Leave the Reserve Bank alone, ANC! 

The ANC’s internecine battle over the nationalisation of the South African Reserve Bank (SARB) is economically destructive, alienating to investors, and does nothing to solve South Africa’s current crises.

There should be no debate about the nationalisation of the Reserve Bank. The Democratic Alliance’s (DA) call to the ANC is to leave the Reserve Bank alone, and instead focus on any number of economic crises which are a direct result of bad government policy.

The proposal to nationalise the Reserve Bank is based on economic lunacy. It will bring no benefit, and only increased hardship, to South Africa. If President Ramaphosa has any desire to prove he actually leads his own government, he should end this discussion immediately by reinforcing the independence of the Reserve Bank. Instead, he is kneeling to populists in his party and allowing this debate to continue.

The Finance Minister, Tito Mboweni, is correct – the nationalisation of the Reserve Bank is a bad idea, and should never be pursued.

A DA government would guarantee the absolute, inviolable independence of the Reserve Bank.

While the conditions for South Africa’s economic collapse accelerate, the ANC would do well to listen to its Minister of Finance on this catastrophic move for our ailing economy. This would also ensure the ANC provides less mixed messaging and more concrete plans for South Africa’s economic prosperity.

GDP contraction requires razor-sharp focus on economic growth and job creation

The DA notes with concern the announcement by the South African Reserve Bank (SARB) that it has reduced South Africa’s growth expectation for 2019, from 1.3% to 1%.

This ‘growth’ for 2019 cannot hope to effectively address the unacceptably high level of unemployment in South Africa.

While we welcome the fact that the SARB will keep interest rates unchanged, the new Cabinet must put all of their energy into stimulating economic growth and in turn, job creation.

With more South Africans, especially the youth, joining the ranks of the close to 10-million jobless South Africans, pro-active, innovative and workable solutions are urgently needed.

The DA, therefore, urges President Cyril Ramaphosa to make economic growth and job creation his top priority. This means the people he picks for his Economics Cluster must be the best of the best. South Africa is in desperate need of a clean and efficient Cabinet that will be put the economy and job creation at the forefront of their efforts.

In building a working economy for all, it is vital that the incoming Ramaphosa administration actively works to stop corruption in both the public and private sector.

The DA is committed to working with President Ramaphosa to ensure that we get South Africa’s economy growing so that there is a job in every home.  It is for this reason that we will be tabling a ‘Jobs Act’ in the National Assembly. In the spirit of cooperation and putting the people first, we trust that the ANC caucus will lend their support to the Act.

The Act advocates for the protection and support of SMMEs by ensuring greater flexibility in the labour market through minimum wage exemption for businesses that fall into certain classifications. This will guarantee that doors of thousands of small businesses remain open and protect thousands of jobs.

The Act will also do away with all unnecessary red tape that small businesses still have to comply with, this will make it easier for entrepreneurs to set up shop. In addition to this, the DA’s Jobs Act will ensure the creation of a special forum for dispute resolution specifically for SMMEs.

This is just the start and more can be done to ensure that we do away with unacceptably high levels of poverty and unemployment

Deputy President Mabuza confirms ANC’s policy incoherence on Reserve Bank mandate

The Deputy President, David Mabuza, in a reply to a Democratic Alliance (DA) parliamentary question confirmed that the ANC government is planning on changing the South African Reserve Bank’s (SARB) mandate and to reduce its independence.

This once again underscores the ANC’s policy incoherence on the Reserve Bank.

Since the ANC declared in their 2019 election manifesto, their intention to change the Bank’s mandate, there has been several contradictions from the ANC on this matter. This is creating a great deal of policy uncertainty and adversely impacting investor confidence in South Africa.

In the lead up to the World Economic Forum and during their time in Davos, President Cyril Ramaphosa and Finance Minister Tito Mboweni tried to convince investors and stakeholders that the ANC does not want to change SARB’s mandate and that the Bank’s independence is “sacrosanct”. Yet at the same time, on home soil, their ANC comrades, Ace Magashule,  Enoch Godongwana and Deputy President Mabuza are contradicting this message.

The ANC’s internal factional battles are now posing a serious threat to the SARB’s independence. Changing the mandate of SARB will not only have devasting consequences but is possibly a trojan horse to capture the Bank, enabling large scale looting, which will result in greater job losses and possibly hyperinflation.

The DA has already written to Finance Minister Tito Mboweni, for clarification on the future, mandate and independence of the SARB, to no avail.

The SARB is considered internationally as one of the best in the world. This tinkering with the mandate of the bank is not only disastrous for investor confidence but will also deal the country a blow domestically. With 10 million unemployed South Africans, we cannot afford to allow the ANC’s policy uncertainty threaten more job losses and possibly hyperinflation.

The DA will fight to keep the SARB independent and to ensure that its constitutional mandate is not violated.

ANC intent on driving investment away

The Democratic Alliance (DA) will write to the Minister of Finance to obtain details of the ANC election manifesto statements that the party intends to change the mandate of the South African Reserve Bank (SARB) as well as to prescribe to financial institutions where they must invest the money they hold in trust on behalf of bank depositors, pension and retirement fund contributors, pensioners and insurance policyholders.

The imposition of prescribed assets is exactly what the apartheid regime resorted to in desperation when they could not raise capital in the international markets. Now the ANC is to resort to the same annexation of private funds as international markets hold back on making capital available to South Africa.

Instead of announcing bold new initiatives to stimulate economic growth and job creation, the ANC has decided to simply “expropriate” ordinary South Africans’ savings to try to save bloated and corrupt State-Owned Entities such as SAA and ESKOM.

Clearly President Cyril Ramaphosa has not had the backbone to stand up to the SACP/COSATU and has capitulated to their demands for these changes to the SARB mandate and to imposing a prescribed asset regime.

What these changes will undoubtedly bring about will be to:

  • Make the South African Reserve Bank a battleground as the destructive forces in the ANC and its ally the EFF push the agenda to change the SARB mandate. We urge the SARB Governor to withstand the coming onslaught and to continue to focus on the existing SARB mandate.
  • Result in further downgrades by international ratings agencies no matter how much charm and spin President Cyril Ramaphosa puts on these economically destructive changes.
  • Drive away foreign direct investment,

The losers as a result of these very foolish moves by the ANC is the will be to create more unemployment and misery for the majority of South Africans. There can be little doubt that unemployment numbers in 2019 will sky rocket way beyond the 10 million mark.

#VBSHeist: Ethics Committee confirms investigation of Shivambu

Please find attached a soundbite by the DA Team One South Africa Spokesperson on Corruption, Phumzile Van Damme MP.

The DA, yesterday, received confirmation that Parliament’s Joint Committee on Ethics and Members’ Interest will be investigating Floyd Shivambu’s possible conflict of interest regarding payments received from his brother, Brian Shivambu.

On Tuesday, the leader of the EFF confirmed that as brothers, there were numerous transactions between Floyd and Brian Shivambu.

In the South African Reserve Bank’s VBS Mutual Bank Heist report Brian is said to have received R16 million from the bank “without an apparent cause” and it was further alleged in media reports that evidence existed of Floyd receiving R10 million of that money.

In his letter to the DA, the Acting Registrar of Members’ Interests Adv. X Gordon confirms that “the matter is being attended to and you will be notified of the outcome of the investigation once the Joint Committee on Ethics and Members’ Interests has decided on the matter.”

We welcome the speed in which the Ethics Committee responded to our complaint, and trust that the same expeditiousness will be applied to the investigation.

We call on the Ethics Committee to conduct a hearing and it be open to the public given the public interest in the matter, and to as per the Code of Conduct:

  • Call witnesses;
  • Summon any person to appear before it to give evidence on oath or affirmation; and
  • Summon any person to produce any relevant documents.

We look forward to the investigation, and if any wrongdoing found, the harshest sanction be meted out against Shivambu on behalf of the thousands of poor people whose money was stolen in the VBS Heist.

Congratulations to Tito Mboweni on his appointment as new Finance Minister

We congratulate the former Governor of the South African Reserve Bank, Tito Mboweni, who has been plucked from political obscurity and appointed as the new Finance Minister in South Africa.

With his experience, the new Finance Minister will have the advantage of being able to hit the ground running and is, at least, known to market participants, ratings agencies and international financial institutions, who closely follow events in South Africa.

However, we are concerned that during the years that he was out in the political cold, he often came over on social media, at least, as a little looney posting content that seemed to be at odds with government policy like this:

We hope that the minister will clarify his view in the run up to the Medium-Term Budget Policy Statement which is scheduled to take place in two weeks time in Parliament.

DA plans to fight hostile takeover of the Reserve Bank

The nationalising of the South African Reserve Bank (SARB)is a hostile move in a long game of EFF political maneuvers to influence the mandate and operations of the Reserve Bank and ultimately South Africa’s banking system as a whole.

This is also an electoral game for the EFF. Whether or not the Bill is passed, the EFF hopes to dominate the ANC’s radical agenda, and position itself as the authentic party of the left.

In a statement released on the 6th of March 2018, the EFF is unreserved about its ambitious plans for the SARB, including: influencing prudential oversight, deconcentrating bank ownership, expediting the licensing of state owned banks, and using the SARB to create a preferential environment for certain banks including state-owned development finance institutions.

At present, private shareholders are limited to holding 10 000 shares and to electing a minority of the non-executive Board members. The provision of a fixed dividend means that shareholders do not invest with the motive of making profits. In addition, shareholders play no role in the formulation and implementation of monetary policy and are excluded from core functions.

There can be no meaningful public interest motive in nationalising the Reserve Bank, only the furtherance of private political interests.

Nationalisation will mean that Finance Minister will have the ability to appoint every board member from a list of nominees that are confirmed by a panel also largely appointed by the Minister. The conflict of interests doesn’t stop there; this Bill has to be interpreted in conjunction with the EFF’s Bank’s Amendment Bill enabling the state to own banks. Coupled with greater ministerial involvement in the Reserve Bank, this will give the government enhanced ability to influence the rules in a market in which it also competes.

As South Africa confronts the public losses due to state capture, another likely avenue for corruption should not be opened up.

Financial prudence and stability do not go in hand with the EFF’s tendency towards recklessness. The memorandum to the Bill is meant to provide detail about its financial implications. In the relevant section Julius Malema has indicated ‘none’. This Bill has recklessly been submitted without the necessary due diligence. The shares cannot just be written out of existence.

The EFF will need to propose a mechanism of expropriation, compensation and determination of the shares’ value. In addition, the potential impact on investor sentiment must be considered. The DA opposes threats to Reserve Bank independence and will ensure that the true costs of the Bill are tabled and debated.

DA cautiously welcomes SARB’s announcement to guarantee up to R100 000 for VBS clients

The DA welcomes the South African Reserve Bank’s announcement that VBS Mutual Bank’s clients (individuals, burial societies and stokvels) will, from Friday, be able to withdraw up to R100 000 over a period of three years through a process that will be facilitated by Nedbank.

Although we are pleased that ordinary citizens who deposited money with VBS will get their money back, this will not be enough to reverse the problems that were caused by the apparent looting of money at the bank.

Clients will be able to withdraw all their funds or leave them with Nedbank, but will need to have withdrawn all the money within three years.

However, we are concerned that monies deposited by the Public Investment Corporation (PIC) and several municipalities with VBS may not be recovered.

If these public monies are not recovered, state employees and citizens of various municipalities will be the hardest hit. The PIC manages the pension funds of millions of state employees and their savings have now been placed at risk.

Citizens of the affected municipalities will also be deprived of basic services should this money not be retrieved and this shows once more that corruption is not a victimless crime.

The DA will continue to hold those who loot public funds accountable and will not tolerate corruption.

DA welcomes the withdrawal of mad motion on the South African Reserve Bank

We welcome the news that the mad motion on the “nationalisation” of the South African Reserve Bank has been withdrawn and will not be debated today in Parliament.
We have been told by Moody’s, who are currently in the country conducting a review ahead of a possible sovereign credit rating downgrade to “junk status”, that:
“…any developments which cast further doubt over the independence and credibility of core institutions including the National Treasury and Reserve Bank would be strongly credit negative.”
What this means is that the mere whiff of an attack on the South African Reserve Bank risks making a sovereign credit rating downgrade to “junk status” more likely in South Africa.
Despite this the ANC submitted a mad motion for debate on the “nationalisation” of the South African Reserve Bank as follows:
Acknowledging the role, mandate and independence of the South African Reserve Bank, in line with international practice, to ensure full public ownership of the Bank”.
The fact is that the debate would have been a disaster risking an attack on the South African Reserve Bank from the ill-informed, nutters and thugs inside Parliament.
This would have panicked investors and made a sovereign credit rating downgrade to “junk status” more likely in South Africa.

DA to begin removal proceedings against Public Protector

The revelations that Public Protector, Busisiwe Mkhwebane, first consulted President Jacob Zuma’s legal advisors and discussed further recommendations not included in her initial report into the ABSA/Bankorp bailout, casts serious doubt as to her independence.
This information has been revealed in annexures to the supplementary affidavit filed by the South African Reserve Bank (SARB) and clearly demonstrates that Mkhwebane does not operate in an impartial manner but rather seems to take her orders from the Union Buildings.
The DA will, therefore, write to the Speaker of the National Assembly, Baleka Mbete, to request that this matter is dealt with by the relevant Portfolio Committee, in terms of Rule 337 and 338 of the National Assembly Rules.
Specifically, the DA in the Committee will call for removal proceedings to be initiated urgently. In terms of Section 194 of the Constitution, the Portfolio Committee has the power to make a finding of “misconduct, incapacity, or incompetence” against the Public Protector. Thereafter, the National Assembly must adopt a resolution calling for removal, which requires a two-thirds majority.
The DA has, from the get go, had serious doubts as to Mkhwebane’s suitability for the vital role of Public Protector. She has confirmed these doubts numerous times, including:

  • When she failed to act when President Jacob Zuma was trying to interdict the release of the State Capture report last year, which gave the first inkling of her bias;
  • When she jumped to the defence of the President by laying criminal charges against former Public Protector, Advocate Thuli Madonsela, for releasing the transcript of her interview with the President;
  • When she has been sitting on key Gupta-related investigations for months; and
  • When she admitted to stepping outside of her mandate by recommending changing the Constitution regarding the mandate of the SARB, showing that she has very poor understanding of her own powers and the limits thereof.

The Public Protector is Constitutionally mandated to investigate misconduct by government departments and entities and to protect the public’s interest. Clearly, Mkhwebane is acting in the interest of the already captured Number 1 and must be removed before she is allowed to compromise the once proud office any further.