Kganyago says central bank ownership a ‘zombie debate’

A decision by the country’s ruling party to nationalise the central bank is based on ideology and a misunderstanding of what it does, according to the institution’s governor Lesetja Kganyago.

The African National Congress decided at a conference in late 2017 to nationalise the South African Reserve Bank, which is one of a handful globally owned by private investors. The shareholders have no say over monetary policy decisions and the central bank’s mandate — to target inflation — is set by the government. President Cyril Ramaphosa said last month that the party is determined to follow through on the resolution because it will affirm the country’s sovereignty.

Kganyago has warned that the move could mask an attack on the Reserve Bank’s independence.

“I can’t see any benefits and frankly it’s a zombie debate,” he said in an interview with Johannesburg-based Power FM late Wednesday. “It doesn’t matter how much you explain, in the end people won’t say ‘we want to feel we have nationalised it and that’s it.’ To what end is not what anybody answers.”

Kganyago estimates it would cost R20 million ($1.4 million) to buy out private shareholders but if those shareholders take the decision to an international court and successfully claim that it owns the nation’s gold and foreign-exchange reserves, it could cost as much as R100 billion.