The current reaction of Reserve Bank Governor Lesetja Kganyago – a man who has never shared with the country just what his vision is for the Reserve Bank – towards the public protector has exposed him for lacking any appreciation of the developmental agenda of the country.
Chief Justice Mogoeng Mogoeng, from the day he took his oath of office, understood that it would be a huge failure in his mandate, as the custodian of the nation’s judiciary, not to have as one of his key mandates the review of the entire judicial value system, particularly its racial historical bias.
Mogoeng understood that no Chief Justice in the new South Africa would be expected to legitimise the very white system he had inherited, by affirming its historical divisive values, and by governing by its maxim. He could not be expected to maintain its inherited bureaucracy.
On 6 June 2013 Mogoeng did not mince his words that he will not allow “a grouping of [apartheid’s] key operators to masquerade as “agents for the enforcement of constitutional compliance when they are in fact a change resistance force”. As expected, no sooner had Mogoeng made his speech that the Centre for Constitutional Right came down on him with a ton of bricks for what they called a partisan speech full of partisan comments that fatally compromise any claim that he might have impartiality with regard to current and future cases relating to race – and particularly to his role in the appointment of judges. Today, of course, Mogoeng is the darling of the entire jurisprudence milieu and continues to ensure that black judges are elevated to their rightful positions.
It’s these scathing accusations, the fear of being accused of not being “objective”, that have made many leaders in sensitive portfolios just maintain the status quo and please the elite at the expense of change in favour of the majority. Because only white culture could be neutral and objective, only white culture could be non-racial, willing to adopt the occasional exotics into their ranks, only white culture had individuals. Thanti Mthanti, Senior Lecturer at the Graduate School of Business Administration, University of the Witwatersrand, in his article Systemic racism behind South Africa’s failure to transform its economy, published on 2 February 2017 on the Wits website, was very clear that “transformation rules and the interests of informal racist agents have proved to be incompatible”. So what is to be done?
The current reaction of Reserve Bank Governor Lesetja Kganyago – a man who has never shared with the country just what his vision is for the Reserve Bank – towards the public protector has exposed him for lacking any appreciation of the developmental agenda of the country. In a speech at a Fedusa conference two years ago, Kganyago said, “Despite its fanciness, macroeconomic policy has little influence over the level of potential or trend growth. Therefore, we actually play little role in the size or speed of wealth accumulation or employment creation”. This is absolute nonsense. While the role of the Federal Reserve in the US has transformed in the past decade, as it has deployed trillions of dollars to boost the US economy while expanding its regulatory oversight of the nation’s financial system, Kganyako has only been happy to point out that the hands of monetary policy are tied to do anything about stimulating the economy or anchoring employment creation programmes.
The Fed’s monetary policy has been governed by a dual mandate: first, to maintain stable prices, and second, to achieve full employment – the definition of which is debated by economists, but which is generally considered to mean an unemployment rate between 4 and 5 percent. The current benchmark by which many economists judge Fed policy is known as the Taylor rule, a formula developed by Stanford economist John Taylor in 1993, which stipulates that interest rates should be raised when inflation or employment rates are high and lowered under the opposite conditions. This means interest rates should not only respond to inflation but to employment as well.
Unemployment? Kganyako could not be bothered. This speaks to what exactly is his vision besides telling us of the limitations of monetary policy? One would have expected Kganyago to question things a little more rigorously on his first day in office. What informs the size of the Monetary Policy Committee? Is it racially representative, are there other skills we could pull in, why is an adviser to the Governor white, does this matter, who owns the Reserve Bank? But no, Kganyago has only been preoccupied with proving to us he can do the job, using his liberal tools of analysis.
South Africa does not just need people who can do the job, we need people who can change the job. A developmental agenda is about more than being able to do the job, but being able to elevate the job. That is about the size of our responsibilities. The ANC, in its National Policy Conference held at Nasrec, has agreed that the Reserve Bank should be owned by the state. “It is an anomaly that an institution like the Reserve Bank should be in private hands,” Enoch Godongwana, Chairperson of Economic Transformation Subcommittee, said, “but the independence of the Reserve Bank should be guaranteed.”
The lack of transformation of the commercial banks and financial institutions, who are under the oversight of the Reserve bank, is another sign of a Reserve Bank reluctant to use its power to force commercial banks to be part of the country’s developmental agenda. The painfully slow transformation of the finance sector has seen outrage rising against banks, and the revelation by the Competition Commission of collusion on fixing prices in currency trading by 17 banks, among them Standard Bank, Investec and Absa, has brought the anger to boiling point. This has all happened under the nose of the Reserve Bank because the bank thinks all we want to hear is whether the repo rate will go up or down every month. The banks’ monthly meetings must be broadened to encompass the state and health of the financial industry, including its developmental goals at the point of reporting.
Frantz Fanon once said, “In an under-developed country an authentic national middle class ought to consider as its bounden duty to betray the calling fate has marked out for it, and to put itself to school with the people: in other words to put at the people’s disposal the intellectual and technical capital that it has snatched when going through the colonial universities.”
We are not impressed by skills at the level of Kganyago, we are looking for a transformative thinking. We want Kganyago to take the Rewserve Bank back to the people. If he can’t do it, we need someone who can. DM
Yonela Diko is currently the Spokesperson of the African National Congress (ANC) in the Western Cape. Prior to assuming his role in the ANC, he worked in various companies in the private sector. Between 2007-2009 he worked for one of the Leading Retirement Fund Companies, NBC Holdings as an Employee Benefits Consultant. After that he joined the Corporate Strategy and Industrial Development (CSID), an Economic Research Unit housed under the School of Economics at Wits University. He did his BCom degree at the University of Cape Town majoring in Economics.