EFF Calls for Nationalisation of Reserve Bank Following Repo Rate Announcement
By Thabo Mosia
The Economic Freedom Fighters (EFF) have voiced strong opposition to the recent decision by the South African Reserve Bank (SARB) to reduce the repo rate by 25 basis points, bringing it down to 8% per annum. The party’s National Spokesperson, Leigh-Ann Mathys, issued a statement on Thursday, criticising what the EFF perceives as SARB’s “extreme conservatism” in addressing the economic challenges faced by the country.
In her statement, Mathys acknowledged that while the rate reduction may provide temporary relief to the working class and consumers, it falls short of what is required to meaningfully address the underlying issues plaguing the South African economy. She pointed out that South Africa has struggled to achieve more than 2% growth over the past five years under President Cyril Ramaphosa’s leadership, with key industries, including agriculture, mining, and manufacturing, either in contraction or experiencing only marginal growth.
Economic and Unemployment Crisis
The EFF underscored that the consequences of SARB’s economic policies, coupled with a stagnating economy, have exacerbated the unemployment crisis. As of 2024, more than 12 million South Africans are unemployed, with over 3 million individuals having abandoned their job searches altogether. This, the party contends, reflects the failure of neoliberal policies that place foreign investment and financial market interests above the needs of the broader population.
Mathys further highlighted how the decline in key industries, particularly those capable of producing goods and creating sustainable jobs, has led to worsening inequality in a country rich in natural resources. The EFF stressed the need for urgent public sector investment in infrastructure, which they believe should be funded through state interventions, including affordable loans from pension funds like the R2.6 trillion in state-guaranteed assets managed by the Public Investment Corporation (PIC).
Criticism of SARB’s Focus on Foreign Interests
The EFF’s statement criticised the SARB’s adherence to neoliberal economic policies, arguing that it prioritises foreign investment in the financial sector at the expense of long-term growth. According to the EFF, the South African economy has been overly focused on attracting speculative investments, particularly in the Johannesburg Stock Exchange (JSE), which, they argue, operates more like a “gambling platform” than an engine for meaningful economic growth.
This stance is in stark contrast to the government’s optimistic reception of the rate cut. According to a statement from the Government Communication and Information System (GCIS), the SARB’s decision to lower the repo rate is a welcome relief for cash-strapped consumers, particularly with inflation now within SARB’s target range of 3% to 6% . The government has pointed out that this combination of lower inflation and a reduced interest rate will lower borrowing costs, potentially helping to stabilise the economy and support household income .
Global Context and the SARB’s Mandate
The EFF’s statement did not shy away from addressing the global context in which the SARB operates. While other central banks around the world, including the Bank of England, the European Central Bank, and the US Federal Reserve, have cut rates in response to global economic shifts, the EFF believes SARB has been too slow in adapting to these trends. They argue that SARB’s decision-making remains overly influenced by the interests of Western financial institutions rather than prioritising the needs of the South African people.
The Path Forward: EFF’s Call for Nationalisation
At the heart of the EFF’s critique is the call for the nationalisation of the South African Reserve Bank. The party asserts that the only way to break free from what they see as SARB’s misguided, profit-driven mandate is to transfer ownership of the bank from private entities, including European citizens, to the state. They argue that this shift would enable SARB to focus on more critical development objectives, such as economic growth and job creation.
To this end, the EFF has revived the South African Reserve Bank Amendment Bill, originally introduced by the party’s leader, Julius Malema. This bill aims to nationalise the central bank, placing it under state control. The EFF is pushing for the swift finalisation of this bill, with a call for public submissions by the end of September 2024 .
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