Perspectives on proposed changes to the South African Reserve Bank's shareholding and mandate

Abstract

Many facets surrounding the South African Reserve Bank (Reserve Bank) have been topical, but the previous five years have seen increased attention and debate. Nationalisation of the Reserve Bank has been at the heart of this debate. Debate surrounding the nationalisation of Reserve Bank formally began in 2017 by way of a Report from then Public Protector, Busisiwe Mkwhebane’s office and has since gained momentum. Further and more materially significant, the calls for the amendment of the Reserve Banks constitutionally entrenched mandate have come to fore, most notably via the Economic Freedom Fighter’s (EFF) South African Reserve Bank Amendment Bill Government Gazette No. 41657 of 25 May 2018. This nationalisation is further unpacked in this research by seeking to understand the theoretical basis and the progressive discourse of nationalisation under the ANC’s political reign.

The historical and current shareholding is discussed and inferences are drawn from a comparative analysis conducted against the Turkiye Cumhuriyet Merkez Bankasi (TCMB) which enjoys are majority state owned shareholder structure similar to the current nationalisation proposal. The economic effects and feasibility of the nationalisation of the Reserve Bank is further discussed and concluding with a feasible approach to the current nationalisation debate.

Further with regards to the contestation surrounding the mandate which seeks to deviate from the current price stability mandate is critically discussed empirically and statistically with the objective of forecasting if the proposed amendments would serve the South African economy better.