The ANC should adopt the term Radical Economic Destruction (RED), because this is exactly what the ruling party is currently doing.
The reported proposal that government should consider nationalising the Reserve Bank (Sarb) is just another nail in the economic coffin.
To be honest, the ANC policy conference was never set to be about policy to “rescue” South Africa from its current mess. It was merely a precursor to the elective conference in December and populist policies are central to this agenda. At least, so it seemed for the first few days.
This was until Wednesday when the news broke that the ANC intends to nationalise the Sarb. As a result, the rand tanked to around R13.45 against the dollar, before recovering slightly. This is peculiar as the rand has, in recent times, become rather immune to political shocks.
The idea comes as a surprise, as the independence or even the possibility of the nationalisation of the Reserve Bank has never been a discussion point. But it cannot be a coincidence that it comes shortly after Public Protector Busisiwe Mkhwebane recommended last month that the Constitution be changed to alter the mandate of the bank. This proposal has been met with fierce criticism, and rightly so.
The Sarb is a highly respected institution that has executed its mandate exemplarily since the dawn of democracy in 1994, and absolute control over this institution would make it a lot easier to transfer money to Dubai.
It is one of few South African institutions that remain uncaptured, but as is the case with the independent media, it seems to have come under attack in recent weeks from factions within the ANC and a fake news propaganda campaign.
Independence entrenched in Constitution
Luckily, the Sarb’s independence is entrenched in the Constitution. This is contained in Section 224 and the clause is rather emphatic: “The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice, but there must be regular consultation between the Bank and the Cabinet member responsible for national financial matters.”
So, within the greater scheme of things, it is highly unlikely that this proposal – if it even becomes an official ANC proposal – will be ratified at the ANC’s elective conference in December.
This nationalisation proposal is indicative of the level of debate at the conference. From various media reports, we can assume that delegates did not discuss the key challenges facing the economy. In fact, there are many more pertinent economic challenges facing South African that should have been discussed. What played out at one point was an almost violent discussion on whether to use the phrase White Monopoly Capital or not.
This is despite the ANC having good economic policy on paper. In fact, apart from land reform, the NDP-inspired policies articulated in the economic transformation discussion document penned for discussion at the conference, did not receive much attention.
It therefore seems as if the populist pronouncements will result in Radical Economic Destruction. The real issue the ANC must acknowledge is that the private sector is a critically important stakeholder in the economy and that it has lost all trust in the ANC-led government. With international investors shying away from South Africa, as well as local companies being on an investment boycott, the desperately-needed investment to ignite growth does not seem likely. Therefore without stakeholder support, the current recession will only get worse and worse.
But again, recent times have shown once again that one should never hope the Jacob Zuma ANC will do the right thing.
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