MALUSI GIGABA: MIA

In the face of an onslaught on the independence of the Reserve Bank, one would at least expect the finance minister to step up. That hasn’t happened

Finance minister Malusi Gigaba has been missing in action in the fight to save the SA Reserve Bank. Just over two weeks ago, public protector Busisiwe Mkhwebane ordered that a constitutional amendment was needed to alter the mandate of the Bank. This followed her investigation into the decades-old Bankorp “lifeboat” loan.

Bizarrely, not only does the remedial action appear to have been beyond Mkhwebane’s powers, but it also appears to have been unrelated to her probe — and to have been inspired by a nutter such as Holocaust denier Stephen Mitford Goodson and thugs such as Black First Land First’s Andile Mngxitama.

Unsurprisingly, the market reaction was swift: the rand tanked, depreciating by 2.05% — from R12.79 against the dollar to R13.05 — in a couple of hours; nonresidents dumped R1.3bn of government bonds; and there was a sell-off of shares in the banking sector worth R365m.

It was not long before the ratings agencies were on the blower — including S&P, which regards the Bank’s independence as a major positive in our sovereign credit rating — asking hard questions about the independence of the Bank.

To his credit, Bank governor Lesetja Kganyago acted decisively to deal with the fallout.

A former governor of the Bank of England, Mervyn King, points out in The End of Alchemy that central bankers today rely less on “mystique” and more on “looking the average person in the eye” when building confidence in central banks across the globe.

Thankfully, there was no mystique in the Bank’s response to the fallout, and much looking into the eye of the average person.

With eyewatering speed, Kganyago vigorously defended the Bank’s constitutional mandate and independence in a major speech; he issued a statement announcing that the Bank would initiate urgent review proceedings; and he lodged an affidavit to have the court set aside the remedial action on the grounds that it was “ill-informed and reckless”.

By contrast, the finance minister was missing in action, zigzagging his way around by first supporting the Bank’s independence, and then, on the other hand, welcoming a debate about its mandate.

It was a poor show. Gigaba should have led from the front in the fight to protect the Bank.

To be fair, there has been speculation that Gigaba is considering joining the Bank’s application to have Mkhwebane’s order set aside — but the fact is that, more than two weeks on, he has yet to take official action.

Adding insult to injury

To make matters worse, accidentprone deputy finance minister

Sfiso Buthelezi — who likes to say what he thinks, no matter how terrifying — put his foot in it when he claimed that inflation targeting may be “bad for emerging economies like SA”.

The effect of Gigaba’s inaction — and his deputy’s action — has been to reinforce uncertainty about the constitutional mandate and independence of the Bank, which has been left dangling in the political wind, vulnerable to its detractors.

That the minister has been missing in action is a monstrous dereliction of duty.

Of course, it shouldn’t be a surprise that Gigaba hasn’t been seen. He is first and foremost a “climatologist” who specialises in reading the political weather. He takes positions calculated to consolidate, or at least to not compromise, his political base.

Evidently, a robust defence of Kganyago would have upset the Bank’s enemies, some of whom are probably Gigaba’s friends.

The truth is, to invert a trend identified by King in The End of Alchemy, the finance minister has got shorter and shorter, while Kganyago has got taller and taller in the fight to save the Bank.

Gigaba is first and foremost a ‘climatologist’ who specialises in reading the political weather