Why the Independence of the SARB Is Sacrosanct

Dear editor

The Democratic Alliance resolutely supports the independence of the South African Reserve Bank (SARB) and firmly opposes the EFF’s SARB Amendment Bill.

The Bill undermines SARB’s constitutional mandate to operate independently by granting the Minister of Finance the right to appoint the seven non-executive directors who are currently elected by shareholders.

By granting total political control over key appointments at the SARB, the bill creates the risk of currency devaluation, inflation, and economic instability. The framers of the Constitution understood the dangers of political meddling in central bank operations, which is why SARB’s independence was enshrined.

This risk of political interference threatens to undermine investor confidence, leading to reduced investment, slower economic growth, and fewer job opportunities. This is in direct conflict with the Government of National Unity’s statement of intent to both protect the independence of institutions, as well as to promote inclusive growth and job creation.

The bill goes further to propose the expropriation of private shareholders’ shares without compensation, which is unconstitutional.

Lastly, the bill is redundant. SARB is already, in effect, state-owned: 90% of its profits go to the government, while private shareholders receive nominal dividends and have no say in its management or monetary policy.

The primary role of private shareholders is to elect seven non-executive directors, who help ensure SARB remains well-governed and true to its constitutional mandate to protect the value of the currency.

Should the state acquire these shares, a new accountability mechanism would be required to safeguard SARB’s independence.

Any such mechanism would need to demonstrate clear benefits that outweigh the costs of implementation, including compensating existing shareholders.

The DA will continue to fight for SARB’s independence and oppose any attempts to erode the foundational principles of good governance that protect South Africa’s economy and our potential for growth and jobs.

Regards

Andrew Bateman MP
DA Deputy Spokesperson on Finance