By: Khaya S Sithole
Over 2 months ago, in a place called Nasrec, I sat in the company of visibly exhausted members of the Fourth Estate waiting for the economic doyenne of the African National Congress – Cde Enoch Godongwana – to emerge from the conference floor and give us updates about the resolutions of the conference. Eventually he emerged in the company of Zizi Kodwa and pronounced 2 key resolutions.
The 2 resolutions related to land expropriation without compensation and the nationalisation of the Reserve Bank. Unsurprisingly, Cde Enoch pronounced – as expected – that the conference had resolved that the Reserve Bank should indeed be nationalised and that the government should resolve the land question by pursuing expropriation without compensation.
For both these resolutions, I still maintain that they are redundant in many respects. I shall deal with the land one tomorrow when I explain why Qedani Mahlangu of all people might just be our saviour. But for today, I shall focus on the Reserve Bank question.Over 12 months ago, Mzwandile Masina – the Mayor of Ekurhuleni – wrote on Instagram that Michael Duerr (a German national) controlled 54.5% of the Reserve Bank and had the power – according to Masina – to ‘decide how much money South Africans take home, he lends us (South Africans) money and decides on interest rates’.
Obviously, Mzwandile was talking absolute nonsense and eventually sanity prevailed and he deleted his post. It turns out however, that his incorrect interpretation of how the Reserve Bank is structured was adopted by some comrades. In Masina’s understanding, the fact that the Reserve Bank allows anyone to buy shares in it renders it a private enterprise rather than a national asset. Masina is right in identifying that the bank does indeed allow individuals like you and I to buy shares in it. However, absent in the Masina analysis was the fact that there is a limitation on how many shares each human being can ever own in the bank. (10 000 maximum). In fact, so bizarre are the rules underpinning the ownership of the bank very few people would ever buy those shares. That is because the return on the shares is limited to 10 cents per year. In other words, no single shareholder gets more than R1 000 from the bank as a dividend. So the owners of the shares in the Reserve Bank are not better off if the bank does well as legally they won’t get more than 10 cents.
The secondary question is whether the fact that individuals own shares in the bank mean they can control the bank. Masina apparently thought so. Naturally, he was incorrect in that assessment too.
The South African government is fully in charge of the Reserve Bank and what it does. They achieve this through firstly appointing the governor of the bank and deciding on the majority of the board of governance at the bank. Individual shareholders are allowed to recommend a representative on the board. Except that representative must be approved by the government so the state actually controls everything about the Reserve Bank.
In spite of all these facts, there was a prevailing opinion that the very existence of such shareholders was anachronistic at best and should be abolished on favour of outright state ownership – also known as nationalisation. Such a view seems to have won favour at Nasrec and was also bolstered by the Public Protector’s bizarre instructions to Parliament last year.
Unfortunately, the reality is that a privately-owned bank versus a nationalised one in this context would make absolutely no difference. In its defence against the Public Protector’s report, the bank defended its independence which exists now with private shareholders and would also exist under nationalisation. Quite exactly what the Public Protector was thinking is unknown to most people. But there is actually a story behind it.
An exercise in futility
In her investigation into the ABSA matter the Public Protector would have stumbled upon the justification by the bank that its decisions regarding the bank loan all those years ago was influenced by the need to safeguard the integrity of the banking system at large. So as a lawyer convinced that a crime had been committed Busisiwe Mkhwebane was aghast at the idea that what she perceived as a crime could be ignored as it was sanctioned by the Independent Reserve Bank. Her reasoning therefore then gravitated towards saying that we must abolish that independence once and for all.
As we now know, her reasoning was fatally flawed.
Unfortunately, this idea that a nationalised Reserve Bank is better than the current one seems to have prevailed in Nasrec and hence the pronouncement that the bank should be nationalised.
Now the fact that I and a lot of people think that the nationalisation would be an exercise in futility is completely irrelevant. The delegates that attended the conference decided it should be nationalised. And for as long as those delegates belong to the ruling party of the day then their resolutions ought to be honoured. You and I who are not delegates do not have to like that fact in order for it to prevail.
So on the back of that I received the Parliamentary schedule for the week and noted that the motion on nationalisation was on the cards. Having been there when Cde Enoch Godongwana pronounced that this was indeed the resolution of conference I read past it as naturally the motion would be passed by the ruling party regardless of what any opposition party thought.
And then suddenly today the motion was withdrawn because the ANC has to engage stakeholders. What utter rubbish.
The nationalisation question was firstly mooted at the policy conference in the middle of last year. This is how it creeped in to the conference resolutions By the time we got to Nasrec the primary stakeholders – the branches – had been consulted. Any other stakeholder with an interest in the matter had from the policy conference until Nasrec to make their views heard. Beyond all these processes, the conference resolution was that nationalisation must happen.
So naturally I have to ask – who are these new stakeholders that the ANC Chief Whip suddenly discovered today that need to be consulted? What is their standing in relation to a conference resolution?
Were they branches that were in a coma from the policy conference until Nasrec? Were they otherwise incapacitated during the conference? And how were they suddenly discovered now?
And – if one decides that the Constitutional processes of the ANC must be respected then unfortunately these questions have to be asked and answered.
So I am quite curious.
More equal than others
I could – as a side note – tell you that precisely 24 hours ago, I drove into a certain bank in Sandton. As I was coming in, I stumbled upon the captains of industry ranging from Michael Katz (who actually held the lift open for me), the CEO of the Banking Association of South Africa, the CEO of Discovery (that slimfit suit was on point), executives from every major listed company and perhaps most importantly – the Deputy Minister of Finance.
I am told the wine and champagne flowed and robust discussions were had.
A day later, the motion to nationalise the Reserve Bank was abruptly withdrawn from Parliament. And we thought the Saxonwold mafia tendencies were a thing of the past…
Over to you Julius Malema.
Here’s another easy victory for you.