Free SA has made a formal submission to Parliament expressing its strong opposition to the South African Reserve Bank (SARB) Amendment Bill [B 26—2018], warning that the proposed nationalisation of the central bank threatens the country’s economic stability, institutional independence, and international credibility.
The Bill, introduced by MP Julius Malema, seeks to make the state the sole shareholder of the SARB and transfer key governance powers to the Minister of Finance, including the appointment of directors and auditors. While the Bill does not alter the SARB’s constitutional mandate to protect the value of the rand, Free SA cautions that it undermines the very independence that makes this mandate effective.
“An independent central bank is a cornerstone of any credible economic system,” said Reuben Coetzer, spokesperson of Free SA. “Handing full control of the SARB to political authorities opens the door to fiscal dominance, inflationary pressure, and potentially disastrous economic mismanagement.”
Free SA’s submission details the economic, legal, institutional, and reputational risks of centralising SARB governance in the executive. Drawing on examples from Zimbabwe and Venezuela, the submission illustrates how loss of central bank independence has historically led to hyperinflation, currency collapse, and widespread poverty.
Among the specific dangers highlighted are:
- Inflation Risk: Politicised monetary policy could lead to the SARB financing government deficits, weakening the rand and driving up inflation.
- Governance Concerns: Transferring all shareholder powers to the Minister of Finance eliminates external oversight and invites politicisation of appointments.
- Legal Ambiguity: While technically constitutional, the Bill may undermine the spirit of section 224 of the Constitution, which demands independence “without fear, favour or prejudice.”
- Investor Flight: Market confidence in South Africa’s monetary policy regime could erode, resulting in capital outflows and higher borrowing costs.
“Symbolic ownership should not come at the cost of real economic harm,” Coetzer added. “The SARB is one of South Africa’s most respected institutions. Undermining its independence, whether deliberately or by accident, will hurt ordinary South Africans most, especially the poor who suffer first and worst from inflation.”
Free SA calls on all Members of Parliament to reject the Amendment Bill and to uphold the constitutional and economic safeguards that protect South Africa’s monetary integrity. Reform should focus on strengthening accountability and transparency within the SARB, not eroding the institutional checks that have preserved macroeconomic stability through some of the country’s most turbulent years.
