Reserve Bank’s independence is crucial to South Africa’s survival

20 June 2017

AfriBusiness is appalled by the most recent announcements made by Busisiwe Mkhwebane, the Public Protector (PP), that the Constitution should be amended to allow the South African Reserve Bank (SARB) to “promote balanced and sustainable economic growth in the republic while ensuring that the socioeconomic wellbeing of the citizens is protected”.

Had the PP taken the time to read the Constitution, she would have noticed that Sections 223, 224 and 225 deal with the establishment, objectives, powers and functions of the SARB. Its primary objective is the protection of the rand in the interest of economic growth. The PP’s proposal seems to be a politically motivated argument setting its sights on the nonsensical and overly used term of “radical economic transformation”.

Arguably the most fundamental section of the Constitution relating to the SARB’s functions, is Section 224(2), which reads: “The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice ...”. The drafters of the Constitution felt it necessary to proclaim the SARB an independent institution that consults with government, and not that it should work with government to pursue political agendas.

“What the Public Protector is aiming to achieve with her bizarre recommendation is to completely strip the Reserve Bank of its crucial independence. This will make the bank subservient to government, effectively attempting to nationalise the banking sector and promote governmental goals, rather than sustainable economic growth to the benefit of all South Africans. Her conduct and utterances boil down to extreme ignorance and utter incompetence when it comes to the fields of law and economics,” says Armand Greyling, Law and Policy Analyst at AfriBusiness.

Any attempt to amend the Constitution regarding the primary objective, powers, functions and independence of the SARB will be met with legal action by AfriBusiness in the pursuit of protecting, upholding and promoting the principles of the free market and the Constitution.

Issued by Armand Greyling, Law and Policy Analyst, AfriBusiness, 20 June 2017