Public Protector Busisiwe Mkhwebane
Photo by: Reuters
South Africa’s Public Protector, Busisiwe Mkhwebane, sent shock waves across the country by calling for an amendment to the South African Reserve Bank’s constitutional mandate. The Conversation Africa’s Sibonelo Radebe asked Jannie Rossouw to share his views.
What do you make of the Public Protector’s recommendation?
It seems to me that the Public Protector acted outside her bounds when she made the recommendation to change the mandate of the South African Reserve Bank. The Public Protector’s findings and recommendations are binding, except if put aside by a court of law. This is why the central bank had no other alternative but to call for a legal review.
The Public Protector created a situation in which one Article 9 institution – the one she now heads up – has deliberately undermined the constitutional independence of another Article 9 institution, the Reserve Bank. Article 9 institutions are all guaranteed independence under the constitution.
It is unclear whose agenda the Public Protector is serving in pronouncing in matters outside her mandate.
What does it say about prevailing political environment?
It comes as the country’s political order is in regression, undermined by a growing list of scandals. When South Africa buried the apartheid order and became a democracy in 1994 it promised to observe a number of key principles that support a democratic order. The creation and maintenance of independent institutions was one of them. Like the judiciary and Chapter 9 institutions, the South African Reserve works well as an independent institution.
In the case of the Reserve Bank, the independence serves to protect it from the whims of politicians. This is ensured in section 225 which states that:
The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice, but there must be regular consultation between the Bank and the Cabinet member responsible for national financial matters.
Economic disasters can strike if the independence is compromised.
Central bank independence was under threat in the 1980s in South Africa. This was when the Reserve Bank was made to follow political orders about what level interest rates should be. It had to ask for political permission to adjust rates. This can only lead to bad monetary policy. The result was that inflation sky-rocketed. There were other negative effects too, such as investment uncertainly owing to swings in interest rates, low economic growth and financial instability.
From 1981 to 1989 the rate of inflation in South Africa averaged 14.7%. This caused considerable hardship for South Africans, mainly poor people, as they had difficulty coping with fast-paced price increases.
What are the likely consequences of the Public Protector’s action?
I am of the opinion that the Public Protector has overstepped the mandate entrusted to her office in challenging the constitutional mandate of the central bank. Clearly the mandate of the Public Protector cannot be to pronounce on the constitutional mandates of other bodies established in terms of South Africa’s Constitution.
The constitutionality of matters is a role entrusted to the Constitutional Court. By interpreting her mandate in the way she has, she raises uncertainty about what the demarcation of responsibilities is between the Constitutional Court and the Public Protector.
By defending its independence the Reserve Bank is protecting all bodies established in terms of the constitution against an errant Public Protector.
I hope that the Reserve Bank is successful in defending its case. The alternative – the court upholding the findings and recommendations of the Public Protector – could cause a constitutional crisis in South Africa. All constitutional bodies, such as the Auditor General, could then find themselves discharging their mandates subject to approval of the Public Protector.
Surely this could not have been the intention of those who drafted the South African Constitution.
What is your view about the current mandate of the Reserve Bank?
I think the current mandate of the Reserve Bank is sound.
Section 224 of the Constitution, which was highlighted by the Public Protector, says the primary object of the Reserve Bank is to:
protect the value of the currency in the interest of balanced and sustainable economic growth…
The main instrument it uses to achieve this goal is making sure that inflation is kept under control. When inflation is low, it implies that money does not lose value, as prices remain stable. On the other hand, if inflation is high, money loses value very rapidly, with a declining exchange rate and rapid price increases. Protecting the value of the currency through containing inflation is a sensible thing to do. I regard inflation as public enemy number one, as it makes people poorer as they have to cope with higher prices.
The argument is often made that the Reserve Bank is only serving the rich. This is untrue. By containing inflation, the central bank serves all South Africans, irrespective of whether they’re rich or poor. Both suffer when inflation is high, as they have to cope with higher prices.