EDITORIAL: The ANC’s Reserve Bank red herring
The ANC has no cogent argument for its stance on the SA Reserve Bank, which entails the hackneyed calls to ‘nationalise’ it as well as ‘review its mandate’
The ANC has no cogent argument for its stance on the SA Reserve Bank, which entails the hackneyed calls to "nationalise" it as well as "review its mandate". The lack of any logical underpinning to this attack on the Bank lays bare how those lobbyists have rather unsavoury motives.
The reality is, the ruling party is divided over the future of the central bank. One faction wants to alter the way the bank acts to force it to take into account "other factors" when setting interest rates; another wants to leave it entirely alone.
The fact that this issue is even still alive at all, let alone the subject of a raging factional battle, is an indictment of the governing party. It betrays a stark lack of understanding of the institution’s role — which is scary since it raises the question of how illiterate ANC leaders are about the functioning of other critical institutions too.
The ANC faction aligned to former president Jacob Zuma first set its sights on the Bank shortly before the party’s 2017 national conference. They were spurred by public protector Busisiwe Mkhwebane’s "recommendation" that the Bank’s mandate be changed from protecting the value of the rand to "improving socioeconomic conditions of citizens of the republic".
At the ANC’s December 2017 elective conference, we then saw a mishmash resolution to nationalise the Bank, referring also to reviewing the Bank’s mandate and independence. But the wording of that resolution exposes that the ANC neither understands how the Bank works, nor how the smattering of private shareholders have zero say in the Bank’s functioning.
Taking a step back, it is easy to trace the roots of this onslaught. For more than two decades, the ANC managed monetary policy well, while preserving the independence of the Bank.
So what happened to push the Bank into the firing line? The answer is this: the Zuma faction’s policy positions are rooted in a quest for "radical economic transformation" (RET) — a slogan pushed by disgraced PR firm Bell Pottinger. Given the deep inequalities and slow transformation of the SA economy, the RET project gained traction.
The problem was, the intent of the Zuma faction was far from noble. Rather, it was part of the plan to force the banks to re-open the bank accounts they’d shut that belonged to the Gupta family, to allow them to continue looting the state.
The Guptas had lobbied former finance minister Pravin Gordhan to intervene on their behalf, but he refused and asked the courts for an order stating that he was not allowed to intervene. But Gordhan’s court papers exposed plenty of suspicious transactions by Gupta companies, totalling R6.8bn, which had been flagged by the Financial Intelligence Centre. That information on possible money-laundering had been obtained from SA’s banks, in collaboration with the Reserve Bank.
Hobble the Reserve Bank, and you hobble those hindering the Guptas.
It may seem cynical to link the ANC’s motives for its attack on the Bank to protecting the Guptas, but the fact is, its own leaders cannot explain coherently why the Bank should be nationalised.
Nor are those pushing for this aware that since 1996 there have been several legislative changes to reduce the influence of shareholders and limit the number of shares that investors can hold.
One of their routine arguments is that the Bank only looks at inflation when deciding on interest rates. But even that isn’t accurate. As governor Lesetja Kganyago explained again last week, the Bank already factors employment into its mandate, as the constitution stipulates.
"Where have you been for the past 25 years?" Kganyago asked those ANC lobbyists. The answer is: fast asleep.