The EFF's proposed nationalising of the South African Reserve Bank (SARB) ultimately seeks to hold to ransom the country's entire banking system, charges the DA's Gwen Ngwenya.
This comes as EFF leader Julius Malema introduced the SARB Amendment Bill this week in a bid to nationalise the reserve bank.
"The nationalising of the SARB is a hostile move in a long game of EFF political maneuvers to influence the mandate and operations of the Reserve Bank and ultimately South Africa’s banking system as a whole," said the DA member of the finance committee in a statement on Sunday.
Ngwenya, referring to an EFF statement released in March this year, said Malema's party is unreserved about its plans for the SARB.
The EFF indicated that it wants the legislation to make provision for the SARB to have more capacity to provide prudential oversight over existing banks. This it said is to prevent “financial malpractice”. Additionally, the legislation should set a framework to deconcentrate bank ownership.
“Currently only six banks own more than 90% of banking services in South Africa and they operate like a cartel,” EFF spokesperson Mbuyiseni Ndlozi said in March.
Among other things, the EFF called for the SARB to expedite the licencing of Postbank into a fully-fledged state bank.
“The SARB must also create an enabling environment for the creation, existence and sustenance of fully black-owned and cooperative banks.”
At the time the EFF also criticised the current form of ownership. “The SARB is owned by private shareholders, some of whom are foreigners with no patriotic interests and commitment to South Africa. The status quo is unacceptable and should be changed through decisive political action.”
'An electoral game for the EFF'
Ngwenya said the bill is part of an electoral game for the EFF. "Whether or not the Bill is passed, the EFF hopes to dominate the ANC’s radical agenda, and position itself as the authentic party of the left."
Since its establishment in 1921, the SARB has always had private shareholders. However, the shareholders have no say on policy decisions taken by SARB in implementing its mandate. They can elect a maximum of seven non-executive directors of the board, from a list of candidates from a panel chaired by the governor, Fin24 previously reported.
A shareholder and his or her associates cannot hold more than 10 000 shares out of the total of 2 million shares in issue. In terms of the SARB Act, shareholders receive a fixed annual dividend of 10c per share, making the total dividend payout each year R200 000.
Ngwenya explained that the provision of a fixed dividend means that shareholders do not invest with the motive of making profits. She noted that shareholders also play no role in the formulation and implementation of monetary policy and are excluded from core functions.
"There can be no meaningful public interest motive in nationalising the Reserve Bank, only the furtherance of private political interests."
According to Ngwenya, nationalisation will mean that the finance minister will have the ability to appoint every board member from a list of nominees that are confirmed by a panel also largely appointed by the minister.
"The conflict of interests doesn’t stop there; this Bill has to be interpreted in conjunction with the EFF’s Bank’s Amendment Bill enabling the state to own banks. Coupled with greater ministerial involvement in the Reserve Bank, this will give the government enhanced ability to influence the rules in a market in which it also competes," she said.
She said that Malema provided no detail about the Bill's financial implications. "Financial prudence and stability", added Ngwenya, "do not go in hand with the EFF’s tendency towards recklessness".
"This Bill has recklessly been submitted without the necessary due diligence. The shares cannot just be written out of existence."
Ngwenya said the EFF will need to propose a mechanism of expropriation, compensation and determination of the shares’ value.
"In addition, the potential impact on investor sentiment must be considered. The DA opposes threats to Reserve Bank independence and will ensure that the true costs of the Bill are tabled and debated."
The EFF was not immediately available to respond to the DA's claims.
The SARB emphasised that it functions in the public interest and that private shareholders have no influence whatsoever on monetary policy, financial stability or banking regulation, Fin24 reported previously.
"Policy making and execution is the preserve of the governor and the deputy governors, who are appointed by the President. The rights of the private shareholders are highly circumscribed," explained SARB.
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