. however, this favourable setting did not last long. a number of key risks have since

on the establishment of the brics bond fund to support the development of local - currency bond markets in the other brics countries, and a stocktake exercise on financial technology as it relates to crypto - assets and the regulation thereof. finally, and very significantly, the brics central banks have, for the first time, conducted a test run of the cra with an actual transfer of funds. this exercise commenced on 3 july and was completed successfully today. 2 brazil, russia, india, china, south africa page 3 of 6 building strong institutions on the african continent is also very important to support development and improve the continent ’ s resilience to shocks. the sarb – through its chairing of the association of african central banks and as the chair of the committee of central bank governors in the southern african development community – has been involved in a number of activities in support of economic and financial integration on the continent. these initiatives have spanned, among other things, the areas of banking supervision, strengthening central - bank independence, regional payment systems, financial - market deepening, financial stability, and financial inclusion. other issues that require urgent attention include the negative impact of the withdrawal of correspondent banking relationships on trade flows and remittances, as well as the limits to domestic revenue mobilisation due to illicit flows. the south african economy south africa ’ s growth outlook remains challenging. at the most recent meeting of the sarb ’ s monetary policy committee earlier this month, the growth forecast for 2018 was revised downwards to 1. 2 % from 1. 7 % in may. the growth forecast for 2019 is 1. 9 % and 2. 0 % for 2020, both of which are significantly lower than the levels required to generate employment and to reduce inequality and poverty rates. while we consider the current monetary policy stance to be broadly supportive of the economy, inflation risks are to the upside, and our fiscal framework is vulnerable. faced with similar conditions back in 1996 under nelson mandela ’ s leadership, the south african government had to make some really difficult decisions. it was resolved to make the required policy choices and strengthen macroeconomic institutions. this garnered investor confidence and placed south africa on a strong economic footing in the early 2000s. recent research conducted by the sarb3 suggests that the collapse in the levels of confidence over the past few years had shaved off around 1 percentage point from 3 theo janse van rensburg and erik visser, 2017, ‘ decoupling from global growth – is confidence becoming