Last week’s conflagration on the South African Reserve Bank (SARB)’s mandate threw the faction fights in the ANC into sharp relief. These fights are currently being fought on three fronts: the SARB, land expropriation without compensation, and the Public Protector’s actions.
FRONT 1 – THE SOUTH AFRICAN RESERVE BANK
There are two dimensions to this: the ownership of the Bank, and its mandate.
Ownership of the SARB
The ownership issue is straightforward. The SARB is one of the few central banks in the world with private shareholders. It currently has 2 million issued shares with 750 shareholders. No shareholder can hold more than 10 000 shares (0,5%). The dividend is pegged at 10c per share, ie R1 000 per annum. (Disclosure: I own 200 shares. Last month I received a dividend of R8.) The surplus after dividends and tax is paid over to government. Government appoints the majority of the SARB’s directors as well as the governor and deputy governors. Shareholders have no say in setting interest rates; in fact, shareholding does not count for much. The Bank’s independence is certainly not determined by it. Independence is set out in the Constitution. Nevertheless, the ANC has resolved that the Bank should be publicly owned.
Thabo Mbeki had the pithiest comment on this issue when he said the debate about ownership of the Bank is irrelevant as government sets the policy anyway.
Mandate of the SARB
That policy is to pursue an inflation target of between 3% and 6%. This is in line with the SARB’s Constitutional mandate to ‘achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa’.
The elements of this mandate are clear: inflation (price stability) and growth (balanced and sustainable). Although the word ‘employment’ does not appear, it is inherent to the goal of sustainable growth. It is also a concern for the Bank in pursuing the inflation target. As Governor Kganyago put it: ‘Like other central banks, we already include concern about growth and employment (…). Over time, keeping inflation expectations low and well anchored is the clearest and most effective way of helping the economy to achieve full employment. For South Africa, the economy grows more strongly when inflation is low.’ (Public lecture at Stellenbosch on 6 March 2019)
Political strategy gone wrong
The Magashule/Zuma faction wants to argue (as Zuma indeed did in a tweet last week right in the middle of the Reserve Bank fracas ) that the change in the mandate is an ANC resolution. The implication is that if that resolution is not implemented, the ANC can recall the government for failing to do so.
The strategy didn’t work. In fact, it backfired.
Forty-eight hours after Magashule’s change-the-mandate statement, the Top 6 of the ANC, including Magashule, issued a statement affirming that the mandate of the Bank is as set out in the Constitution and ‘this policy has not changed’. It confirmed the role of the Minister of Finance and reflected almost word for word what Finance Minister Tito Mboweni had said on social media a day earlier. It was not only a clear endorsement of current policy, but also of Mboweni, putting him in pole position.
The Top 6 statement also dealt with the ownership issue, saying: ‘It is our desire for the SARB to be publicly owned. However, we recognise that it will come at a cost, which given our current economic and fiscal situation, is simply not prudent.’
The statement was a clear and unambiguous repudiation of Magashule. It also binds all ANC members. What
Magashule likes to call ‘the collective’ has spoken, and he himself is now bound by it. It would be difficult for him to
break ranks, as he can then be disciplined for bringing the party into disrepute. No wonder he quickly disowned a
tweet that contradicted the Top 6 statement and removed it from his twitter account. In fact, he went further. He
tweeted the Top 6 statement and said, ‘All ANC members… are to adhere to this line of march’. Case closed on the
mandate; case postponed on ownership.
The fight on this front will flare up again in the future, but this time the battle went decisively in Ramaphosa’s favour. It
appears that the currency market agrees. The rand broke through the R15/$ mark, and at the time of writing was
FRONT 2 – LAND EXPROPRIATION WITHOUT COMPENSATION
In his post-election speech, Ramaphosa promised that Parliament will deal with this matter. However, it is noticeable
that the issue has lost a lot of heat over the last year, despite the election and the emotions generated by the
Thoko Didiza is the new Minister of Land and Agriculture. She occupied a similar post in the Mbeki cabinet and is
highly regarded. A more efficient process around land reform will help enormously to ease the turbulence.
My base case remains that the Constitution will probably be changed in line with the detail set out in the Expropriation
Bill, published in December. This bill provides for five instances where land can be expropriated without
compensation: abandoned land/buildings, land belonging to the state and state-owned enterprises, land in which the
state invested more than the value of the land, land held purely for speculative purposes, and land to which labour
tenants have a right.
FRONT 3 – THE PUBLIC PROTECTOR’S CRUSADE
Public Protector Busisiwe Mkhwebane is currently investigating charges against Pravin Gordhan that were laid by the
EFF as well as charges against Ramaphosa that were laid by the DA on the R500 000 his son/campaign received
Mkhwebane can of course innocently claim that she is merely following through on charges brought by the two
political parties, but her past behaviour belies any such ‘innocence’.
She herself is under attack. Apart from the DA, both the Communist Party and Business Unity SA (strange
bedfellows!) have called for her dismissal. Mkhwebane is now in year three of her seven-year term. It remains to be
seen whether she will finish the term.
• The faction fights in the ANC will continue, but last week’s outcome on the SARB was a clear win for the
• The president stamped his authority on the party via the Top 6. The ‘line of march’ that all ANC members must
adhere to is clear.
• This follows a successful election and the removal of well-known Zuma acolytes from cabinet. Some observers
count only five ‘Zumaites’ amongst the 28 cabinet members.
• Some 18 months ago, Ramaphosa was elected at Nasrec with a margin of 52/48; considering all the
developments since then, he is now undoubtedly much stronger than that.
• The SARB incident confirmed the president’s approach: follow process and let it run to its conclusion. This
frustrates those who want to see quicker action, but it makes for decisive outcomes. (Think of Tom Moyane,
Shaun Abrahams, Malusi Gigaba, Nomvula Mokonyane, to name only a few. They all went after a process.)
• We can expect more of the same approach as Ramaphosa navigates the Public Protector’s report and the land