South Africa


Ramaphosa and Magashule contradict each other on Reserve Bank nationalisation

African National Congress (ANC) Secretary General Ace Magashule during a media briefing about his meeting with former president Jacob Zuma on September 11, 2018 in Johannesburg, South Africa. Responding to allegations that he met Zuma to discuss a plot to oust President Cyril Ramaphosa, Magashule said he met the former president over organisational issues. (Photo by Gallo Images / Sunday Times / Alon Skuy) Then-Deputy President Cyril Ramaphosa during a pre-World Economic Forum (WEF) breakfast briefing on January 18, 2018 in Johannesburg, South Africa. Ramaphosa, who will be accompanied by Finance Minister Malusi Gigaba at the WEF in Davos, said Team SA is hoping to woo investors with the message that South Africa is serious about rooting out corruption, and that renewal is taking place in the country. (Photo by Gallo Images / Sunday Times / Moeletsi Mabe)

On the eve of the World Economic Forum in Davos next week, President Cyril Ramaphosa directly contradicted his party’s secretary-general, Ace Magashule, on the ANC’s election promise regarding the “flexible monetary regime” for the Reserve Bank. The question is: which ANC will be on the ballot paper?

Last year when President Cyril Ramaphosa led Team South Africa to Davos, he was still officially Number Two. It was only a month later that former president Jacob Zuma was pushed to resign. This year, Ramaphosa is going as Number One, but it’s not really clear that he’s completely in charge.

The breakfast briefing at the Crowne Plaza hotel in Rosebank on Wednesday started seven minutes late. If time is money, this slight delay came at a considerable cost, as one of the tables alone seated big bank bosses like Standard Bank’s Sim Tshabalala, Absa’s Maria Ramos, Investec’s Stephen Kosseff, and Colin Coleman from Goldman Sachs.

JSE chairperson Nonkululeko Nyembezi-Heita was also there, and early in the conversation asked for clarification on the ANC’s view on the Reserve Bank mandate (the Monetary Policy Committee also happens to be having its meeting at the moment).

This came after ANC secretary-general Ace Magashule told eNCA’s Aldrin Sampear on the Politbureau show on Sunday that the “flexible monetary policy regime” for the Reserve Bank promised by the ANC in its 2019 elections manifesto, means that the bank would be nationalised.

Ramaphosa’s response contradicted this. He said the party’s election promises “shouldn’t alarm anyone”. He said: “The manifesto had a paragraph on a wish and an aspiration, acknowledging that the Reserve Bank is independent and that there is no intention whatsoever to tamper or tinker with the independence of the central bank. The wish that is expressed is, that as it goes ahead with monetary policy machinations, it will keep an eye on employment.”

He said that was precisely what the Reserve Bank was focusing on already, and everything was perfectly okay. Finance Minister Tito Mboweni, who was chastised for being half an hour late (his Twitter account shows he was up until at least 11pm watching Brexit developments), agreed.

A look at economies across the world will show that the macroeconomic outcomes are much better in countries with independent central banks,” Mboweni said. “As long as we are clear, this I can say without equivocation, the independence, standing and the role of the Reserve Bank is sacrosanct and will remain independent. There should be no debate about that.”

Ramaphosa, however, said the manifesto issues would form part of a debate, although it wasn’t clear if he meant between voters of different parties, or between the ANC and the ANC. Also, while the former president, Jacob Zuma, loved to refer things for debate, it didn’t get the country far in terms of policy certainty – which really is first prize for attracting investors, as Ramaphosa wants to do.

Where Ramaphosa was putting things up for debate, Magashule was unequivocal.

The nationalisation of the Reserve Bank was a resolution of the ANC’s “highest decision-making body”, at the national conference in Nasrec in 2017. “I know that we as officials of the ANC, we have met and we said we are going to implement every resolution from the national conference without flinching.” Where there are “difficulties”, the party would consult its structures, in this case the national general council, which should take place next year and which is the highest decision making body in between national conferences. It’s powerful enough, for instance, to get rid of presidents who don’t deliver on their party’s mandates, although that hasn’t happened as yet. “We can’t be seen to be undermining the highest national decision-making body,” he said confidently. “Nobody has a choice. It’s a conference decision.”

The same goes for other key economic questions, like land reform. Ramaphosa said there was no “vengeful intent” as the Freedom Charter said “the land must be shared amongst those who work it”.

The ANC resolved at Nasrec that there should be expropriation without compensation, and many in the party took that to mean the Constitution should be changed.

Ramaphosa, however, toned the resolution down slightly. “The issue of the expropriation of land without compensation has always been part of the constitutional construct that we have, and the current process is just to make it clear. If you read the Expropriation Bill (currently before Parliament) carefully, you will see how it will take place. We will not depart from using the clear prescripts as outlined in the Constitution. We will not allow land grabs. It will be done in the most orderly manner.” Land expropriation without compensation was “one of the measures that can be used” for land reform, he said. “There won’t be wholesale expropriation without compensation as people feared.”

Whether everyone in the ANC is speaking from the same memo, is, well, up for debate. Ramaphosa might have won the top prize at Nasrec, but the “unified” ANC leadership that emerged was split more or less equally between the two camps that contested. It still is. That much was clear in the way Ramaphosa had to accommodate Zuma on the campaign trail in KwaZulu-Natal last week, even as Ramaphosa’s references to the “difficult period” the ANC has just emerged from, refers to Zuma’s presidency. The question is whether Ramaphosa will be as strong and uncompromising after the elections as his supporters claim he truly is (in the likely event that the ANC wins again). It’s difficult to say.

Also, for much of its 25 years in power the ANC has been campaigning left and governing not-so-left, starting with former president Nelson Mandela’s wish to nationalise mines and the banks. South Africa’s democracy is, however, becoming older and the competition is fiercer now, in the form of the much more radical and populist Economic Freedom Fighters on the one side, and the Democratic Alliance on the other – and some noise by loud former Zuma-aligned disgruntleds like Hlaudi Motsoeneng and Mzwanele Manyi in between.

Voters might be wondering which ANC it is the party’s leaders will be asking them to vote for in the next three or four months. DM


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