The government does not have any plans to nationalise the SA Reserve Bank, especially as that would prove costly for the fiscus, finance minister Enoch Godongwana said emphatically in reply to an EFF parliamentary question.
This has been the long-standing position of the Treasury in response to EFF and MK party lobbying. EFF leader Julius Malema introduced a private member’s bill in 2018 to nationalise the central bank. Parliament’s finance committee revived the bill in September last year.
In a written response to a question by EFF MP Nontando Nolutshungu, Godongwana said while 100% ownership of the Reserve Bank by the state would be in line with most countries and jurisdictions across the world, the benefit that would be derived from doing this had to be balanced against the likely large fiscal cost that it would involve. The Reserve Bank has about 800 private shareholders who would have to be paid off.
“The costs would include compensation in terms of both section 25 of the constitution and existing bilateral investment treaties. Yet the benefits of 100% ownership of the SA Reserve Bank are minimal, as private shareholders are currently restricted to playing a governance role only, and play no role in determining monetary, prudential, regulatory or any other policy, as policy issues are the sole responsibility of the governor and deputy governors of the SA Reserve Bank, all of whom are appointed by the president.
“What is more fundamental for the SA Reserve Bank is for the country to ensure that it is allowed to independently pursue its constitutionally enshrined mandate of protecting the value of the currency in the interest of balanced and sustainable economic growth; and its additional objective of protecting and maintaining financial stability as envisaged in the Financial Sector Regulation Act,” the minister said.
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