The "proposed" nationalisation of the South African Reserve Bank : a Coherent or Fallacious Proposal?

Abstract

Nationalisation remains very topical in democratic South Africa as we have seen this discourse manifest in the agenda to nationalise numerous industries. In 2017, following the Report of the Office of the Public Protector regarding the "life boat" given by the South African Reserve Bank (Reserve Bank) to Bankorp Limited and the failure to recover what has been deemed misappropriated funds, we have witnessed this discourse gain momentum with the African National Congress elective conference resolving to propose the nationalisation of the Reserve Bank. It is this leg of the nationalisation debate that is unpacked in this paper. The aim is to understand the core functions of the Reserve Bank in order to establish the possible impact of a move towards nationalisation. The Reserve Bank aims to protect the value of the currency, is tasked with inflation targeting and acts as a lender of last resort, among other functions. The theme of nationalisation maintained in this paper is one of a vehicle that is rooted in the democratic ideology of progressiveness and advancement of the economic interests of the majority. This view is understood against the backdrop of the policy framework of the Freedom Charter. Owing to the volatility of South Africa's socio-political and economic landscape however, pervasive corruption and other disadvantages such as state capture are advanced as having weakened and tainted the decision-making ability of government and are expounded upon to suggest that South Africa is not ready for nationalisation of an institution such as the Reserve Bank. A comparative analysis conducted against the National Bank of Austria which was nationalised in 2010 provides insights and key lessons to be learnt. In the concluding chapter, alternatives to the nationalisation of the Reserve Bank, in the form of the establishment of a state-owned bank independent of the Reserve Bank as well proposing for efficient and strategic use of existing government financial institutions are explicated.