South Africa’s ruling party, the African National Congress (ANC), has accepted a proposal that the central bank should be wholly state-owned rather than an institution with private shareholders.
Quoting some people in the know of the deal but who asked not to be identified because the decision had not been made public, Bloomberg reports that delegates at the party’s elective conference in Johannesburg decided that 100 percent of the Reserve Bank should belong to the government.
According to the news report, the Reserve Bank’s investors have no say over policy or the appointment of the governor, but do vote to select seven of the 10 non-executive directors. It’s is one of a small coterie of global counterparts from Japan to Switzerland that has shareholders, a legacy of its foundation in 1921.
It stated further that the proposal, made at the party’s policy conference in July, came two weeks after an instruction by the nation’s anti-graft ombudsman that the Reserve Bank’s inflation-targeting mandate be changed, adding that while the court has scrapped this bid, the ANC proceeded with the plan to change the regulator’s ownership structure.
In view of the latest approval, the ANC will now have to ask parliament to change the South African Reserve Bank Act. The party holds more than 60 percent of the seats in the legislature.
After fighting the anti-graft ombudsman’s mandate-change proposal, Reserve Bank Governor Lesetja Kganyago said the central bank would only oppose ownership changes if there was any encroachment on its independence.
The Reserve Bank has 2 million issued shares that are bought and sold on an over-the-counter trading and transfer facility after it delisted from the Johannesburg Stock Exchange in 2002.
In the six months through Dec. 19, the central bank’s stock traded for a little as 3 rand ($0.23) and as much as 12 rand, the lender said on its website.