Ramaphosa Moves to Calm Fears on Central Bank, Land Ahead of WEF
(Bloomberg) -- South African President Cyril Ramaphosa moved to quell investor fears ahead of his trip to the World Economic Forum in Davos, saying the African National Congress won’t tamper with the central bank’s independence and that the government won’t allow land grabs.
Comments in the party’s election manifesto unveiled at the weekend that the central bank must pursue a flexible policy regime shouldn’t alarm anyone, Ramaphosa told reporters Wednesday in Johannesburg. While the sentiments in the manifesto reflect a party “wish,” the ANC acknowledges the Reserve Bank’s independence, he said.
“The independence, the standing and the role of the Reserve Bank is sacrosanct,” Ramaphosa said. “It will remain independent as clearly stated in our constitution. There is to be no debate about.”
Credit-ratings companies have singled out the central bank’s independence as a sign of institutional strength in the country, even as other government organs such as the revenue service and the prosecuting authority were hollowed out under the rule of former President Jacob Zuma.
Reserve Bank Governor Lesetja Kganyago, who will announce the Monetary Policy Committee’s latest interest-rate move on Thursday, has emphasized that decisions will be data-dependent and focus on the bank’s primary mandate of targeting inflation at three to six percent. The central bank’s focus on price growth has drawn criticism in the past from parties who say it should also consider economic growth, which hasn’t exceeded 2 percent annually since 2013, and job creation in its decision-making.
At its 2017 leadership conference the ANC decided the Reserve Bank should be state-owned and that it will seek changes to the constitution to make it easier to expropriate land without paying for it. While there has been no meaningful move on nationalizing the central bank, the National Assembly, where the ANC holds a majority, in December approved a report that favors changing the constitution to make it easier to expropriate without compensation.
Separately lawmakers also released a draft Expropriation Bill that outlines the circumstances under which the state can take land without paying for it. The nation’s land reform policy is not a barrier to investment, Ramaphosa said.
“This is not what people have always feared, that there is going to be wholescale, vengeful type of expropriation of land,” he said. “The decision taken was very clear, that the agricultural production must not be reduced, food security must be ensured and it must lead to greater growth of the economy, it must not negatively impact the economy.”
The government is working on plans to stabilize the finances of loss-making power utility Eskom Holdings SOC Ltd., he said.
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