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Reserve Bank speaks out on ANC resolution to nationalise bank

Jul 05 2017 19:29
Matthew le Cordeur

Cape Town – The South African Reserve Bank (SARB) on Wednesday spoke out on a draft resolution taken at the African National Congress (ANC) policy conference to nationalise the bank.

The rand last 2.2% when Bloomberg published leaked information from the conference on Wednesday, hitting R13.50 to the dollar at one stage.

The Reserve Bank told Fin24 that it has noted the draft resolution by the ANC policy conference, which is still to be submitted to the ANC elective conference.

“While typically we would refrain from commenting on internal processes of political parties, high public interest in the issue warrants this explanation," it said.

“The shareholding of the SARB has no bearing on the policy or regulatory role that the SARB plays."

The SARB reiterated that it is a public institution that derives its mandate from the Constitution.

“Any notion that a change in the shareholding of the SARB will amount to a higher degree of control over the SARB is incorrect," it argued.

“Even with a change in shareholding, the SARB will continue to derive its primary mandate and independence from sections 224 and 225 of the Constitution of the Republic of South Africa, a mandate it must carry without bowing to any pressure, whether it be political or from the private sector.”

Explaining the move, ANC head of economic transformation Enoch Godongwana told reporters Wednesday that SARB stock being held by private investors is “an anomaly.”

South Africa “is still sticking to the framework of the 1920s,” he said, Bloomberg reported.

Highly symbolic move

Nomura economist Peter Montalto said that while this has been on the agenda for some time it now fits into a different political context after the Public Protector Busisiwe Mkhwebane’s report, which recommended the SARB’s mandate be changed.

“We see no advantage from ownership by the state for government in view of the terms of the SARB Act as it stands and the constraint of the constitutional objective,” Montalto told investors in a note on Wednesday.

“However, it is highly symbolic and important and a hint at the direction of things to come.”

While the SARB and ABSA announced they would take the protector’s report on review, it took Finance Minister Malusi Gigaba a few weeks to finally take action.

On Wednesday, Gigaba finally announced that Treasury was reviewing the order to change the mandate of the SARB.

He said in a statement that the role of SARB is a “policy question”.

“Its primary mandate is in the Constitution,” he said. “There is no intention in the part of the executive to amend the Constitution in any manner.

“In any event, the first port of call for any policy changes would not be the Constitution, but the pre-constitutional legislation which governs the Reserve Bank, the South African Reserve Bank Act 90 of 1989.”

Gigaba said he does not believe that the proposed Constitutional amendment is necessary.

“The Constitution does not contemplate the protection of the currency for its own sake, but specifically in the interest of balanced and sustainable economic growth. These two objectives of the Reserve Bank are mutually supportive and reinforcing.”

Democratic Alliance MP David Maynier criticised his late move.

“The fact is that for more than two weeks the minister has dithered and zigzagged his way around the fallout from the remedial action and failed to take any concrete action to protect the constitutional mandate and independence of the South African Reserve Bank,” he said in a statement.

“This was a monumental dereliction of duty and left the Governor of the South African Reserve Bank, Lesetja Kganyago, dangling in the fight to save the independence of the South African Reserve Bank.”

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