Mkhwebane supports Malikane
• Protector and ministerial adviser in sync on state control of creating money to tackle poverty
Public Protector Busisiwe Mkhwebane has advocated a role for the central bank that is closely aligned to the views of Chris Malikane, the controversial adviser to Finance Minister Malusi Gigaba, who advocates the creation of a state bank with the unrestrained ability to create money.
Public Protector Busisiwe Mkhwebane has advocated a role for the central bank that is closely aligned to the views of Chris Malikane, the controversial adviser to Finance Minister Malusi Gigaba who advocates the creation of a state bank with the unrestrained ability to create money.
Malikane, a former Witwatersrand University professor well known for his radical views, said on Tuesday he could not comment due to his role as the minister’s adviser.
In a report released on Monday, Mkhwebane also recommends that the Reserve Bank’s constitutional mandate be changed from protecting the value of the rand to the protection of citizens’ socioeconomic wellbeing.
The report suggests abandoning the Bank’s role as a lender of last resort as it “benefits only the financial sector … and does not improve the socioeconomic conditions of ordinary citizens”.
There would be no need for the central bank to play the role of last-resort lender if “the state took control of creating money and credit”.
This would alleviate the “economic ills of ordinary economically disadvantaged people”, her report reads.
Malikane said he had not seen Mkhwebane’s report but agreed he had written about the nationalisation of the Reserve Bank repeatedly and the need for a state bank able to create money that could alleviate the ills of the poor.
The Bank said yesterday it would take the report on review and that Mkhwebane had overstepped her authority.
The scrapping of the inflation target mandate and the suggestion that the role of lender of last resort be abandoned has caused jitters at the Bank and in the market.
On Monday, Reserve Bank governor Lesetja Kganyago struck back at Mkhwebane’s recommendation, reiterating that the Bank’s constitutional mandate ensured sustainable economic growth.
“All of this is clearly in the interest of all South Africans,” said Kganyago.
The Bank implemented its mandate through a flexible inflation-targeting framework, he said.
“There is no long-term tradeoff between growth and inflation. Keeping inflation low [and] protecting the value of the currency is supportive of growth,” Kganyago said.
Meanwhile, Cosatu, which has consistently argued for nationalisation of the Bank, welcomed Mkhwebane’s recommendation, saying the Bank was “not acting in the interests of the poor majority”.