South African President Cyril Ramaphosa said that the ruling party has decided to nationalize the Reserve Bank of South Africa. In a university campus speech, he said, “We have got to go through processes. There is no hidden agenda’. He also stressed the need for the central bank to have independence. He further added that the move to bring it under the control of its citizens will affirm the nation’s sovereignty.
Ramaphosa has been pushing for the independence of the Reserve bank for more than a year now and has upheld the resolution to nationalize. In one of the earlier speeches, he said, “The Reserve Bank plays a critical role in the life of any nation with regard to monetary policy and safeguarding and promoting the value of its currency. The party once more reaffirms the role, mandate, and independence of the Reserve Bank.”
After the speech ahead of his meeting Lesetja Kganyago who is the Governor of Reserve Bank, the rand declined by 0.7% w.r.t the dollar.
South Africa is among the few countries where private investors own the central bank. It has more than 770 shareholders and closes to 2 million shares. The investors can hold a dividend of R1000 rand and can own up to 10000 securities.
The resolution fits the global trend:
Ramaphosa says nationalizing the central bank fits the global trend. He said, “the UK used to have a shareholding in the Bank of England, but that has changed.” He further added “We have a situation where we have external shareholders who live in various countries in the world, SA is one of only six countries in the world that still has a shareholding in their central banks. It is the done thing around the world that the central bank is one of the most important institutions in the life of our country, and that is what the ANC resolved should be done.”
Nationalizing the banks will help the South African Bank as it will then be aligned with the structure of the majority of the Central banks around the world. Only a few other countries like Belgium, Greece, Japan, Italy, etc have private shareholders. Many countries have opted to Nationalise their banks and the most recent was by Austria in 2010.
Though the South African President announced his intention, there is a great deal of work to be done by the government as they may not have the full authority over the South African Reserve Bank Mandate.