Why South Africa’s Central Bank Is Under Fire: QuickTake Q&A
Street hawkers sell their wares to passing pedestrians on a road near the headquarters of the South African Reserve Bank, right, in Pretoria, South Africa.
Photographer: Waldo Swiegers/BloombergSouth Africa’s central bank is under fire by the nation’s ruling party. The anti-graft ombudsman told parliament on June 19 to start the process of changing the constitution to force the Reserve Bank to focus on the “socioeconomic well-being of the citizens” rather than on inflation. Many investors took this as a threat to the bank’s independence. Then the ruling African National Congress proposed that the bank, which has been owned by private shareholders since its founding in 1921, should become state-owned. With South Africa suffering through a second recession in almost a decade, the 96-year-old central bank has become a scapegoat for many of the economic woes.
As the ANC prepares for a December leadership contest, many are losing faith in the party’s ability to raise living standards and reduce inequality. President Jacob Zuma has vowed “radical economic transformation” to accelerate spreading wealth to the black majority. Some of his supporters say the central bank is reluctant to issue new banking licenses to black-owned lenders.