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Oliver Dickson
The Public Protector’s report on the Absa bailout has received much criticism due to her remedial actions. Most of it is undeserved. Let’s break it down:
The promotion and prioritisation of socio-economic rights has been the snail in the race in our democratic project of South Africa. It in almost unquestionable whether South Africans all have access to political rights, but it is almost entirely questionable whether South Africans, particularly perpetually disadvantaged and poor South Africans, have access to socio-economic rights.
This isn’t a problem unique to South Africa, this is a problem in most parts of the world: Most states’ approach to providing and protecting human rights, as enshrined in the UN Human Rights Charter, prioritises political rights over socio-economic rights, while the social democracies of the world prioritise it the other way around, most, very successfully.
We have come to learn in South Africa that our prioritisation of political rights over socio-economic rights disables us from closing the inequality gap, eradicating poverty wholesale and transforming the economy of South Africa, more generally.
There is now a political push-back to this approach and prioritisation by political parties, with the advent of the EFF, BLF and certain civil society organisations such as Accountability Now. The government, state organs and the law of the country are being continuously pushed to rearrange that rights prioritisation. The CIET report by the Public Protector, however, seems to suggest that such a push may also be coming from within state organs, itself.
The Public Protector includes within the Bankorp bailout investigation report (CIET Report) remedial actions, a recommendation that Section 224 of the Constitution be amended to include within the mandate of the Reserve Bank the responsibility to ensure that the socio-economic wellbeing of the citizens are protected, in addition to its mandate of protecting the currency and ensuring price stability. This has received much critique.
The loudest critique to this recommendation is that it is not within the powers of the public protector to recommend a constitutional amendment. Those in the centre of this, including the governor of the Reserve Bank, seem to suggest that this recommendation is wrong because Absa owes the Reserve Bank absolutely nothing pertaining to this bailout.
All of these critiques are intellectually lazy because none of it speaks to the heart of the matter. The more important and more interesting debate here is not whether the public protector is in over reach of her powers or whether or not Absa owes the state any money – those debates should obviously happen.
However, the important debate here is whether the recommendation by the Public Protector – that section 224 of the Constitution be amended – is an important recommendation that deserves due consideration and whether such an amendment would help actualise the socio-economic rights of South Africans by some degree.
And the answer here is YES!
As it currently stands, section 224 states that the primary objective of the South African Reserve bank “is to promote balanced and sustainable economic growth in the Republic” and by that SARB expresses its mandate as primarily to ensure price stability and to protect the currency.
That means any and all prioritisations that the Reserve Bank makes in its day to day functions is guided by the question “What best protects the currency?” Sadly, what best protects the currency doesn’t always include the long term socio-economic rights of the poorest of the poor (this is not to suggest that it doesn’t include it at all). Importantly, the answer to “What best protects the currency?” is almost always discretionary and speculative, at best.
It often centres around the immediate comfort of investors and the market – which often comes at the cost of the poor and disenfranchised. The fear that investors will turn away from South Africa seems to be the generic answer to “what best protects the currency”.
This fear is often over-stated and irrational – but importantly, it’s often used as a mechanism to delay the transformation of our economy. This is why, 23 years into our democracy, land is still within the hands of a white minority, the financial services sector is still largely untransformed and mines are still not state owned. It is out of a fear that investors will run away.
Crucially, we need to ask whether the prioritisation of price stability and currency protection are always mutually exclusive from ensuring the socio-economic wellbeing of South Africans – so much so that SARB can only do one of the two?
The answer is NO! It can certainly do both of them, as its primary objective. The argument that the reclamation of the R1.125 billion by SARB from Absa would destabilise the banking sector, send the rand into free fall and scare away investors does not seem to be entirely true.
Through mutual agreement between SARB and Absa, nothing stops them from agreeing on a repayment program and repayment period that is comfortable for Absa, the sector and SARB – one that would not quake the economy.
Importantly then, what could an additional R1.125 billion to the fiscus do for the poor and marginalised of this country? A great deal of a lot.
A certain school of thought argues that the socio-economic wellbeing of the poor is directly tied to price stability and a strong and stable rand, therefore, SARB already acts in the best interest of the socio-economic wellbeing of the poor.
If that is the case, then this recommended constitutional amendment doesn’t change anything and in fact only cements the mandate of SARB – and by that logic, there seems to be no need to challenge such a constitutional amendment, regardless of where it comes from.
- Dickson is a socio-political analyst and an award winning competitive debater. Follow him on Twitter: @Oliver_Speaking.
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