Kganyago protects Bank from nutters and the ill-informed

Comandante Fidel Castro learned the hard way that the calibre of the person who leads the central bank matters. He, after all, appointed Che Guevara as the president of the national bank in Cuba.

It was a disaster. Guevara was more comfortable organising firing squads and stealing other men’s wives than he was with central banking. Unsurprisingly, he achieved very little besides ordering a 32-storey national bank to be built without stairs, and with half the number of required toilets, on the waterfront in Havana.

We are fortunate, in contrast, to have a person of the calibre of Lesetja Kganyago leading the South African Reserve Bank.

He is the chairman of the International Monetary and Fiscal Committee; was awarded Central Banking’s Governor of the Year 2018 award; and, unlike many of his fellow governors, has a keen sense of humour.

However, most important of all, he has been courageous in his robust defence of the Bank. Until now, the problem has been attacks on the Bank from the ill-informed, the nutters and the thugs outside Parliament. But the problem has escalated and there is now a risk of attacks on the Bank from the ill-informed, the nutters and the thugs inside Parliament.

Last week, a mad motion, entitled 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, found its way onto the order paper for debate in Parliament.

The motion to “nationalise” the Bank was a mad idea and in a moment of sanity was withdrawn, reportedly following a behind-thescenes intervention from Finance Minister Nhlanhla Nene, who was concerned about the effect of the debate on investor sentiment and our sovereign credit rating.

Moody’s is, after all, circling us like a shark, conducting a “review for a downgrade”, and has been very clear 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”.

The debate on the motion, had it taken place, would not actually have been about the “nationalisation” of the Bank but would have been about the real “unresolved issue”, which is the deep divisions within the ANC and its alliance partners about the role of the Bank.

The hysterical reaction within the governing party and its alliance partners to what was referred to as an “unmandated decision” to withdraw the motion provides some insight into the kind of madness the debate would probably have brought to the surface.

The ANC’s Youth League immediately jumped in and blamed “leading figures in the ANC”, presumably referring to the likes of Nene and ANC economic transformation tsar Enoch Godongwana, who “remain captured and abuse their position of power to advance the interests of white monopoly capital”.

They called for “the nationalisation of the Bank including banks and other monopoly industries to be in the hands of the people under the custodianship of our democratic state”.

Not to be outdone, the ANC’s MK Veterans Association responded by suggesting that the motion had been withdrawn to “consult with white monopoly capital stakeholders in order to water down, and literally whitewash, our national conference resolutions in order to appease white monopoly capital”.

THE BANK IS ONLY NOTIONALLY INDEPENDENT AS IT GENERALLY SUBSCRIBES TO THE DOMINANT AND CONVENTIONAL POLICY DOGMA

They went on to point out that “the policies advanced by the Reserve Bank have been misaligned to the developmental agenda of the country and ended up serving the interests of white monopoly capital rather than the interests of the majority of black South Africans, who continue to be subjugated and exploited by white monopoly capital”.

Then labour federation Cosatu weighed in, stating that the “Bank is captive to the narrow interests of the rentier financial capitalists” and claiming that the “Reserve Bank is only notionally independent as it generally subscribes to the dominant and conventional policy dogma, which is the failing policies received from finance capital, even at the expense of real producers of wealth in mining and manufacturing”.

This is the kind of rubbish we can expect when the mad motion on the “nationalisation” of the Bank is eventually debated, because the problem is that the moment of sanity was just a moment and the mad motion is likely to find its way back onto the order paper and trigger attacks on the Bank from the ill-informed, the nutters and the thugs inside Parliament.

Which in the end is likely to make a sovereign credit ratings downgrade to junk status more likely.