South Africa, Debate Re-Surfaces over Nationalization of Central Bank
BY YESMAN ANTOH-
NEW AFRICA BUSINESS NEWS, Accra, Ghana- A DEBATE has currently re-surfaced over the nationalization of South Africa’s Central Bank after the ruling African National Congress (ANC) threatened to put the bank ‘in the hands of the people of South Africa.’
The ANC’s attempt to nationalize the central bank, known as the South African Reserve Bank (SARB), must be stopped, the opposition Democratic Alliance (DA) said.
The DA made the statement after ANC Deputy Secretary-General, Jessie Duarte confirmed that her party will continue to pursue the nationalization of the bank.
Duarte made the remarks after the ANC National Executive Committee (NEC) concluded its policy meeting in Pretoria.
Duarte described the nationalization of the SARB as an ‘issue of sovereignty,’ saying the mandate of the bank will continue to be a matter that will, from time to time, be consulted with the government.
The DA rejected the proposed nationalization of the SARB, which ‘is a bad idea that should be resisted by all South Africans, and which we will fight against in Parliament.”
the DA’s Shadow Minister of Finance, Geordin Hill-Lewis said nationalization would allow the ANC to ramp up the political pressure on the Reserve Bank, with the aim of exerting influence over monetary policy and importantly, over commercial bank licensing and regulation.
Hill-Lewis said unlike most Central Banks in the world, the SARB has been privately owned since it was established in 1921, but its shareholders have no control over monetary policy, financial stability policy or banking regulations.
Its current mandate is to protect the value of the currency in the interest of balanced economic growth and development. Although the independence of the SARB is enshrined in South Africa’s Constitution, the bank has been criticized for failing to help boost the economy and create jobs, resulting in calls to change the bank’s mandate.
The debate on the SARB has been on and off these years. In 2018, the ANC, which would like to see the government owning 100% of the bank’s shares instead of the current arrangement where the shares were held by a number of private shareholders, tabled a motion in Parliament to nationalize the Central Bank, but it later withdrew the motion due to strong opposition.
The SARB insists that changing the ownership structure of the bank could raise the level of risk and uncertainty for the country in both the financial and economic policy sense.
Although President Cyril Ramaphosa affirmed earlier this month that the bank’s independence must be maintained, some senior officials within the ANC, including ANC Secretary-General Ace Magashule and Duarte have openly advocated the nationalization of the bank.
The ANC’s policy confusion over the SARB highlights the divisions within the ANC and further complicates Ramaphosa’s plan to turn around South Africa’s struggling economy.
“There is not a single positive outcome from this proposed nationalization, and the ANC has made no argument as to why this is necessary or desirable,” Hill-Lewis said.
“The fact is that it is neither necessary nor desirable, and it will lead to more investment flight and more job losses,” he added. Xinhua
BY YESMAN ANTOH, NEW AFRICA BUSINESS NEWS, BUSINESS & POLITICS, GLOBAL CORRESPONDENT
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