The Public Protector released her report on the Bankorp “bail-out” on 21 June 2017. Many among us will have something to say about the remedial action she proposes on this specific issue, in essence that Absa repays the “government” an amount of R1.125 billion.
However, we confine ourselves here to her rather startling recommendation that the mandate of the SARB [South African Reserve Bank] should be changed &#8211; a matter that she was not asked to consider. One of her remedial actions is an instruction to the Chairperson of the Portfolio Committee on Justice and Correctional Services to “initiate a process that will result in the amendment of Section 224 of the Constitution”. She then even more remarkably goes onto suggest what the new mandate should be:
224 (1) The primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are (sic) protected.
While this is an unexpected (and unwarranted) recommendation, it does raise the very interesting question about what mandate is appropriate for the central bank of an emerging economy such as South Africa. Those of us with research expertise and direct experience of monetary policy and central banking matters will acknowledge the complexities of these debates at both a theoretical and practical and policy level. Some academics economists will be pleased with the exclusive price stability mandate of the SARB as per section 224 (1) of the 1996 constitution. Others will argue for a broader mandate including growth and employment, alongside price stability. Some combination of price stability, growth, employment are in the mandates of the US Fed, the Reserve Bank of Australia, and Canada, and even the EU.
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The academic debate over central banks’ mandate is an international one and has been going on in one way or another for most of the 20thC. It became especially tense and complicated in the context of the growing dominance of new neo-classical economic thinking associated with Robert Lucas and his research collaborators since the early 1980s. Although there has been some convergence around a narrow price stability mandate in practice since then, there are also many examples of central banks which have a statutory or legal mandate that includes either growth or employment or some combination of these three elements. In NO case that we are aware of is a central bank’s mandate spared the responsibility of price stability (however phrased), whatever other objectives are included. To exclude price stability from a central bank’s objective in favour of some poorly conceived reference to ‘socio-economic well-being” is incomprehensible and plainly irresponsible.
We are not against, and many of us would positively welcome and support, the opening up of a well-informed, properly constituted and transparent debate about the mandate of the SARB at some appropriate time, and through the proper institutions, e.g. through a parliamentary enquiry at which expert testimony and international experience are solicited. Indeed, it is important not to conflate a defence of the proper process by which such debates should be constituted, with a defence of the current mandate of the SARB. It is quite possible to defend the independence of the SARB while questioning how appropriate its current mandate is to the challenges facing the country.
The crisis of low growth and high unemployment coupled with growing inequality suggests that this and other aspects of our economic policy stance should be debated in a responsible manner, designed to bring about a much needed improvement in the quality of life and work among our people, a majority of whom have not yet witnessed the dividends of democracy. There is no reason why the inclusion of growth and employment, together with price stability, cannot be an intrinsic part of such a public engagement. But uninformed and rash statements, especially ones that carry the power and binding nature of the PP, do not assist us at all. Threats to the operational independence and constitutional mandate of the SARB that come about in this manner represent a grave threat to an economy already crippled by a number of serious problems.
The likelihood that the PP’s analysis and remedial actions are designed, not as arguably well-intentioned even if plainly wrong interventions, but rather as part of the assault against the remaining institutions in the state sphere that stand for good governance is very, very high. That is why those who are opposed to such state looting, as we all are, must stand in defence of the SARB, even if we may differ on some aspects of the theoretical and policy debate about the role and mandate of central banks such as SARB in today’s world.
That was also our collective and publicly articulated view on two previous occasions over the past 18 months when two respected Ministers of Finance were unceremoniously dumped by the President.
*Signatories (alphabetical)
Matt Andrews 
Christo Auret 
Haroon Bhorat 
Derick Blaauw 
Anthony Black 
Ilsé Botha 
Danny Bradlow 
Adele Breytenbach 
Philippe Burger 
Rulof Burger 
Le Roux Burrows 
Marianne Camerer 
Daniela Casale 
Ivor Chipkin 
Nico Cloete 
Johan Coetzee 
Kenneth Creamer 
Stan Du Plessis 
David Everatt 
Olivia Ezeobi 
Frederick Fourie 
Pieter Fourie 
Steven Friedman 
Alison Gillwald 
Jannie Rossouw 
Amanda Gouws 
Duncan Hodge 
James Hodge 
Hylton Hollander 
Clare Hofmeyr 
Petronella Horn 
Gilad Isaacs 
Faizel Ismail 
Rachel Jafta 
David Kaplan 
Richard Ketley 
Murray Leibbrandt 
Anthony Leysens 
Elsabe Loots 
Neva Makgetla 
Stephen Malherbe 
Julian May 
Lumkile Mondi 
Jabulile Monnakgotla 
Mike Morris 
Eldridge Moses 
Bokang Mpeta 
Liezl Nieuwoudt 
Morné Oosthuizen 
Vishnu Padayachee 
Brigitte Pegado 
Marinda Pretorius 
Vimal Ranchhod 
Monique Reid 
Gareth Roberts 
Simon Roberts 
Ayesha Sayed 
Maxi Schoeman 
Collette Schulz-Herzenberg 
Krige Siebrits 
Simone Smit 
Mark Swilling 
Christopher Tapscott 
Nicola Theron 
Amy Thornton 
Imraan Valodia 
Theo van der Merwe 
Piet-Hein van Eeghen 
Lize Van Robbroeck 
Corne Van Walbeek 
Cobus Vermeulen 
Dieter von Fintel 
Marissa von Fintel 
Merle Werbeloff 
Martin Wittenberg 
Ingrid Woolard 
Uma Kollamparambil 
Andries du Toit

Open letter from South African academics and economists: Hands off the Reserve Bank

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Absa will seek a high court review of the Public Protector&#8217;s CIEX report, which instructs that it pay back more than R1bn. Songezo Zibi, Head of Communications at Barclays Africa Group joins CNBC Africa for more.

ABSA seeks high court review of CIEX report

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SARB&#8217;s Independence has been touched, this is a ratings negative. Peter Attard Montalto, Emerging Markets Economist, Nomura joins CNBC Africa for more.

SARB’s independence has been touched, this is a ratings negative – Nomura

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Public Protector Busisiwe Mkhwebane said she would seek that the SARB&#8217;s mandate be changed from protecting the value of the rand to a focus on the protection of &#8220;citizens&#8217; socio-economic wellbeing&#8221;.

S.A Public protector pushes for SARB mandate change

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Absa Bank says it does not believe it is obliged to #paybackthemoney. This follows the release of the Public Protector&#8217;s report into the loan granted to then Bankorp under the apartheid government.

Absa Bank may seek high court review of Public Protector’s report

PRETORIA (Reuters) &#8211; Barclays Africa Group unduly benefited from apartheid-era bailouts and must repay 1.1 billion rand ($86 million), South Africa&#8217;s anti-graft watchdog said on Monday.
Public Protector Busisiwe Mkhwebane in January reopened a probe of Barclays South Africa following a wider report published last November by her predecessor.
She said on Monday that the probe had found that the apartheid government breached the constitution by supplying Bankorp, which was acquired by Barclays Africa unit Absa in 1992, with a series of bailouts from 1986 to 1995.
Barclays Africa would have to pay 1.1 billion rand ($86 million), Mkhwebane said, adding that her office had referred the matter to the Special Investigating Unit to help recover the money.
&nbsp;
<h2>Barclays Africa response to Public Protector’s Press Conference</h2>
Absa has noted the Public Protector’s statement today regarding her investigation into the SA Reserve Bank’s assistance to Bankorp between 1985 and 1995. Absa acquired Bankorp in April 1992. We have not yet received a copy of the report and we are urgently requesting the Public Protector’s Office to send it to us. Once we have read it we will consider our legal options including seeking a High Court review.
Absa met all its obligations in respect of the loan provided by the SA Reserve Bank by October 1995. It is our firm position that there is no obligation to pay anything to the SA government.
(Reporting by Dinky Mkhize; writing by Ed Stoddard and Tiisetso Motsoeneng; editing by James Macharia and Jason Neely)

Bankorp

Open letter from South African academics and economists: Hands off the Reserve Bank

ABSA seeks high court review of CIEX report

SARB’s independence has been touched, this is a ratings negative – Nomura

S.A Public protector pushes for SARB mandate change

Absa Bank may seek high court review of Public Protector’s report

Barclays Africa says “no obligation” to pay SA govt

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Bankorp

Open letter from South African academics and economists: Hands off the Reserve Bank

ABSA seeks high court review of CIEX report

SARB’s independence has been touched, this is a ratings negative – Nomura

S.A Public protector pushes for SARB mandate change

Absa Bank may seek high court review of Public Protector’s report

Barclays Africa says “no obligation” to pay SA govt

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