Julius Malema in Parliament. Picture: SUPPLIED
Julius Malema in Parliament. Picture: SUPPLIED

EFF leader Julius Malema has stolen a march on the governing ANC by proposing legislation to nationalise the Reserve Bank.

The Bank is owned by private shareholders, although they have no power over how it operates, its monetary policy or who leads it.

Bank governor Lesetja Kganyago has warned that nationalisation could have costly implications for the state, though it would not necessarily affect the independence of the institution, which is enshrined in the constitution.

President Cyril Ramaphosa has insisted that the Bank’s independence is sacrosanct.

Malema’s initiative has thrown down the gauntlet to the ANC, which resolved at its December conference to nationalise the Bank.

The ANC has launched what is expected to be a drawn-out process to look into the modalities of achieving this. It withdrew a parliamentary motion to debate the issue in the National Assembly in March to allow the governing party to consult with key stakeholders.

Banking Association SA MD Cas Coovadia said the EFF’s proposal was a political issue within the context of the broader nationalisation debate the party has put on the table. It came at a time of uncertainty about land expropriation without compensation, which the EFF spearheaded and the ANC had endorsed, he said.

IT WILL CREATE THE PERCEPTION THAT THE INDEPENDENCE OF THE BANK IS BEING ENCROACHED UPON.

"The perception is that the EFF is leading this debate. The ANC needs to take charge … the government has to be clear that our critical priority is investment and growth."

Coovadia said nationalisation of the Bank was in some ways a diversion because the majority of the Bank’s board was appointed by the government, and its shareholding had no bearing on monetary policy decisions.

"There are serious limitations on the holding of the shares and on the dividends earned on those shares, so it is not the case that anybody is making a great deal of money from it.

"But we also believe … it will send the wrong message … it will create the perception that the independence of the Reserve Bank is being encroached upon."

In a briefing to parliament’s finance committee last week, Kganyago said the Bank would engage with the process with the sole intent of preserving its independence and the mandate given to it by the constitution.

"Whether the Bank ends up being wholly owned by government or continues as it is, for us the prize is preserving the independence of the Reserve Bank."

He anticipated there would be wrangling with shareholders over the value of the Bank’s share price should it be nationalised, and a long court process was likely to ensue over this.

Depending on the outcome, nationalisation could be a costly exercise for the state.

In terms of the South African Reserve Bank Amendment Bill introduced in parliament by Malema, the state should be made the sole holder of shares in the Bank and the finance minister should have the power to exercise the rights associated with this shareholding.

The bill proposes that the directors of the Bank’s board be appointed by the minister rather than being elected at an ordinary general meeting of shareholders, and that the annual report and financial statements be submitted to the minister and parliament.

ensorl@businesslive.co.za

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