Cyril makes the right Sarb noises

There has been a lot of heated reaction to the announcement in parliament this week by President Cyril Ramaphosa that the ANC government would work towards removing foreign shareholding in the SA Reserve Bank (Sarb).

A number of commentators interpreted Ramaphosa’s comments as the implementation of a decision at the ANC elective conference in December 2017, that the central bank be nationalised.

While Ramaphosa did say that the bank “should be owned by the people of our country”, this is a long way from actual nationalisation – where the state takes over the institution in its entirety. By removing foreign shareholding in the Sarb, Ramaphosa is, in effect, preparing to do exactly what he said – ensure that the bank is owned by locals … although not by the government.

Ramaphosa also pointed out, correctly, that foreign shareholding in the central bank of a country is a rare phenomenon and South Africa is one of only six countries where this happens.

Some commentators have accused Ramaphosa of going against his promises about the Sarb at the World Economic Forum in Davos earlier this year. However, what Ramaphosa actually said, strongly, was that the independence of the Sarb would be maintained.

The role of the Sarb is, in its own words, “to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa”.

That has, so far, not been tampered with. And that is the message which should be conveyed to investors abroad.

Foreigners should also be assured that this is election season and the Sarb comments by Ramaphosa are ambiguous enough that ANC supporters will hear “nationalisation”, when there is nothing of the sort.

Yet, because the Sarb and its future are a signal of financial stability, especially to investors, Ramaphosa needs to be more explicit and play less to the electoral gallery.