UDC rejects a controlled Central Bank- Keorapetse
The Umbrella for Democratic Change ( UDC) hopes that the Bank of Botswana ( BoB) will not be subjected to any form of direct control by the executive or parliament as a result of the new law, the Leader of Opposition Dithapelo Keorapetse has said. He said the UDC is of the view that the suggested amendments of the Act, especially if they are well implemented, would result in the central bank, whose mandate is to achieve responsible control of monetary policy, being unaffected directly by the government or influenced by what the government does. Debating the Bank of Botswana ( Amendment) Bill, 2022 ( Bill No. 11 of 2022), the LOO stated that they have been made aware that a comprehensive benchmarking exercise was carried out to come up with this Bill. He said unfortunately, there was reportedly an organisational inertia at the BoB and outside, particularly on the separation of governor from chairman of the board. The argument, it appeared, was that there are a lot of operation matters that require that the chairman be the governor, he said adding that they have never supported this argument. He said the UDC made it clear in its 2019 Manifesto that it is committed to building an economy that works for all, citing that the central Bank, Bank of Botswana and Botswana Currency are ideas brought by the opposition by Phillip Matante and other opposition trailblazers. Keorapetse said that the Bank of Botswana has since its inception carried out Botswana’s monetary policy and controlled money supply and has been mandated with maintaining low inflation and steady GDP growth. On a macro basis Bank of Botswana has influenced interest rates and has participated in open market operations to control the cost of borrowing and lending throughout the country’s economy,, Keorapetse told Parliament. He said the UDC has always agitated for the separation of governor from chairperson because it is good governance. He argued that there is need to also limit terms of board members. According to the legislator good practice is to allow for one renewal. He submitted that leaving this open will mean the person can go for many terms which is not good and must change notwithstanding the argument that there is a scarcity of people who can serve in the board. “The scarcity is artificially created because of non performance restrictions they impose such as the unwritten rule of being a BDP card carrying member. We have enough Batswana to serve in the board and therefore no need to have people overstay in boards”. He said the UDC supports the adjustments to amounts as they make a lot of sense but warned that over time these could become valueless because of possible misalignment with the intended purpose. On the issue of operational independence he said the UDC needs more clarity wondering if this means independence for instance, to pursue monetary policy irrespective of the fiscal policy and other issues? He indicated that, in some countries such as Australia the central bank is truly independent and almost autonomous in its operation. He explained that the South African Reserve Bank also provides some valuable lessons. Some Central Banks elsewhere, he said pursue their policy objective no matter what the fiscal and other economic objectives may require. “For instance, in fighting inflation, they would increase interest rates even though the need for boosting economic growth requires interest rates to be lowered to boost investment and growth. So we need to be clear what this operational independence means in real terms. “UDC has raised corporate governance issues at BoB. We have asked questions and suggested that the Bank has to change auditors often and not use a single firm for a long time. We have also suggested that high governance standards be adhered to in appointing companies to print Botswana Pula. “We have also suggested more transparency and accountability on BoB procurement especially capital projects. We have also demanded employment of Batswana in key positions,” Keorapetse said.