The ANC's policy conference might have resolved to nationalise the Reserve Bank, weakening the Rand against the US Dollar on Wednesday, but government is actually unlikely to do so.
Business Day reported on Wednesday that the party resolution to nationalise the Bank was largely seen as political manoeuvring between factions, while in reality, the Bank's independence was seen as sacrosanct by those high up in the ANC.
The rand reportedly weakened 2% against the US dollar at news that the Bank would be nationalised. Investec CEO Stephen Koseff told Business Day that the announcement was an "own goal" which served no purpose other than to upset investors. The Bank's independence was enshrined in the Constitution but the market "did not like the signalling", he said.
The ANC's economic transformation subcommittee, Enoch Godongwana, reportedly said it was highly unlikely that the Bank could be nationalised.
He was asked why such a policy position would come out of the conference when delegates knew this, and said this was a "difficult question".
"It's slightly difficult in a conference like this – people come with views, and on the basis of that express an opinion, which we respect. It's a resolution of delegates and they questioned why people wanted to own shares. People feel private ownership is a problem."
Godongwana explained why the ANC was unlikely to nationalise the Bank.
"The independence of the Bank is sacrosanct. There is no intention even in the resolution to tamper with that. The Reserve Bank has 650 private shareholders, they have no say in governance. They get standard dividents; 90% goes to government anyway.
"Even if we wanted to buy shares, there's no fiscal space to buy them. Why should we buy shares when we must be building roads and schools?' he reportedly said.
Moneyweb reported that the Bank is one of a small group of central banks that has shareholders, and its investors have no say over policies, but can vote to select one of its non-executive directors.
Rashaad Tayob, portfolio manager at Abax Investments Ltd in Cape Town told Moneyweb that people were conflating ownership of the Bank with control of it.
"The net effect is zero but I think investors are on edge given that the mandate of the bank has been questioned and targeted in a very political way. People are conflating ownership of the Reserve Bank with control of it, which isn't the case at all. But if you see this issue simmering up again, it shows the balance of policy is shifting away from the traditional framework," he said.Suggest a correction