South Africa’s Public Proctor wants the central bank to have wider goals..

South African economy is slipping and in May 2017 the central bank head was quizzed by academicians of the region.  The role of Government and central bank is being seen with deep suspicion.

Thus, it was quite something to read the Public Proctor getting into act and asking the central bank to have wider goals:

What kind of financial system is sure to collapse if the central bank cares about people’s well-being?

The recommendation by South Africa’s Public Protector that the Reserve Bank’s mandate change, says much about Busisiwe Mkhwebane, none of it flattering. It says just as much about mainstream economic debate – and none of that is flattering either.

Mkhwebane recommended that the central bank’s constitutional mandate, which makes protecting the currency its primary goal, be changed to one which requires it to “promote balanced and sustainable economic growth while ensuring that the socio-economic well-being of the citizens are protected”. She also said the constitution should require the bank “to achieve meaningful socio-economic transformation”.

The Central bank had no option but go to Court as anything from the Proctor is binding:

This triggered a wave of protests, as well as an announcement from the South African Reserve Bank that it would take the matter to court. The Reserve Bank had no option. The constitutional court has ruled that the Public Protector’s findings are binding unless they are challenged in court. Her recommendation wildly exceeded what she is allowed to do by the constitution – or democratic good sense – and the Reserve Bank could not allow it to stand.

Democratic constitutions are changed by large majorities of the people or their elected representatives – not by individuals. By making a binding recommendation that the constitution be changed, Mkhwebane signalled that she either doesn’t understand – or does not care – for democracy.

Her report is also very useful to a faction of the governing party which wants to deflect charges of state capture by claiming that white monopoly capital already controls the state. There are real questions about the fitness for office of a Public Protector whose report seems more interested in protecting connected politicians and business people than with taking the people’s will seriously.

But the reaction did not stop at insisting that Mkhwebane has no business telling the people what the constitution should say. Much of it objected not only to her saying what the Reserve Bank’s mandate should be, but to anyone at all doing that.

Hmm..

The Public Proctor website says:

The mandate of the Public Protector is to strengthen constitutional democracy by investigating and redressing improper and prejudicial conduct, maladministration and abuse of power in state affairs; resolving administrative disputes or rectifying any act or omission in administrative conduct through mediation, conciliation or negotiation; advising on appropriate remedies or employing any other expedient means; reporting and recommending; advising and investigating violations of the Executive Members Ethics Act of 1994; resolving disputes relating to the operation of the Promotion of Access to Information Act of 2000, and discharging other responsibilities as mandated by the following legislation:

  • Constitution of the Republic of South Africa Act 108 of 1996;

  • Public Protector Act 23 of 1994;

  • Executive Members Ethics Act 82 of 1998;

  • Promotion of Access to Information Act 2 of 2000 (PAIA);

  • Electoral Commission Act 51 of 1996;

  • Special Investigation Units and Special Tribunals Ac t 74 of 1996;

  • Protected Disclosures Act 26 of 2000;

  • National Archives and Record Service Act 43 of 1996;

  • National Energy Act 40 of 2004;

  • Housing Protection Measures Act 95 of 1998;

  • National Environmental Management Act 108 of 1999;

  • Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000;

  • Public Finance Management Act of 1999 and

  • Lotteries Act 57 of 1997.

Phew! The institutional history of countries is always so important and fascinating.

The article further mentions why the central bank should engage in the debate and not shut it down as is the case in SA.

This article is another instance of how central banks are being attacked worldwide over their roles and governance.

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