SA has an odd habit of revisiting bad ideas with dogged persistence. The SA Reserve Bank Amendment Bill, introduced by EFF leader Julius Malema on August 16 2018 and now open for public comment, is one such example.
Though it lapsed in 2019 under parliamentary rule 333(2), it was revived that October. It then limped through hearings and committee briefings until lapsing again in May 2024, only to be revived once more two months later after the formation of the government of national unity. Like many of SA’s doomed-to-fail ideological ideas (National Health Insurance, expropriation without compensation) the bill refuses to die.
The proposed legislation aims to make the state the sole shareholder of the Reserve Bank and to transfer the power to appoint its board directors and auditors to the finance minister. It would formally open the Bank up to capture by the state and rejection by the international financial community.
What the bill actually does
The bill aims to eliminate the categories of “shareholder” and “elected director”, concentrating all power in the hands of the finance minister. It deletes sections of the SA Reserve Bank Act that allows shareholders to elect board members and auditors. It makes the state (not parliament or an independent panel) the sole actor with legal authority over the Bank’s governance. Most importantly, it strips out the system of checks and balances that gives the Bank a degree of institutional independence.
The idea behind independent reserve banks is simply that governments are prone to short-term and party political thinking, particularly during economic stress. Independent central banks can act as a counterbalance, ensuring that monetary policy serves the long-term health of the economy rather than the electoral needs of the governing party. The extent to which Malema’s horror bill attacks these principles must be experienced first hand (changed text in square brackets):
- “5(b) in the case of an [elected] appointed director, by [election by the shareholders at an ordinary general meeting of shareholders] appointment by the minister, of a person, confirmed by the panel as a candidate as contemplated in this act, in the place of [the] an appointed director whose office has become vacant, or by the appointment by the board, subject to his or her subsequent [election by shareholders at the next ordinary general meeting of the shareholders] appointment by the minister, of a person confirmed by the panel as a person suitable for possible [election] appointment to the board.’’
- “9. The following section is hereby substituted for section 21 of the principal Act: “Share capital of Bank (1) [The share capital of the Bank shall be R2m, and shall be divided into 2-million ordinary shares of R1 each] The state is the sole holder of shares in the Bank. (2) [The liability of a shareholder shall be limited to the amount unpaid on the shares held by him] The rights attached to the shares in the Bank must be exercised by the minister on behalf of the state.”
From the first word to the last, the eight pages of amendments to the act are the bluntest call for a socialist, centralised economic system that our republic has had to seriously debate since its inception.
Independence can’t be cosmetic
The EFF and others who think as they do about the independence of the Reserve Bank argue that private shareholders have no real say in the Bank’s decision-making anyway. This is mostly true. Shareholders in the Bank can’t influence monetary policy or instruct the monetary policy committee. They can elect some directors, but those directors are vetted by a panel including the governor and a retired judge. Moreover, these shareholders can’t pocket profits. The dividend is capped and most profits are already handed to the state. So why the obsession with their removal and scapegoating of these shareholders?
As the Banking Association SA pointed out in its submission to parliament in 2020, there are real risks here. By concentrating power in the executive the bill compromises the operational independence of the central bank. It does so while global investors are already wary of SA’s fiscal discipline. Worse, the bill asserts that this sweeping change would have “no financial implications”, which is simply a lie. There are 2-million Reserve Bank shares in circulation, many held by foreign investors. Redeeming them fairly would cost money. Expropriating them, as some EFF rhetoric suggests, would trigger a constitutional crisis and panic the markets.
Economic trust faltering
Central banks are effective because they are trusted. That trust isn’t automatic — it is earned through decades of political neutrality and a demonstrated commitment to inflation targeting, macroeconomic stability and transparent communication. Undermining that trust by making the Bank a political tool, however indirectly, would be a self-inflicted wound.
Perhaps the most important consequence of the bill isn’t monetary, because hopefully with sufficient opposition through civil society, businesses and political parties the bill will be stopped. The problem is SA’s continued policy flirtation with socialist ideas to fix the country’s failings.
While countries worldwide are acknowledging the failures of state-centric solutions, SA is veering in the opposite direction, seemingly clinging to a vision of centralised control that history has repeatedly discredited.
For instance, after decades of populist economic mismanagement and hyperinflation Argentina has turned towards aggressive deregulation and liberalisation under a new administration that recognises the futility of state micromanagement. The move is already paying off economically.
In Eastern Europe former command economies such as Poland have embraced institutional independence as a cornerstone of their democratic and economic success. These are pragmatic, logic based corrections that lead to prosperity. The world is moving towards leaner, more accountable state structures while the EFF is dusting off the old banners of nationalisation and statist control.
This debate isn’t about whether the Bank should be “privately owned”. That framing is misleading. It is not a private company. It is a public institution with a unique, quasicorporate governance model. The shares are noncontrolling and the shareholders are mostly passive. Removing them simply removes a layer of accountability and introduces new risks.
SA is at an inflection point. Growth is anaemic, debt levels are high and investor confidence is fragile. The last thing the country needs is a noisy debate about central bank control, driven by ideological theatrics rather than institutional logic.
The SA Reserve Bank Amendment Bill distracts from real economic challenges while inviting unnecessary legal, financial and political risk. The real danger lies not just in what it changes, but in what it signals. It tells the world that SA is willing to gamble with one of its most respected institutions for the sake of a political talking point.
It tells citizens that political control is more important than institutional resilience. And it tells the next generation of leaders that short-term ideological gains are worth more than long-term stability. We must reject that message.
