Late on Tuesday evening, the African National Congress had South Africans racking their brains, trying to figure out just what the governing party intended to do with the South African Reserve Bank.
Would they nationalise the Reserve Bank or let it be? Would that adjust the mandate of the beyond safeguarding the value of the rand and maintaining price stability in the interest of balanced and sustainable economic growth in South Africa?
Over the past year, a number of developments have taken place regarding the Reserve Bank and the conflicting views are much broader than among ANC membership.
Here are the statements from various corners that have shifted the momentum of the discussions around the ownership and mandate of the South African Reserve Bank.
EFF’s SARB Amendment Bill
In August 2018, the Economic Freedom Fighters tabled an amendment bill to nationalise the Reserve Bank.
What was said: The bill proposed that ownership of the South African Reserve Bank should be transferred to the state and that the finance minister should appoint certain members of the board of directors, as opposed to this power resting with shareholders.
‘Protect the Reserve Bank’ – DA
Almost as soon as the EFF’s proposed bill was announced, then Democratic Alliance MP and party’s head of policy Gwen Ngwenya released a statement in which she vowed that the opposition party would fight what she called a “hostile takeover” the SARB.
What was said: “The nationalising of the SARB is a hostile move in a long game of EFF political manoeuvers to influence the mandate and operations of the Reserve Bank and ultimately South Africa’s banking system as a whole,” said Ngwenya.
‘Nationalisation neither here nor there’ – SARB
Reserve Bank Governor Lesetja Kganyago said in August 2018 that the independence and mandate of the South African Reserve Bank (SARB) was not being challenged by the EFF’s proposed amendment bill.
Before the EFF amendment bill was introduced, the ANC’s 2017 conference made a resolution to buy out shares in the SARB. Kganyago explained that the Reserve Bank got its mandate from the Constitution and not shareholders, so buying shares would not change its mandate.
What was said: “I have read the resolutions. I hope there isn’t something that talks about interfering with our mandate. If there is one, unfortunately I can’t implement them (the resolutions). You will be asking me to act unconstitutionally and we are a constitutionally created institution. We cannot act unconstitutionally,” Kganyago said.
‘Nothing to fear’ – Cabinet
In August 2018, then-minister of communication Nomvula Mokonyane told reporters during a media briefing that Cabinet did not believe that proposed changes to the ownership of the SA Reserve Bank would significantly affect the institution’s independence.
What was said: “Any adjustments must be done in a way that does not affect the intention of the bank. Ownership is a matter that can be discussed in processes along with what that ownership means, but that need not change the independence of the institution,” said Mokonyane.
‘Public interest at the heart of SARB’ – Mabuza
In January 2019, Deputy President David Mabuza reaffirmed the ANC’s intention to nationalise the SA Reserve Bank and place “public interest and development” at the centre of central bank’s existence.
What was said: “Needless to say, the implementation of this resolution will have implications on the ownership of the bank as well as its focus to be an instrument of development. The Reserve Bank, like other central banks, must place public interest and development at the centre of its existence,” said Mabuza in a written parliamentary reply to questions from MPs.
‘ANC will honour its resolution’ – Magashule
On Tuesday afternoon, ANC secretary general Ace Magashule told reporters at Luthuli House that the governing party’s National Executive Committee resolved at the latest Lekgotla that the South African Reserve Bank’s mandate should be expanded.
What was said: “It also directed the ANC government to consider constituting a task team to explore quantity easing measures to address intergovernmental debts to make funds available for developmental purposes. These measures should consider inflationary impact on the currency and the poor, and all must be done to cushion them,” Magashule said.
Magashule said realising this reform would be consistent with practice by developed countries, acting to save their economies. He said it would go a long way in “dealing decisively with the triple challenges of unemployment, poverty and inequality”.
‘No quantitative easing here’ – Mboweni
Hours after Magashule’s briefing on the ANC’s NEC Lekgotla, Minister of Finance Tito Mboweni took to social media networking site Twitter to say that government would determine what happens to the Reserve Bank.
What was said: “Government sets the mandate for the SARB. There is no quantitative easing thing here. The primary mandate of the SA Reserve Bank is to protect the value of the currency in the interest of balanced economic growth and development,” Mboweni tweeted.
Why it matters
Regardless of who is correct, who has the last word or if nationalising the Reserve Bank and changing its mandate is the right thing to do, conflicting views potentially undermine the certainty President Cyril Ramaphosa needs to advance his economic ambitions for South Africa.