South African Reserve Bank

Julius Malema – File Photo

South African Reserve Bank Amendment Bill: Julius Malema proposes nationalisation

Julius Malema keeping his word on nationalisation.

South African Reserve Bank

Julius Malema – File Photo

On Thursday, political antagonist and leader of the Economic Freedom Fighters (EFF), Julius Malema, introduced the South African Reserve Bank (SARB) Amendment Bill to Parliament.

In essence, this amendment bill aims to nationalise SARB by doing away with private shareholders. It’s one more piece of the nationalisation puzzle put forward by Malema in his ultimate quest for complete state control.

Another state-owned enterprise

The firebrand leader has been clear on the issue of nationalisation – the state should own all land, minerals, large portions of the industrial sector, and the central bank.

But as reported by Business Insider; outright nationalisation of enterprises could have disastrous effects on the economy – especially considering the current struggles faced by all state-owned enterprises (SOE).

So what does this new amendment bill propose, and how will it affect the current SARB structure?

Private shareholders replaced by the Minister of Finance

The South African Reserve Bank Amendment Bill is focused on eliminating private shareholders, and transferring all private shares to the Minister of Finance.

But just how that transfer of power and funding will take place is not detailed in Malema’s amendment bill. In fact, very little regarding the practical process and inner mechanism of SARB’s nationalisation process is made very clear.

South African Reserve Bank Amendment Bill: Implications

The country’s central bank is unique, in the sense that it is one of the few in the world that’s still owned by private shareholders.

the discussion surrounding the practical implications of SARB’s nationalisation vary – with proponents of outright state-ownership pointing out the already limited capacity of private shareholders.

According to SARB governor, Lesetja Kganyagop, has described the issue of nationalisation as ‘cosmetic’, as 90% of the SARB’s profits are transferred to government, and the remaining 10% is allocated to the SARB’s reserves. In this sense, private investors have no influence on the key mandates of SARB.

So why would nationalisation matter?

For transparency and clarity; all shareholders are afforded the opportunity to elect board members. This means that operations and procedures undertaken by the bank, and board members, can be audited and inspected by private interests.

Not only does ousting private shareholders hold the propensity for further SOE corruption – but buyouts relating to shares would be a costly experience for the bank, and hence, for the country.