S. African Opposition Drives Law to Nationalize Central Bank

(Bloomberg) -- A radical South African opposition party is putting pressure on the ruling African National Congress to make good on an undertaking it made eight months ago to nationalize the central bank.

Julius Malema, leader of the Economic Freedom Fighters, introduced a proposed amendment to the laws that regulate the bank to abolish its private shareholding and bring it under the control of the state, parliament said on its Twitter account on Thursday. The EFF first tabled a notice of its intention to propose this change in May.

While the EFF commands just 6 percent of the seats in Parliament, its strident calls for more to be done to place wealth in the hands of the black majority and address racial income disparities that persist more than two decades after the end of white minority rule have resonated among many young black voters. With elections due next year, the ANC has mimicked several of the EFF’s more populist policies, including agreeing to change the constitution to allow for land seizures, in a bid to shore up its support which fell to a record low in a municipal vote in 2016.

The EFF has sought to brand itself as a driver of government policy, according to Ongama Mtimka, a politics lecturer at Nelson Mandela Metropolitan University in the southern city of Port Elizabeth.

The EFF has a tendency to “take things way faster than the ANC,” Mtimka said by phone. “The EFF is not the governing party, they don’t have some of the sensitivities and political management issues the ANC needs to take into consideration.”

The EFF’s move on the central bank follows its February motion to change the constitution to allow for expropriation of land without compensation, another change the governing party originally adopted at its national conference in December. ANC lawmakers agreed to a slightly modified version of the EFF’s proposals and referred them to a committee that’s due to report back on how they can be implemented by the end of this month.

South Africa’s central bank is one of the few in the world that’s still owned by private shareholders. The shareholders vote to appoint seven of the central bank’s 10 non-executive directors and have no say over policy.

The amendment bill proposes that the Reserve Bank’s board be appointed by the finance minister rather than shareholders.

The bill “does not in any way alter either its primary mandate of price stability, neither its independence,” the central bank said in an emailed response to questions. It “will continue to engage with the parliamentary process and at the appropriate time make a submission as part of that process.”

Governor Lesetja Kganyago told lawmakers on Wednesday that nationalization would be a protracted and expensive process, and wrangling over what the bank’s share are worth is likely to end up in court for years.

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