Where has Cyril Ramaphosa been? The confusion over whether the ANC did or did not take a decision this past weekend on the mandate of the SA Reserve Bank and quantitative easing needs real leadership.
Late on Thursday, after meeting with the ANC officials concerned, Ramaphosa issued a statement saying the party agreed that public spats about the mandate of the Bank have “not been helpful” and have undermined the confidence of citizens and investors. He also spoke about the ANC’s desire to nationalise the Bank but said the move would not be prudent at this time.
However, Ramaphosa made no specific mention of ANC secretary-general Ace Magashule’s role in the saga. The markets need Ramaphosa to stand up and make clear exactly where he, his party and the government stand — if for nothing else than for the sake of our already battered economy, which desperately needs stability, not more ill-informed cutting off of noses to spite an already bleeding face.
PODCAST | Business Day Spotlight - Policy uncertainty, and a plummeting GDP cause economic upset
For more episodes, click here.
Subscribe: iono.fm | Spotify | Apple Podcasts | Pocket Casts | Player.fm
Magashule announced earlier this week that the party had decided at its lekgotla that the Bank’s mandate should be expanded beyond price stability to include growth and employment. He also said the lekgotla had directed the government to consider establishing a task team to explore “quantity easing” measures to address intergovernmental debt and make funds available for developmental purposes.
This isn’t the first time the party has spoken about expanding the Bank’s mandate. The idea made its way into the party’s manifesto in January, while the decision to nationalise the Bank shook the markets in December 2017 during the ANC’s national conference, where Ramaphosa was elected. What was new, and what has rattled those who are economically literate, was the glib talk of quantitative easing.
The bombs Magashule dropped came on the back of news that SA’s economy underwent its biggest contraction since the global financial crisis, which in any event would have resulted in a bad news day for the Thuma Mina (Send Me) brigade. However, a few hours after the announcement the head of the ANC’s subcommittee on economic transformation, Enoch Godongwana, walked back Magashule’s comments — as has become the norm since Nasrec — saying consideration of quantitative easing was not on the ANC’s agenda and there was no decision by the party to expand the central bank’s mandate.
Finance minister Tito Mboweni, a former Bank governor, also jumped on the bandwagon, urging people to leave the Bank alone and accusing those who want to tinker with it of undermining efforts made so far to stabilise the country’s finances.
And in a completely unsurprising turn of events, the issue spilled out onto social media, with ANC national executive committee members on different sides of the factional divide taking swipes at each other. One grouping insisted it was discussed and a decision taken, and another said no such decision was taken.
I have no doubt it was discussed, but was there a resolution at the end of the lekgotla? Despite the confusion over what the ANC actually decided, another problem in this already perplexing saga is that those tasked with communicating the party’s message don’t seem to be doing their jobs.
Depending on who you speak to, changing or expanding the mandate of the Bank would require a constitutional amendment. But when Magashule was asked during a press briefing if that is the next step, he gave a confusing answer. “We have never changed anything, we have just said it must also focus on certain things, I think we have said growth. We don’t do anything to the Reserve Bank for now, it’s not an issue. It’s part of the broader national conference resolution — nationalise the Reserve Bank, expropriate land … Today there is no big thing about the Reserve Bank. The Reserve Bank is working very well with the government and we keep it there where it is,” he said.
When pushed for clarity he emphatically said there would be no constitutional amendments. Which makes one wonder: what was the point of making the announcement on the mandate of the Bank? Was it just to spook the markets in the name of radical economic transformation?
The “quantity easing” gaffe in the lekgotla statement sparked some very funny comments on Twitter, but there is a serious side to it. How can you expect the country, and foreign investors, to have confidence that the governing party is focused on economic growth when it makes such elementary errors?
The ANC needs to consider ensuring that when it communicates economic policy it is done by someone who actually understands it, or that a statement is carefully drafted by competent individuals and that the person reading it is under strict instructions not to deviate from the message.
Most importantly, since Tuesday night there had been no formal communication from the ANC on what it actually meant to say, which placed South Africans and investors in a precarious position: who do we believe, Magashule or Godongwana? Ramaphosa should have stepped in on Wednesday morning and explained his party’s position.
The more Ramaphosa allows confusion to reign the more unappealing SA is going to look to the markets and outside world, not to mention the ratings agencies, which are circling. If he is serious about growing the economy and reforming the government he must take the country into his confidence and give us the facts, especially if he wants to avoid the reversal of any gains he achieves every time his secretary-general opens his mouth.
• Quintal is political editor.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.