Opposition firebrand Julius Malema tabled a bill to nationalize South Africa’s central bank, rattling markets wary of any threat to the institution’s independence.
The rand fell more than 1 percent overnight after parliament released details on the bill late on Thursday, including clauses to “make the state the sole holder of the shares in the bank” and “provide for the appointment of certain board directors by the (finance) minister”.
Most central banks around the world are state-owned. But markets have been worried about moves to bring the privately-held South African Reserve Bank into government control — particularly after the past administration was accused of meddling in appointments and decisions.
It was unclear how far Malema’s far-left Economic Freedom Fighters (EFF) party and its 25 out of the country’s 400 parliamentary seats would be able to push the bill.
But the ruling African National Congress party promised to study the proposed privatization — a policy it promised to pursue in December, but put on the back-burner three months later.
“The ANC will … consult with the leadership of the caucus as well as the organisation to determine its desirability based on ANC resolutions and policies on the matter,” said the ruling party’s parliamentary caucus spokeswoman, Nonceba Mhlauli.
The ANC has called the central bank’s ownership status a “historical anomaly”, but delayed a parliamentary debate on the issue in March, saying more consultation was needed.
The currency closed at 14.7275 versus dollar on Thursday and weakened further on Friday, driven by an emerging markets sell-off.
“With the independence of the central bank once again potentially in question, this combined with all of the other investor unfriendly headlines locally, (is) likely to keep the local unit on the back foot,” Nedbank analysts said.
On top of market concerns, the central bank has also warned buying-out private shareholders would be expensive as some existing investors are likely to sell their stakes at a premium.
South Africa’s central bank has been privately owned since it was established in 1921. But its shareholders have no control over monetary policy, financial stability policy or banking regulation.
Malema and his party did not make an immediate statement on their bill. But they have regularly argued for the nationalization of a wide range of assets — including mines and banks — and said the central bank should not be owned by private shareholders without a direct interest in the country.
The party — launched after Malema was expelled from the ANC in 2012 — has been pushing its plans to nationalize assets and to redress racial disparities in the build up to elections in 2019. Despite the split, it has cooperated with the ANC on past legislation.
Parliament in February passed a motion brought by the EFF and supported by the ANC to carry out land expropriation without compensation, another key pillar of the ruling party.
Together, the ANC, EFF and other small opposition parties could muster the two-thirds majority needed for a constitutional change to allow for land expropriation without compensation.