Reserve Bank ownership: Proposal divides policymakers, economists
A Bill introduced by MP Julius Malema proposing the nationalisation of the South African Reserve Bank (Sarb) has stirred significant debate among policymakers, economists, and civil society.
Source: The Banking Association South Africa.
The SARB Amendment Bill [B 26—2018] aims to transfer state ownership and governance powers to the government, a move the Economic Freedom Fighters (EFF) argue is necessary for financial inclusion and socio-economic transformation.
However, opponents such as Free SA warn that the Bill threatens to undermine the central bank’s independence—a cornerstone of economic stability—and could lead to inflationary risks and reduced investor confidence.
The Bill proposes making the State the sole shareholder of the Sarb and shifting key governance powers, including the appointment of directors and auditors, to the Minister of Finance.
Fiscal control risks
“Handing full control of the Sarb to political authorities opens the door to fiscal dominance, inflationary pressure, and potentially disastrous economic mismanagement,” flags Reuben Coetzer, spokesperson for Free SA.
In its submission, Free SA outlines a series of legal, economic, and reputational risks associated with centralising the Reserve Bank’s governance in the executive branch. Drawing on cautionary examples from countries like Zimbabwe and Venezuela, the organisation highlights how diminished central bank autonomy has previously led to hyperinflation, currency collapse, and widespread poverty.
Among the key dangers flagged in the submission are:
Inflation risk: A politically controlled Sarb may be pressured to finance government deficits, weakening the rand and pushing inflation higher.
Governance concerns: Transferring shareholder powers to a single political office removes external oversight, increasing the likelihood of politicised appointments.
Legal ambiguity: Although technically within constitutional bounds, the Bill may violate the spirit of Section 224, which mandates independence “without fear, favour or prejudice".
Investor flight: The perception of weakened monetary policy independence could drive capital outflows and raise borrowing costs.
Challenging private power
But Malema asserts that nationalising the South African Reserve Bank will effectively facilitate financial inclusion. The Economic Freedom Fighters (EFF), he said, views the Sarb as a crucial instrument for socio-economic transformation. It argues that the bank should not remain in the hands of private individuals and institutions but should serve the broader public interest.
As far back as 2018, Malema highlighted that six of the largest banks control 90% of all banking facilities in South Africa and are predominantly owned by white minorities, who often apply exclusionary criteria. He believes that nationalising the Sarb would address these disparities and make the institution more reflective of South Africa's demographics.
In parallel, Malema and the EFF have also backed the Banks Amendment Bill, which seeks to amend the Banks Act to allow state-owned companies—such as Postbank—to register and operate as banks. (While Postbank now exists as a state-owned commercial banking entity in legal structure, it has not yet submitted its licence application to the Prudential Authority and therefore is not operating as a fully licensed bank.)
Financial Services
Smart IDs: From government grants to payment cards? The deal that's raising eyebrows
Katja Hamilton 7 Feb 2024
The Banks Amendment Bill would introduce legislative changes to enable Postbank to operate as a fully licensed, State-owned commercial bank by addressing key legal limitations in the Banks Act (No. 94 of 1990).
Malema and the EFF argue that this intervention would enable the State to provide essential financial services and expand access to credit, particularly for underserved communities.
It is within this ideological framework and long-standing push for financial reform that the EFF has persistently pursued the legislative process required to bring the SARB Amendment Bill to Parliament.
Nationalisation in motion
The Bill was initially introduced to Parliament in August 2018 but lapsed in May 2019 with the dissolution of the sixth Parliament. It was subsequently revived in October of the same year.
In 2020, the EFF and Parliamentary Legal Services briefed the Standing Committee on Finance on the Bill, following an initial round of public hearings held in November 2018. Despite this early engagement, the Bill once again lapsed in May 2024, before being revived for a second time in July 2024.
After the EFF called for the Bill to be prioritised in the new parliamentary administration, the Standing Committee on Finance resolved in September 2024 to conduct a second round of public hearings. This decision followed a briefing by the Parliamentary Budget Office, which presented its analysis of the Bill’s potential socio-economic impact.
With limited progress in processing the Bill, EFF MP Hlengiwe Mkhaliphi raised the matter with the National Assembly Programme Committee in late March 2025 and was assured that a response would be provided at the following meeting.
Despite the Bill’s steady advancement through parliamentary channels, Coetzer remains resolute in his opposition, warning that the cost of nationalisation may far outweigh its symbolic value:
“Symbolic ownership should not come at the cost of real economic harm. The Sarb is one of South Africa’s most respected institutions. Undermining its independence, whether deliberately or by accident, will hurt ordinary South Africans most—especially the poor, who suffer first and worst from inflation.”