Public Protector Takes Aim At Reserve Bank

Busisiwe Mkhwebane’s call for changes in the Reserve Bank’s mandate would undermine its indepedence and trigger more credit ratings downgrades.

- Mariam Isa

Public Protector Busisiwe Mkhwebane’s shock proposal to change the mandate of the South African Reserve Bank (SARB) amounts to an attack on the independence of an institution seen as the last remaining bulwark against state capture and a volley of credit ratings downgrades, which would wreak havoc on the country’s fragile economy.

Her call to scrap the SARB’s inflation targeting framework – which protects the value of the rand – knocked the currency more than 1.5% weaker against the dollar, taking it back through the key R13/dollar level as financial markets digested the threat to one of the main cornerstones of South Africa’s global financial credibility.

Coming on the heels of a new Mining Charter seen as unworkable by investors, the wording of Mkhwebane’s proposed changes to the SARB’s mandate bears the hallmark of the radical economic transformation being touted by the government and the ANC as the main solution to the country’s problems. 

It has also added to the policy uncertainty weighing on SA’s credit ratings and dealt yet another blow to dismal business confidence, which has stifled investment and tipped the country into a technical recession that could last for the entire year.

ANC secretary general Gwede Mantashe added his voice to criticism that the Public Protector had overstepped her authority and was not legally entitled to ask the portfolio committee on justice and correctional services to introduce a motion in Parliament to change the wording of the SARB’s mandate in the manner she suggested.