President Cyril Ramaphosa has reaffirmed the constitutional mandate of the South African Reserve Bank (SARB), saying it should be pursued without “fear, favour or prejudice”.
Delivering his State of the Nation address (Sona) on Thursday, two weeks after ANC secretary general Ace Magashule made pronouncements on reviewing the mandate of the bank, which sent the rand tumbling and negatively affected market sentiment.
Ramaphosa moved in to allay fears after a public row emerged between Magashule on the one hand and Finance Minister Tito Mboweni and ANC economic chief Enoch Godongwana on the other, over the discussions and decisions taken at the ANC’s national executive committee lekgotla.
The SARB has become a proxy battle against Ramaphosa by a faction in the ANC aligned to Magashule, after the ANC’s national conference in 2017 resolved on nationalising the bank and reviewing its mandate. Ramaphosa had said two weeks ago in a statement from his office in Luthuli House, that nationalisation was unaffordable at present.
On Thursday, he again reaffirmed the status quo, saying price stability was necessary but not a sufficient condition for economic growth.
“Rising prices of goods and services erode the purchasing power of all South Africans, but especially that of the poor. Inflation further undermines the competitiveness of our exports and our import-competing firms, putting industries and jobs at risk,” he said.
For these reasons, the Constitution mandated the central bank to protect the value of
the currency in the “interest of balanced and sustainable growth”.
“Today we reaffirm this constitutional mandate, which the Reserve Bank must pursue independently, without fear, favour or prejudice,” he said.
He added that the Constitution also made a provision for regular consultation between the bank and the Finance Minister to “promote macroeconomic coordination, all in the interests of employment creation and economic growth”.
In 2010, then finance minister Pravin Gordhan wrote to then SARB governor Gill Marcus asking that the bank be more mindful of employment and economic growth alongside its price stability and inflation mandate.
Following the furore over the bank’s mandate, Ramaphosa last week met the board of the SARB to discuss vacancies which had arisen in the senior leadership of the bank, the presidency said in a statement at the time.
There are three vacancies after the resignation of deputy governor Francis Groepe in January, the expiry of deputy governor Daniel Mminele’s term and the drawing to a close of governor Lesetja Kganyago’s term in November this year.
In the meeting Ramaphosa “reiterated his commitment to safeguarding the high reputation the SARB enjoys” internationally. He promised to appoint directors of a “high calibre”. According to the SARB Act, the President, in consultation with the finance minister and the board, appoints the governor, three deputy governors and three other directors.