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Daily Maverick
2 hours ago
- Business
- Daily Maverick
Currency of credibility – Sarb nationalisation debate in Parliament opens a legacy hornet's nest
The SA Reserve Bank is still partly privately owned, a legacy quirk shared by only a handful of countries. Now, as Parliament reopens old calls to nationalise it, critics warn the real risk isn't who owns the shares, but whether new resolution powers and deposit insurance can protect ordinary savers – and whether the political signal could shake confidence in the rand. South Africa's central bank is an anomaly: part-private, with somewhere between 800 to 1,000 shareholders. In reality, those shareholders have no real say over monetary policy, but are largely a legacy from the early days of central banking – a relic that's survived global reform and local battles alike. That quirk has come before Parliament with public comment regarding the proposed, EFF sponsored, South African Reserve Bank Amendment Bill, which aims to nationalise the SA Reserve Bank (Sarb) – buying out its private shareholders and shifting the shares fully to the state – has resurfaced alongside the Financial Sector Laws Amendment Act, which arguably does far more to rewrite the country's bank failure rulebook. 'What is the problem with government being the sole shareholder on behalf of the 61 million people of South Africa?' asked EFF MP Omphile Maotwe during a Standing Committee on Finance hearing on 2 July 2025. 'If you say there will not be any change, so what is the problem when we want this thing to be in the state?' Old Mutual Wealth's chief investment strategist Izak Odendaal is blunt in his comment to Daily Maverick: 'The real shield for credibility isn't a share register but the constitutional guardrails that keep the Sarb's policy boring – on purpose'. That view clashes with economists and market watchers who say the real safeguard isn't who holds the shares, but whether the backstop works when it matters. What does history tell us? Dawie Roodt is an economist and a Reserve Bank shareholder, a fact that for transparency he declared to Daily Maverick. 'I use it for my work… but to be really honest, I have not been [to] an AGM for many, many years as well.' The dividend, he adds, is fixed and around R8 annually. 'Almost all central banks started off as privately owned banks,' he explains. That legacy has shifted in most countries, but not fully here. Private shareholders still appoint half the Sarb's directors, a governance guardrail Dawie believes still matters. 'I think that's a very good idea… you get this extra set of eyes. See what happened to Eskom or the Post Office – there was no private sector oversight.' New powers, old questions The deeper reform sits in the Amendment Act. It hands the Reserve Bank resolution authority status: power to step in if a bank fails, override insolvency, push through rescue or wind-down. It also launches the Corporation for Deposit Insurance (Codi), South Africa's first explicit deposit insurance fund – R20-billion funded by the banks themselves, not taxpayers. But that parachute remains untested. Odendaal argues that while Codi aligns South Africa with global norms, the real stress test is when confidence wobbles. 'A banking system runs on trust,' he told Daily Maverick. 'If that breaks, no insurance fund is big enough – so the signal from Parliament really does matter.' Defending the founding papers The Institute of Race Relations (IRR) argued a nationalisation-related point to Parliament that the Bill risks overstepping constitutional lines. '[This Bill] effectively provides for expropriation without compensation, which is not constitutional… Compensation has to be borne by agreement… No compensation can never be agreeable, and it must be just and equitable,' IRR representative Gabriel Crouse told MPs during the hearing. Treasury also raised somewhat adjacent nationalisation concerns. Chris Axelsson, Director-General for Tax and Financial Sector Policy, said during the hearing: 'The main point in terms of the amendment Bill that we are concerned about is the rights of the current shareholders… There's no recognition of what will happen if from one day they hold the shares and the next day the state owns those shares. It would be a forced takeover – like an expropriation of those shares.' He warned of 'bilateral investment treaties' that could drag South Africa into international legal fights. 'Changing the composition of ownership doesn't result in any material change in the current role of government… The current structure doesn't have any impact on the mandate and the independence of the Sarb.' For now, the cost of buying out shareholders remains unknown, but any forced expropriation could invite protracted litigation and ripple through foreign investor sentiment, a risk flagged repeatedly in hearings. Credibility is the currency For Roodt, that's the point. 'The only thing that changes is the signal – and that's not a good signal because what we have currently works very, very well,' he said. 'You don't even have to change policy. You just have to change the ownership… the market is going to lose confidence.' The myth that shareholders can steer monetary policy doesn't survive contact with how the Sarb works. 'As a shareholder, I have absolutely no say [in monetary policy]… the governor and deputy governors are presidential appointments,' Roodt said. 'The argument that shareholders influence policy is completely incorrect.' Despite the heat of the debate, no concrete timeline for the nationalisation amendment has been confirmed. Odendaal warns that drawn-out political noise alone can bleed credibility fast, even before a vote is called. Meanwhile, markets and savers watch whether the Sarb's resolution powers and its new insurance backstop can survive the first real test unscathed. The currency of credibility Odendaal's line on the real backstop remains verified: 'Deposit insurance is the parachute – don't panic, your money's safe,' he said. Odendaal says the Reserve Bank's real currency is credibility. 'You want your central bank to be dull and dependable,' he says. 'Once it becomes political theatre, you risk paying that cost in the currency.' Roodt's bigger worry is whether the Sarb stays ahead of the next wave: stablecoins, central bank digital currencies and the new money landscape. 'Money plays a crucial role in a modern economy… there are new kinds of money… the landscape could change completely,' he said. 'If the Reserve Bank doesn't stay on top of new technology… they risk becoming irrelevant.' 'Leave it as it is. If it's not broken, why fix it?' Roodt said. The test for South Africa's central bank won't be its share certificates, but whether the resolution powers, deposit backstops and credibility hold when the next wobble hits. DM
Zawya
05-06-2025
- Business
- Zawya
South Africa: Mining performance contracts in Q1 2025
Amongst the sectors that contracted in Q1 2025, mining performed the worst in the first quarter. In real terms, mining GDP declined by a notable 4.1% quarter-on-quarter (q-o-q). This decline subtracted 0.2 percentage points from overall real GDP. Amongst the sectors that contracted in Q1 2025, mining performed the worst in the first quarter Factors placing strain on industry The strain experienced in the mining industry is emphasised by the following: - The sector is in a technical recession. After also recording a (small) quarterly contraction of 0.1% in Q4 2024, the mining sector now meets the recession definition. This is characterised by two consecutive quarters of declining mining GDP. - Mining GDP has experienced a quarterly decline in four of the last five quarters. As an aside, the demand-side GDP data indicates that real private sector investment has also declined in four of the last five quarters. This speaks to low business morale and is an important factor that explains the sluggish GDP growth in recent quarters. - Compared to Q1 2024, real mining GDP declined by 4.2% y-o-y. - Poor mining sector profitability in the first quarter. This is reflected in Stats SA's gross operating surplus numbers, a broad measure of profitability. The poor profitability was despite a 1.3% q-o-q increase in the SA Reserve Bank's export commodity price index in Q1. This was driven by the sustained rise in the gold price. At least in part, the weak profitability can be explained by the poor production figures at the start of the year. - The compensation of mining sector employees increased by 2.6% y-o-y in the first quarter, below an increase of 3.9% in the non-mining sectors of the economy. PGM performed the worst Regarding the weak mining production in Q1, Stats SA mentioned that the production of platinum group metals (PGM) performed the worst. Disruptions to PGM mining activity due to heavy rain in the northern provinces in January and February largely accounts for the underperformance. The weather-related disruptions were not limited to the PGM sector, with production also curtailed in the chrome, gold and building materials industries. Because weather was the major driver of the poor mining sector performance in Q1, we should see some recovery in the second quarter. Outlook For a durable recovery, mining requires an improved regulatory environment. In the near term (next several months), mining production should recover from the Q1 weather-induced weakness. However, uncompetitive electricity pricing, ongoing constraints in rail and port logistics as well as global trade tensions, are likely to cap the pace of the recovery in mining output and profitability. Therefore, it remains essential that the domestic mining policy environment is supportive of a growing mining sector. The Minerals Council continues to review the draft Mineral Resources Development Bill and will further engage the Department of Mineral and Petroleum Resources to co-create a regulatory environment that will attract and support investment in exploration, new mine development and the sustainability of existing mines. This is to unlock the potential of South Africa's mineral resources to support higher rates of economic growth and job creation. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
IOL News
28-05-2025
- Business
- IOL News
South Africa's take-home pay growth slows as interest rate decision sooms
Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank scheduled for Thursday. Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank (SARB) scheduled for Thursday. The BankservAfrica Take-home Pay Index (BTPI), tracking salaries of approximately 3.8 million workers, reported a nominal average take-home pay of R17 495 in April, down 2.0% from R17 846 in March. Despite this slowdown, pay remains 13.8% higher than the R15 370 recorded a year ago. Shergeran Naidoo, BankservAfrica's head of Stakeholder Engagements, noted that while take-home pay has seen gains since mid-2024, recent global and domestic economic pressures are dampening momentum. 'The upward trend in salaries marked a positive shift after years of stagnation, but escalating global trade tensions are weighing on confidence, slowing economic activity,' Naidoo said. Real take-home pay, adjusted for inflation, also declined by 2.2% to R15 005 in April from R15 344 in March, though it remains above year-ago levels. Independent economist Elize Kruger noted that South Africa's consumer inflation, which dropped to 2.8% in April 2025, has bolstered purchasing power. 'With headline CPI projected to average 3.4% in 2025, down from 4.4% in 2024, we're seeing the lowest inflation since 2020's 3.3%,' Kruger said. She attributed this to a stronger Rand and falling international oil prices, which are expected to drive further fuel price cuts in June despite a recent fuel levy hike. However, economic challenges persist. Early data suggest South Africa's quarterly 2025 real gross domestic product growth may be flat or negative, reflecting global trade war impacts and subdued domestic demand. The repo rate, currently at 7.5%, translates to a real repo rate of 4.1% - well above the neutral rate of 2.8%. This restrictive monetary stance, combined with unchanged tax brackets and new levies from the 2025 National Budget, continues to squeeze households. Kruger said a modest 25 basis-point rate cut at the upcoming SARB Monetary Policy Committee meeting could provide relief. 'Lowering borrowing costs would ease pressure on households and businesses, potentially boosting confidence and investment,' she said. However, she cautioned that a more aggressive cut is unlikely given the SARB's cautious approach. Global trade disruptions and sluggish local growth have trimmed economic forecasts, raising concerns about job and income prospects. Kruger stressed the need for structural reforms to address energy, logistics, and governance bottlenecks. 'These reforms are critical to unlocking growth and shielding the economy from external shocks,' she said. The low inflation environment, supported by a recovering Rand and cheaper oil, offers the SARB room to ease monetary policy, following the lead of other developed and developing economies. Yet, debates over lowering the inflation target band could delay relief. 'Prolonged high interest rates are punishing the economy unnecessarily,' Kruger warned. As South Africans await the SARB's decision, the slowdown in take-home pay underscores the delicate balance between fostering growth and managing inflation. With global uncertainties looming, the central bank's next steps will be pivotal for salary earners hoping for financial respite. BUSINESS REPORT Visit:
The South African
13-05-2025
- Business
- The South African
Stokvels in 2025 are becoming BIG business for banks
It's no surprise that stokvels in 2025 are growing at an exponential rate. Traditionally, the grassroots money-saving groups grow in times of financial distress and institutional mistrust. Interestingly, however, inflow into stokvels in 2025 is occurring mostly at mainstream banks. According to FNB, its stokvel accounts grew by a staggering 66% year-on-year, to more than R13 billion by December 2024 (versus R8 billion in 2023). As a result, South Africans are discovering that saving money in groups can be more effective than going alone. FNB says the positive trend for stokvels in 2025 proves that people want a safe and easy means for saving what meagre income they have. More than a third of FNB's account members are investing in stokvels in 2025. Paradoxically, perhaps, for such a traditional, grassroots saving system, the rise in popularity of stokvels in 2025 is due to digitisation, asserts FNB. Specifically, the digital stokvel account – launched in 2020 as a response to the COVID-19 pandemic – allows members to manage, contribute and share savings with no fees. In light of this growth, many stokvels in 2025 are starting to look at expanding their investment strategies into shares, unit trusts, and more. And while the majority of South Africans still function as a cash-first society, it is encouraging to witness the adoption of digital solutions. Moreover, the National Stokvel Association finds that digital stokvel solutions are increasing. As technology develops to enable real-time payments, digital channels are increasingly displacing cash in lower-value transactions. Specifically, mobile banking apps are replacing older interfaces as preferred payment methods. Not only is this more convenient but it is also safer. Even after it was revealed by the SA Reserve Bank (SARB) that more than 50% of South Africans draw their salaries immediately, Standard Bank says it has seen 20% growth in digital payments in the last year. 'This increase doesn't just reflect heightened consumer convenience, but it represents a fundamental shift in how South Africans handle their finances,' surmised the bank. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The South African
07-05-2025
- Business
- The South African
WHY the majority of South Africans prefer cash in hand … still
Despite the sharp digitsation of banking, the majority of South Africans prefer cash transactions. New data suggests that digital transactions may be on the rise for wealthier residents/businesses, but the majority of South Africans prefer cash in hand. Impressively, even with the rise in digital banking, cash transactions have not decreased over the last decade. As a result, the lower-income majority in South Africa still prefer dealing in hard currency. Many informal traders and spaza shops are simply unable to transact digitally. Image: File As interesting as it sounds, the fact that most South Africans still prefer cash is rather a large issue for the SA Reserve Bank (SARB). According to the latest insights, this trend suggests that most residents simply don't trust banking institutions. Moreover, because nearly 45% of South Africans receive some form of SASSA grant, many want to keep additional income undisclosed, or 'off the books.' Likewise, the sentiment seems to be that money recorded in a bank account may draw attention from SARS. A key reason why many low-income residents draw their money immediately is so it remains undisclosed to SASSA. Image: File However, there is also a strange divergence occurring at a retail level in South Africa. Because, in middle- to high-income areas many merchants are going cashless. While, in the informal economy, many shops shun card transactions. This means there is a large amount of cash circulating South Africa. Far higher than other comparable emerging economies. Standard Bank's Nthabiseng Mohale revealed broadly the same amount of currency has been circulating the country since 2009 – roughly R171 billion. Therefore, 'Cash remains deeply embedded in the country's consumer psyche,' said Mohale. Informal saving 'stokvels' is another reason why South Africans prefer cash in hand. Image: File Furthermore, the SARB says broadly half of all adults withdraw all their salary money as soon as it is deposited in their accounts. Conversely, digital payments in South Africa have enjoyed an 8% increase annually. This represents a clear value proposition to retailers and consumers who don't wish to handle money, too. Nevertheless, the majority of South Africans prefer cash because it represents a tangible, familiar way of managing one's finances. Many are wary of hidden fees or unauthorised/bounced debit orders. Likewise, cash is also perceived as a safeguard against unforeseen financial burdens. Which side of the fence do you sit? Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
