POLITICS
31/05/2018 10:26 SAST | Updated 31/05/2018 10:26 SAST

This Is Why Nationalising The Reserve Bank 'Will Change Nothing'

As long as the SA Reserve Bank remains independent, very little will change if government 'nationalises' the bank.

Yuri Gripas / Reuters
SA Reserve Bank Governor Lesetja Kganyago speaks at IMFC press conference during the IMF/World Bank spring meeting in Washington, U.S., April 21, 2018.

The ANC says it will begin the slow process of implementing its resolution to nationalise the SA Reserve Bank (SARB). But there's no reason to panic just yet, say two economists.

Despite the central bank's private shareholders being paid out for their dividends, for which the taxpayer will probably foot the bill, there should be no major changes if government opts to nationalise the SARB — as long as the institution remains independent.

There will always be a fear that with government's influence SARB will turn out like the central bank of Zimbabwe.

This is according to Professor Jannie Rossouw from the University of the Witwatersrand, and Mike Schussler from economists.co.za, both of whom agree that the idea of nationalising the central bank is more political propaganda than a measure to effect any practical change.

READ: Nationalisation Would Be Damaging, Says SARB.

According to both experts, this is why South Africans shouldn't worry just yet:

1. The SARB's mandate is embodied in the Constitution and has nothing to do with its shareholding. Therefore, "nationalisation" will change very little.

2. The debate is mainly centred on the fair value that will be paid to the bank's current shareholders.

3. Government appoints the leadership of SARB anyway.

"SARB's mandate is embodied in the Constitution and has nothing to do with its shareholding. Nationalisation will change very little. If you want to change its mandate, you need to change the Constitution, not its shareholding. It's become more of a catchphrase, really. What does government really want to achieve? The ANC has not told us yet," Rossouw said.

"If nationalisation becomes a trend, then perhaps we should be worried."

READ: ANC Moving Ahead With Reserve Bank Nationalisation... But It Is Moving With Caution.

Schussler said even with government as its only shareholder, the SARB would still be required to make independent decisions.

"The impact will only be felt by the current shareholders who will be paid out for their shares, which aren't worth a great deal anyway. They are not high-paying dividends. For most, this will make no difference at all. It will take our tax money to pay shareholders, but that will be the only real effect," he said.

"Private shareholders also have some influence over the appointment of board members, and this gives an extra layer of independence. But the SARB will have to keep to its mandate if it is to remain credible. There will always be a fear that with government's influence SARB will turn out like the central bank of Zimbabwe. But it is unlikely."

However, the DA's David Maynier holds a different view.

"The push to nationalise the reserve bank is often simply dismissed as being symbolic and having no impact. However, the nationalisation of the SARB is a risk because, in practice, it may mean that seven directors, who are currently elected by private shareholders, will be appointed by the governing party. Which of course is controlled, or influenced, by the murky 'deployment committee', headed up by deputy president David Mabuza.

"We should, therefore, be afraid, very afraid, of the push to nationalise the Reserve Bank," he said.

*Rossouw holds shares in the SARB.