General: ANC to ‘return’ SARB ‘sovereignty’ to ‘the people’

The ANC’s national executive committee has ‘reaffirmed’ a resolution taken at its 54th national conference in 2017 to ‘return the sovereignty’ of the South African Reserve Bank (SARB) to ‘the people of SA as a whole’, reports Pam Saxby for Legalbrief Policy Watch. This is according to an eight-page media statement on the outcomes of its meeting last weekend. Posted on Facebook but – at the time of writing – yet to be published on Twitter or the party’s official website, paragraph 7 under the sub-heading ‘economic transformation’ nevertheless made a point of emphasising the ANC’s ‘policy positions’ not only on ‘the independence’ of the SARB ‘as set out in the Constitution’, but also on its mandate – which is to be ‘exercised in regular consultation with government’.

Last week, in a public lecture at the University of SA in Pretoria, SARB Governor Lesetja Kganyago expressed concern that – in the absence of a ‘conversation’ about ‘difficult but vital reforms’ that might rescue SA from its ‘growth malaise’ – an ‘obsession’ in some circles ‘about the SARB and monetary policy as the only answer to … (the country’s) growth problems’ is feeding the ‘notion’ that the institution’s private shareholding influences its policy framework and decisions. ‘This shareholding debate is more damaging to our economy than it should be,’ Kganyago said. ‘It sends a signal to investors, both here and abroad, that our macroeconomic framework is at risk, making the cost of debt higher than otherwise and undermining confidence.’

Over the years, the newly-reappointed Reserve Bank Governor has repeatedly defended the institution’s ‘private shareholding’ – by spelling out the ‘limited rights’ of the parties concerned, who have no influence over the SARB’s mandate (Fin24). In an address at the 98th ordinary annual general meeting of shareholders in July 2018, Kganyago explored the issue in considerable depth, beginning with the voting rights of private shareholders and the cap on their dividends – and noting that, as ‘an additional layer in the governance framework’, they help to ‘strengthen accountability and transparency’. ‘The South African experience has taught us that boards appointed by government are no guarantee of good governance, nor are they a guarantee that decisions will be taken in the interest of the broader economy,’ he warned.

However, Kganyago did acknowledge the existence of ‘a group of shareholders’ apparently ‘agitating for the SARB’s nationalisation’. Believing that they are ‘entitled’ to a portion of its assets, they ‘see this as an opportunity to make enormous profits at the expense of taxpayers’. According to Kganyago, ‘this could turn out to be a protracted legal process and a very expensive exercise for what would, at best, be a cosmetic gain’. He was referring to the fact that, in terms of SARB’s constitutionally enshrined mandate, ‘broader policy’ and regulatory decisions are the responsibility of the Governor and Deputy Governors – ‘who are themselves appointed by government’.

Follow Pam Saxby on Twitter (@SaxbyPam)