Why the SARB Amendment Bill Must Be Rejected
Central Banks Make Disastrous Political Puppets
South African politicians often market their ideological pipe dreams as silver bullets, recycling failed policy ideas from the past instead of doing the hard work of real reform. This time, it’s the South African Reserve Bank Amendment Bill, a proposal that, like its ideological cousins NHI, EWC and BEE, promises transformation but will almost certainly deliver dysfunction.
The SARB Bill, introduced in 2018 by the Economic Freedom Fighters and revived again in 2024, wants to make the state the sole shareholder of the Reserve Bank. It also gives the Finance Minister full control over appointing directors and auditors. EFF supporters call it progress and revolutionary. But revolutions, as history shows us, often eat their children. Like many top-down overhauls dressed in the language of justice and “giving power to the people”, this one risks destroying the very thing it claims to improve.
At this stage the Bill has be reintroduce to Parliament and the Finance Standing Committee, chair by the ANC’s Mkhacani Maswanganyi of the National Assembly has once again opened the EFF’s Bill for public comment. A process which all South Africans should participate in to vigorously oppose this proposed amendment.
Centralisation won’t save us
South Africa has real problems. Our institutions are weak, our governance generally is poor and accountability is thin. And when things don’t work, our default move is to centralise power with the assumption that giving the state more control will solve the problem. The SARB Bill follows this same script. It removes the few remaining private checks in the Reserve Bank’s governance and puts a single minister in charge of the board, the auditors, the rules, basically everything.
But a healthy democracy doesn’t function well with centralisation. Functioning democracies do not concentrate power in one office. It disperses it. It designs tension between institutions, between Parliament, the courts, the executive, and independent bodies like the Reserve Bank. And these tensions aren’t bugs in the system but they are features specifically designed to ensure the long term functioning of the institutions and system. The fact that a government can’t single-handedly move every lever of the economy is a good thing.
And what’s peculiar with this move is that the SARB is one of the few public institutions in South Africa that still functions decently well. Not perfectly, but competently. It enjoys trust particularly internationally and it has credibility in financial markets. So why would we hand it over to direct political control? Because some people like the Marxist EFF think that if it’s not owned outright by the state, it can’t be trusted.
Symbolism over substance
The Bill’s EFF backers say this is about reclaiming sovereignty and about removing “foreign influence” in the Reserve Bank. They argued that it puts control in the hands of “the people.” But like many Marxist ideas, that sounds noble on the surface but it’s hollow and doomed to fail. Moreover, like many policy proposals by Marxist it proposes solutions to problems which do not exist.
It’s the same tactic used in Marxist or socialist regimes the world over: create a phantom enemy, then propose a bold reform, and consolidate control. In this case the phantom enemy are the private shareholders of the Reserve Bank, the problem is that the shareholders are in the way of economic growth and the reform is removing these shareholders and centralising the shareholding in the state.
In George Orwell’s Animal Farm, the pigs justify everything in the name of equality and the good of the group, even as they hoard power. But as Albert Camus has famously said, the welfare of the people has always been the alibi of tyrants.
The point is the private shareholders of the SARB are not the obstacles to economic success which the EFF attempt to paint them to be. Because the SARB’s private shareholders don’t control monetary policy, they can’t set interest rates and they don’t influence the Monetary Policy Committee. They earn a capped dividend and have no power beyond electing a handful of non-executive directors who are, by law, vetted by an independent panel that includes the Governor and a retired judge.
So why remove them? Because the EFF thinks it looks good to their supporters and it sells a story which has been told throughout history that private interests are per se bad. But the story isn’t true. Those powers that the EFF supposedly want to give to the people don’t go to the people. They go to the Minister and the state.
Supporters of the Bill argue that Section 224(2) of the Constitution guarantees the SARB’s independence so we don not have to worry. That even if we change who appoints the directors, the text of the law will protect the Bank’s integrity. But as we all know promises on paper does not guarantee independence in practice.
Independence is not just about what the Constitution says. It’s about how systems are built and managed. If the Minister of Finance controls all appointments, picks the auditors, and shapes the rules, then the SARB is no longer independent even if the words in the Constitution remain. Because law is not just written words but what is the reality of the situation and what is practiced.
This Bill replaces a semi-independent governance model (which is currently the case with the Reserve Bank) with direct political control. That change might not be spelled out in Section 224(2), but the change in legislation hollows out the meaning in the Constitution.
It’s like claiming to respect free speech while silencing every critic through backdoor regulations. The words of a constitution is only worth the paper it’s written on if its promises aren’t applied in practice. But this double speak is evident the world over, from the Democratic People's Republic of Korea which is neither democratic nor is it a republic, to Nigeria which constitutionally promises universal healthcare but ranks at or near the bottom across all major healthcare outcomes.
In South Africa we’ve seen the consequence of centralisation before as well. Eskom was centralised. It collapsed. SAA was nationalised. It drained billions. SANRAL, PRASA, Post Office are each one a story of state control gone wrong.
And the lesson is always the same, centralising power in a failing system doesn’t fix the system. It just moves the failure to a higher level and creates the illusion that things are being done and progress is being made.
Conclusion
There’s a reason wise democracies protect their central banks. History shows us the consequences of infringing on a central bank’s independence (which independence is actually already limited in South Africa’s case).
In Zimbabwe, the Reserve Bank became a de facto arm of the ZANU-PF. It printed money to fund government spending, ignored inflationary risks, and ultimately triggered one of the worst cases of hyperinflation in modern history. Prices doubled almost daily.
In Venezuela, a similar pattern unfolded. The central bank, stripped of its autonomy, propped up state spending with artificial currency supply, which eventually collapsed the value of the bolívar and destroyed public trust in the economy.
In Turkey, President Erdogan toppled six central bank governors between 2016 and 2022 to force lower interest rates and inflation surged to around 85%, leaving the lira in tatters and wiping out middle-class savings.
In Brazil, President Lula has publicly criticised the central bank chief and even tried to gag him from speaking, undermining the institution’s credibility as its inflation-targeting credibility comes under pressure.
Even in advanced economies like the U.S., political attacks on central bankers like Nixon’s assault on Arthur Burns to more recent Trump tirades against the Fed have rocked the institution’s credibility and stability. In each case, we see currency value suffers, inflation expectations de-anchor and at the end of the day ordinary citizens foot the bill.
Closer to home, South Africa has avoided that fate precisely because its Reserve Bank retained a degree of operational independence. And globally, successful economies like Germany, Canada, and New Zealand have deliberately designed central banks to be shielded from direct political interference. These countries’ records on inflation control, investor confidence, and currency stability reflect that decision. It’s not that independence guarantees success, but removing it almost guarantees failure.
As Friedrich Hayek warned, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” The SARB Amendment Bill is a design born of ideology which has historically proven to be disastrous and if passed, it will leave South Africa poorer and weaker.
The SARB Amendment Bill doesn’t strengthen the Reserve Bank. It just undermines it. And therefore if passed the consequences will follow the well trodden historical path of failure.
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