By Daniel Makina and Rogers Dhliwayo
“Price stability is no longer the finish line—it’s the foundation for a more inclusive, resilient, and sustainable South African economy.” — Inspired by SARB’s Strategic Plan 2024/25
Central banks worldwide are navigating a paradigm shift. While their traditional mandates have revolved around monetary stability, recent decades have seen an expanded focus on inclusive and sustainable economic growth, driven in part by the Sustainable Development Goals (SDGs). In emerging economies, the integration of financial inclusion into macroeconomic policy frameworks has emerged as a catalyst for equitable development (Ozili, 2020). For South Africa, the South African Reserve Bank (SARB) stands at the confluence of these global shifts and domestic imperatives, balancing inflation targeting with the need to support structural transformation, reduce inequality, and foster resilience in the face of climate shocks.
The SARB, Africa’s oldest central bank, has evolved beyond its traditional role of maintaining price stability to embrace a broader developmental agenda aligned with the SDGs. While its constitutional mandate remains focused on inflation control, its statutory responsibilities now reflect a deeper commitment to inclusive, sustainable growth.
Drawing on Ghosh’s (2025) empirical findings for Asia-Pacific central banks, there is compelling evidence that policy shocks, both positive (e.g., SDGs, global development compacts) and negative (e.g., financial crises) can accelerate the alignment of central banks’ priorities with sustainable development objectives. This insight has profound implications for SARB, especially in a domestic context characterized by high inequality, poverty, unemployment, and climate-related risks.
Financial Inclusion and the SARB
Financial inclusion (FI) is increasingly recognized as a macro-critical variable, influencing not only poverty alleviation but also aggregate demand, employment generation, and resilience to economic shocks (Demirgüç-Kunt et al., 2018).
South Africa has achieved remarkable gains in financial inclusion over the past decade. In 2011, just over half of adults (54%) held a formal bank account; by 2021–22, this had increased to 85%. By 2023, 98% of adults were served by the formal financial sector, with 84% holding a bank account in their own name—reflecting significant deepening of access to financial services despite persistent inequality and economic challenges (Center for Financial Inclusion, 2025). Yet, persistent gaps remain, particularly in rural areas, among informal workers, and in small and medium enterprise (SME) financing. The SARB’s current framework incorporates FI indirectly through its role in overseeing the National Payment System, regulating banks, and supporting initiatives such as the Financial Sector Charter.
However, Ghosh’s (2025) analysis suggests that without deliberate policy shocks or strategic interventions, FI alone has a limited effect on achieving inclusive growth targets. This finding underscores the need for SARB to integrate FI objectives into its policy deliberations more explicitly, in coordination with National Treasury, the Financial Sector Conduct Authority, and financial institutions.
Policy Shocks as Accelerators
Ghosh (2025) demonstrates that policy shocks can significantly amplify the positive impact of FI on macroeconomic outcomes. The introduction of the Millennium Development Goals (MDGs) and SDGs enhanced the growth and employment effects of FI initiatives in Asia-Pacific economies. Similarly, the Asian Financial Crisis of 1997 catalyzed regulatory reforms and expanded central bank mandates in ways that ultimately strengthened financial stability and inclusivity.
For South Africa, the COVID-19 pandemic and the ongoing just energy transition can be viewed as analogous shocks. Both have exposed vulnerabilities in access to finance, particularly for SMEs and vulnerable households. The SARB’s decisive actions during COVID-19, such as rate cuts, bond purchases, and regulatory relief demonstrated its capacity to adapt. Moving forward, integrating sustainability-linked policy tools (e.g., green refinancing windows, climate stress testing) could help ensure that such interventions also advance SDG-related objectives, notably SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure).
SARB’s Potential Role in the SDG Framework
While SARB’s primary mandate is price stability, the Reserve Bank Act allows for consideration of broader economic objectives, provided these do not compromise monetary stability. In the SDG era, this opens the door for SARB to:
- Embed sustainability in monetary policy transmission: Incorporating climate and inclusion variables into macroeconomic modelling to inform interest rate decisions.
- Expand macroprudential policy scope: Using capital adequacy, liquidity, and lending rules to incentivise sustainable and inclusive finance.
- Strengthen FI data and monitoring: Leveraging digital payment systems and big data analytics to track and address FI gaps in real time.
- Collaborate regionally and globally: Engaging with initiatives like the Network for Greening the Financial System to align with emerging best practices in sustainable central banking (D’Orazio & Popoyan, 2019).
The SARB’s Mandate in the SDG Era
The SARB’s expanded mandate in the Sustainable Development Goals (SDG) era is grounded in its 2024/25 strategic documents (SARB Annual Report 2024/25). This expanded mandate reflects the SARB’s shift from a narrow monetary focus to a holistic role in shaping South Africa’s economic resilience and social equity. It has four pillars.
Financial Stability as a Development Pillar
Under this pillar, the SARB actively identifies and mitigates systemic risks through the Prudential Authority. It regulates financial institutions to ensure safety, soundness, and public trust.
Climate and Sustainability Integration
The SARB is now actively embedding climate-related financial risks into its oversight framework. It is supporting green finance and sustainable investment to aid South Africa’s low-carbon transition.
Digital Inclusion and Innovation
As custodian of the national payment system, SARB promotes secure, accessible digital transactions. It is encouraging fintech adoption to expand financial inclusion, especially for underserved segments of the population.
Global Engagement
As South Africa leads as the President of the G20 in 2025, the SARB is contributing to shaping global financial norms via the G20 Finance Track. It is in the forefront in advocating for emerging market priorities in international monetary discussions.
Conclusion
The SARB stands at a pivotal juncture. Price stability remains its bedrock mandate, but the growing interconnectedness of macroeconomic stability, financial inclusion, and sustainable development demands a more integrated approach. Lessons from the Asia-Pacific economies show that deliberate, well-designed policy interventions, especially in response to shocks, can accelerate the alignment of central banking functions with the SDGs. For South Africa, embedding such an approach within the SARB’s operational and strategic framework could transform it from a guardian of stability into a proactive architect of sustainable prosperity.
Daniel Makina and Rogers Dhliwayo are editors of Economic Business Insights.
