JOHANNESBURG — During President Jacob Zuma’s State of the Nation address, the first door that needed to be unlocked in his drive for Radical Economic Transformation was the banks. He felt they were a major stumbling block to achieving his dream. A few months later and enter Public Protector Busisiwe Mkhwebane. Her first warning shots were fired, firstly the Bankorp saga and why Absa must pay back the money, R1.125bn of it. But the bigger fish to fry lay in her attack on the independence of the South African Reserve Bank. Which is the biggest stumbling block to the Zuptoid goal of full control. And her calls to amend the Constitution in doing so, which should raise alarm bells. Analyst Daniel Silke puts this all into context, and it’s a full blown attack on the banking sector, which should have everyone worried. – Stuart Lowman
— Barney Mthombothi (@mthombothi) June 19, 2017
By Daniel Silke*
South Africa’s new Public Protector, Busisiwe Mkhwebane, achieved what was largely intended in her controversial pronouncements yesterday. With almost daily revelations surrounding the GuptaLeaks scandal, the heat was effectively turned towards the banking sector.
And, as if that was not enough, a new channel of concern into the stability of the South African Constitution and established economic policy added to the politics of distraction and diversion.
Notwithstanding the merits of Paul Hoffman’s original complaint back in 2011 re the controversial Bankorp bailout, the decision to re-open this after a series of earlier investigations by Judges Willem Heath and Dennis Davis is a useful diversion for a state under siege.
The banking sector has long been a target for a more populist wing within the ANC. And, past tactics from elements of the sector make it an attractive object of scrutiny. But, more importantly, the discourse from the Public Protector suggests that she has bought into the ideological orbit of those ‘unorthodox’ economists and advisors who currently have the ear of Finance Minister, Malusi Gigaba.
Given the status of the Public Protector and the media attention she commands, her remarks present a motivation for the removal of the institutional independence of the SA Reserve Bank and its ability to be more ‘flexible’ in monetary policy without the current constraints found in inflation targeting and interest rate decisions. The justification for this is a deep-rooted suspicion of the traditional financial services sector and their apparent transgressions.
Ms Mkhwebane therefore represents a view that is widespread amongst the patronage and more populist faction within the ANC.
The problem with her announcement is that it simply does not occur only within the context of the Bankorp transgressions – it comes at a time when the banking sector is seen as an obstacle to the unfettered functioning of the Guptas and their business empire. In addition, the regulatory environment within the banking industry has also become a troublesome burden for many crony capitalists.
The Public Protector’s announcement also comes at a time when the historical economic paradigm now present in the Ministry of Finance is being challenged by Minister Gigaba’s new advisory team. And it takes place just as when the independence of the country’s institutions are under attack in order to bolster an alternative ideology and patronage-based clique. Indeed, it is precisely what Moody’s warned of following their recent downgrade and will confirm their negative outlook for the near future.
And furthermore, it comes at a time when the Constitution is beginning to be viewed as an obstacle for the advancement of similar vested interests. Ms Mkhwebane’s highly dubious attempts to interfere in constitution-making also plays into the narrative that suggests that the grand compromises of 1994 are now working against elements in our body-politic and the Constitution therefore is now ripe for review.
Within this context, the pronouncements from the Public Protector are simply additional clues to a prevailing discourse deep within a particular faction within the ANC. It should be a warning shot to pragmatic South Africans from all political persuasions of the looming battles for control over both the policy-making paradigm and also the political power-plays as the ANC moves towards and elective conference and a less-certain performance in 2019.