SARB Governor Lesetja Kganyago
The public protectors remedial action on changing the South African Reserve Bank (SARB) mandate might have not met jurisdictional requirements in terms of the Constitution but Parliament should atleast debate the merits and demerits of amending the constitution on SARB’s mandate in order to prevent SARB from bankrolling private banks who create money out of thin air as it did with Bankorp/Absa in the early nineties.
The debate on secrecy and lack of accountability by central banks is happening around the world and most recently in the United States of America where the Federal Reserve has come under serious scrutiny on accountability to the American public. Here in South Africa, the banking cartel together with current leadership of SARB supported by the liberal media has treated any debate about SARB as some abomination and yet SARB is a public institution and must be subjected to public scrutiny and public accountability through a democratically elected parliament.
After Myburgh Report on African Bank was released in May 2016 which stated that African Bank conducted its business negligently, SARB and Public Investment Corporation(PIC) came to its rescue by breaking the bank up into two entities then later funding the “new” African Bank with public servants’ pensions and SARBs ability to create money out of thin air. Governor Lesetja Kganyago in his replying affidavit to Public Protector’s report on CIEX Report stated that SARB can provide the same services as a private bank.
This bailout of African Bank is no different to the Bankorp/Absa ‘life boat’ where corporations are protected by public institutions but no such acts of “prudence” are provided for the general public by the same institutions e.g Fees Must Fall or Department of Small Business or Land Reform Programme.
A quick look into SARB’s operations before “majority rule” or “democracy” irrefutably proves that SARB provided facilities to advance full employment and protection of White minority economic interests as stated in SARB’s June Quarterly Bulletin of 1989 where some of policy directives included  :
- The Reserve Bank will extend special facilities at a low rate of interest to the Land Bank to enable the latter to keep its short-term lending rates unchanged. This should prove of great benefit to the farming community. The expansionary impact of this limited credit extension on bank reserves and the money supply will be offset by open market operations
- Additional financial assistance will be provided by the Department of Finance to the Industrial Development Corporation, the Small Business Development Corporation and other development corporations to enable them to keep their lending rates to small businesses as low as possible
- The Government will consider ways and means of expanding interest rate subsidies on certain categories of housing loans extended by building societies and banks
The policy directives stated above support the remedial action given by the Public Protector, Busisiwe Mkhwebane. It is therefore disingenuous of SARB to claim that changing the mandate of SARB will have an impact on its independence. After all, SARB had a different mandate from 1921 to 1996 and it remained independent for all those years. South Africa has a unique central bank as its mandate is determined by the Constitution instead of an Act of Parliament so the Public Protector made a correct assessment but jurisdiction failed her. Parliament can still bring about that fundamental change to ensure prosperity for all South Africans.
If SARB’s mandate is not changed then SARB can continue bankrolling failed private banks and protecting the banking cartel of 5 White controlled banks which control 91% of banking in South Africa.
The sudden change in SARB’s policies and mandate post 1994 leads one to anti-colonial British author Peter Robbins who said “Economic Apartheid has replaced legal Apartheid with the same consequences for the same people”
South African Reserve Bank Quarterly Bulletin June 1989