ANC push for SA to own central bank

Top officials in South Africa’s ruling ANC are pushing for the state to take over ownership of the country’s central bank, one of the few in the world to still be owned by private shareholders, newspapers reported on Sunday.

The Sunday Times and Sunday Independent said ANC Secretary-General Gwede Mantashe had presented a document to the party’s top decision-making committee questioning why the bank was still owned by the private sector.

He had argued that the party should not shy away from looking at the state’s role in the banking industry as a whole.

“Why have we been reluctant to even open the discussion on the role of the state in the banking industry,” the newspapers reported him as saying in the document that was supported by some executive committee members.

“Including discussing the fact that the South African Reserve Bank is one of less than five central banks in private hands in the world.”

The Reserve Bank is owned by shareholders, who are entitled to appoint half of the board of directors. Shareholdings are limited and liquidity tight.@@@

But shareholders have no say in the day-to-day operations, or policies, of the bank. The governor and deputies are appointed by the president and are responsible for running the bank.

Accountable to parliament, it independence is protected by the country’s constitution.

Changing the ownership structure of the central bank would not have a major impact on its operations but a move to more state control may raise fears of political interference in policy decisions.

Investors have been watching closely for signs of a shift in policy since Jacob Zuma became president last year, thanks partly to the vociferous backing of the ANC’s trade union and communist party allies that helped his rise to power.

Rating agencies warn that a shift from a previously conservative policy may impact on ratings.

The alliance agreed late last year to debate the mandate of the bank, seen by the left as too focused on controlling inflation. They want policymakers to also take into account jobs and growth when making interest rate decisions.

The government has also agreed to debate the relative strength of the rand currency, while the ANC’s youth movement want mines nationalised.

Cabinet ministers have played down calls for nationalisation and the government and Reserve Bank have stressed they will not intervene to influence the level of the rand.

The government sets the central bank’s mandate — to target medium term inflation at between 3 and 6 percent.

Trade unions were incensed when the bank raised its repo rate by 5 percentage points to 12 percent by mid-2008 when inflation peaked at close to 14 percent, and demanded they be cut faster last year when the economy followed other countries into recession.

Analysts say the total unwinding of the previous rate increases between December 2008 and August last year, despite inflation still being outside the bank, showed the central bank was flexible in attaining its mandate.

The newspapers said the ANC document was put to a party planning

meeting last week.



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