DA slams Ramaphosa's commitment to nationalise the Reserve Bank

1 August 2022

Please see attached a soundbite by Dr Dion George MP

"Nationalising the Reserve Bank will deepen South Africa’s negative economic spiral" said Dr Dion George, the DA Minister of Finance.

This was in reaction to the desperate attempt by President Cyril Ramaphosa to pander to the ANC’s RET faction during the weekend, where he appeared to agree and commit to his party’s misguided plan to reignite efforts to nationalise the South African Reserve Bank (SARB).

The suggestion by the President that the nationalisation of the SARB will proceed in a “manner and pace that takes account of the cost to the fiscus” will merely serve as a slow poison for investor confidence.

There is no meaningful public interest motive in nationalising the SARB, only the furtherance of narrow political interests.

The ANC believes that it can print money to save South Africa from the economic crisis caused by its failed economic policies. That would result in massive devaluation of the Rand that our economy cannot absorb.

The nationalisation of the SARB ultimately means that the finance minister will have the power to appoint every board member from a list of nominees that are confirmed by a panel also largely appointed by the minister i.e., cadre deployment on top of cadre deployment.

Coupled with greater ministerial involvement in the SARB, this will give the government enhanced ability to unduly influence the rules in a market (in which it also competes) by altering the scope of the SARB’s mandate as it pleases.

However, the importance of an independent SARB goes far beyond this. In managing the country’s money supply and overseeing the banking sector, the SARB is the anchor for the country’s economic stability.

Left in creditable, independent and technocratic hands, it serves as an institution that can take necessary and often unpopular decisions. Where it is commandeered by politicians and cadres, the temptation would inevitably be to throw off the restraints and do what is immediately expedient, with the risk that in a deteriorating economic environment, it will ultimately collapse our currency.

This was clearly never a rational policy stance by the ANC. It is irresponsible, ill-informed and has thus far only succeeded in alienating investors by worsening perceptions of South Africa’s policy environment.

"Any prospect of economic recovery depends on a policy environment that is focused on growth. This requires of the government to abandon anti-growth, confidence-sapping policies like nationalising the SARB" said George.

It is not good enough simply to say that nationalisation will proceed in a manner that is “cognisant of the likely cost implications for the fiscus”. This policy stance must be permanently abandoned.

The DA therefore strongly opposes the threats by the ANC to the independence of the Reserve Bank.

Issued by Dion George, DA Shadow Minister of Finance, 1 August 2022