The plans of South Africa‘s ruling African National Congress (ANC) to nationalise the central bank will be implemented responsibly and will not affect the institution’s mandate or independence, party officials said on Tuesday.
Unlike most central banks in the world, the South African Reserve Bank (Sarb) is privately owned, but the ANC resolved at a party conference in December 2017 to move it into full state ownership.
Party officials on Tuesday sought to emphasise that they would tread carefully after Sarb Governor Lesetja Kganyago said last week that a debate over ownership of the central bank was increasing investor uncertainty and fuelling the risk premium attached to the country’s debt.
“Our position on the nationalisation of the reserve bank has not changed,” ANC Secretary General Ace Magashule told reporters. “All the decisions which must be implemented, must be implemented in a responsible way,” he added.
Alongside the pledge to nationalise the Sarb, a dispute has erupted within the ANC over whether or not to explicitly expand its mandate.
According to the constitution, “the primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth”, and since 2000, the SARB has used an inflation-targeting framework to achieve its monetary policy goals.
Magashule said a meeting of the ANC’s national executive committee at the weekend emphasised the party’s policy positions on the central bank’s independence and constitutional mandate.
Those comments struck a contrast to last month, when he said that the party had agreed to explicitly target job creation alongside inflation.
His June comments were disputed by an official aligned with President Cyril Ramaphosa, and the disagreement unnerved investors in Africa‘s most advanced economy.
The Sarb has been privately owned since it was established in 1921. But its shareholders, which include South African banks like Absa and Bidvest as well as private individuals, have no control over monetary policy, financial stability policy or banking regulation.
The party’s deputy secretary general Jessie Duarte said the mandate of the Sarb would not change as a product of the bank’s nationalisation.
“(The mandate) cannot change because of who the shareholder is, that’s not the issue,” Duarte said.
“We stand behind the independence of the Reserve Bank.”