The South African Reserve Bank has hiked the repo rate by a less-than-forecast 25 basis points. (Gallo Images / Alet Pretorius)
The ANC has reiterated its view that the South African Reserve Bank’s mandate and ownership structure should be changed.
This and other proposals are outlined in the ANC organisational report, which was tabled on the second day of the party’s 55th elective conference. The nationalisation of the Reserve Bank, and the call for “flexible monetary policy”, was among the policy resolutions taken at the party’s previous conference five years ago,
But the 2022 organisational report implies a more cautious approach considering the cost associated with buying out existing shareholders.
“The monetary policy regime followed in South Africa has been more restricted to narrow inflation targeting, with rising inflation and higher interest rates making life more difficult for consumers and SMMEs [small, micro and medium enterprises] in particular,” it reads.
“Linked to employment targeting, monetary policy must actively support the development of domestic productive capacity, to advance industrialisation.”
The document calls the current ownership structure of the Reserve Bank “irregular”, suggesting that — instead of having private shareholders — it ought to be 100% publicly owned. This, the report states, “is another matter that the conference required to be regularised, in line with established international practice”.
“Our low economic growth, stagnating financial position and rising inflation since 2021 has impacted negatively on these conference positions. The government should find mechanisms to regularise this situation,” it says.
“The restructuring of the ownership of the Reserve Bank should happen in a [conscientious] manner. This will safeguard its constitutionally enshrined independence and minimise any liabilities to the state, conscious of the cost implications.”
In 2017, the Reserve Bank responded to calls for its nationalisation by saying it was of the view that changing its ownership structure could raise the level of risk and uncertainty for the country in both a financial and economic policy sense.
“This heightened exposure to risk is unwarranted given the country’s fragile economic situation. The SARB [South African Reserve Bank] functions in the public interest; private shareholders have no influence whatsoever on monetary policy, financial stability or banking regulation,” the bank said.
“Policy-making and execution is the preserve of the governor and the deputy governors, who are appointed by the president.”
The central bank said nationalisation would also be expensive, noting that its shares trade for much less than the price at which some existing shareholders are willing to sell their shares.
“The ‘buying-out’ of existing shareholders will, therefore, result in paying large sums of money to effect cosmetic changes that will have no bearing on the manner in which the SARB carries out its mandate or executes its policy responsibilities.”
On macroeconomic policy, the 2022 organisational report underlines the importance of “correct monetary and fiscal policy management”.
Speaking on the government’s current policy on fiscal consolidation, on Saturday, Mmamoloko Kubayi, the ANC’s head of economic transformation, noted that the party’s alliance partners were of the view that fiscal policy ought to change.
“[But] I don’t think so,” she said in an interview with Mail & Guardian.
“My issue now is where I am spending. That is the conversation I would want to have — not spending only on social packages, but I would want to see spending in areas that guarantee the sustainability of growth. The fiscal policy does not have to change.”
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