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The South African Reserve Bank found itself in the national spotlight in 2020, following the submission of the South Africa Reserve Bank Amendment Bill 2018.
Introduced by the EFF (Economic Freedom Fighters), the South African Reserve Bank Amendment Bill will alter the current South African Reserve Bank Act, 1989 (Act No.90 of 1989). If this Bill is passed, South Africans can expect several changes.
When following up on the proposed changes to the Bill, the matter is currently hanging in limbo—and the amendment has been met with concern by members of the Business and Government sector.
Business lobby group, Business Leadership South Africa (BLSA) states it submitted the necessary comments in November 2020, voicing its reasons for not supporting the Bill. “We are of the view that the Bill introduces unnecessary risk to the country, to sustainable jobs intensive employment growth and the cost of funding for businesses; and is also unconstitutional. On 18 November 2020, we made an oral presentation of our submission before the Parliamentary Standing Committee on Finance.”
Additionally, BLSA says one of its main concerns with the Bill is that changing the governance structure and nationalising the SARB will negatively affect the SARB’s credibility, South Africa’s monetary policy approach and its excellent standing in the world. It goes as far as to say, “We believe that this is a risky move with no meaningful benefit. This risk is exacerbated by the creeping state control and failures that we are experiencing as a country.”
Adding to this, the National Treasury warns that the nationalisation of the SA Reserve Bank may expose the central financial institution to corruption or land up in the same situation as other state-owned enterprises. One only needs to look at the crisis which South African Airways is facing.
Finance minister Tito Mboweni adds, the Government also has objections to the Bill. These include its constitutionality; cost implications, as well as the legal and economic uncertainty it will generate.
Moreover, he stresses that the Bill’s proposals will expose the fiscus to retaliatory costs, particularly from foreign investors under Bilateral Investment Treaties (BITs).
With several key role players showing their disdain towards the Bill, it seems the South African Reserve Bank will escape unscathed. But, only time will tell, once parliament makes its decision final.
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