Parliament begins debate on nationalisation of Reserve Bank
Parliament has begun deliberating on a bill sponsored by the EFF, which would see the amendment of the South African Reserve Bank (SARB) Act in order to allow for the Bank to be nationalised.
The EFF, SA's third biggest party, seeks to discontinue private ownership of the Reserve Bank through the amendment, which was first tabled as a private members' bill in the fifth parliament.
In introducing the bill to the standing committee on finance and the select committee on finance on Tuesday evening, the party’s second in command Floyd Shivambu said the bill was only about ownership and not about the mandate of the bank. He said the debate on the bank's role was ongoing and would be finalised at a later date.
He also slammed the notion that buying out private shareholders of the bank would run into the region of billions, saying that it was a side show to detract from nationalising the bank - a move which he said would benefit all South Africans and not just commercial banks which had admitted to rand manipulation.
The meeting was off to a rocky start with members of the National Council of Provinces (NCOP), Willie Aucamp and Dennis Ryder - both of the DA - leaving the meeting after raising objections to the involvement of the NCOP at the early stage of the introduction of the bill, which will later have to be signed off by both houses of parliament separately.
In his presentation, Shivambu said the SARB was one of only nine in the world that still had private ownership. He said it currently had 802 shareholders, based both locally and internationally.
“Admittedly, there is no massive financial benefits that accrue to the current shareholders, so there will never be a sound claim for compensation,” said Shivambu.
“Currently each of the 2 million shares is R10, meaning that in total the shares issued by the SARB is R20m - meaning that no one has paid billions to gain shares, so why would you claim billions as compensation?
“The highest dividend each shareholder is entitled to is R1,000 per shareholder. Why would you claim billions if you were only entitled to R1,000 per year?”
Shivambu charged that it would be pure “madness” for any “rational court” to grant billions in compensation to the private shareholders and that it would not be just and equitable to give them no compensation.
“What we would have to do is to discuss how we would go about protecting the bank in a manner that it is not abused, like some of the SOEs are,” he said.
The amendments proposed in the bill by the EFF would make the state the sole shareholder of the SARB and empower the minister of finance to appoint the board. Submissions of the annual financial statements would be made to the minister and be tabled before parliament.
Parliament’s legal services have advised that the EFFs bill to nationalise the Bank may not “pass constitutional muster” in its current form. Parliamentary legal advisor Noluthando Mpikashe made the statement to the sitting.
“As the legal services of parliament, we are of the view that the bill as is – if challenged –will not pass constitutional muster. We are not the final arbiters to say the bill is unconstitutional; we are just giving a view, looking at previous court decisions and looking at how section 25 is currently in the constitution,” said Mpikashe.
“Hence there is a process to amend section 25 of the constitution because currently it does not allow expropriation without compensation. So we are saying until the constitution is amended to allow for expropriation without compensation, we are of the view that currently the bill is in violation of section 25 of the constitution.”
Shivambu was visibly irritated and argued that matters related to legality of bills usually were dealt with in the final stages of signing off on the bill and not when it was being introduced.
“This is unprocedural. No legal advisor can stop a bill of parliament - it doesn’t exist,” he said.
“The procedure is that you can vote against the bill in the committee, in the National Assembly and in the National Council of Provinces. If you are still unhappy, you can write to the president and tell him not to sign off on that bill. Failing that, you go the Constitutional Court.”
Mpikashe was at pains to emphasise that legal services did not seek to do away with the bill, but that in its current form it could be contested and that the committee should be aware of that.
The point of contention was around expropriating shares of private shareholders without compensation. She said that it was a matter that could go either way given that there were numerous schools of thought around section 25 and what can be expropriated without compensation.
The fifth parliament had resolved to embark upon the process of amending section 25 in order to make “explicit” what is already implied in the constitution. The move was sponsored by the EFF, who have been calling for all land to be nationalised and expropriated without compensation.
The ANC's 2017 national elective conference resolved to nationalise the Bank, but no moves have been made to implement the resolution by way of parliamentary procedures. The party's treasurer-general Paul Mashatile is one of those who is of the view that the country should not prioritise what would be a costly exercise to buy out private shareholders under the current economic conditions.
With the exception of the two co-chairs, Yunis Carrim and Joe Maswanganyi, who are ANC members, other MPs of the ruling party remained mum in this evening’s committee meeting. They opted out of engaging Shivambu’s presentation, as well as the input from Mpikashe.
It was resolved by the co-chairs that the bill be introduced as is and that legal considerations would be made at a later stage.