South Africa’s ruling African National Congress gushed a double whammy of capital-flight-creating rulings this afternoon. The Rand is tumbling on Bloomberg headlines that the ANC is said to seek constitutional changes for land expropriation (from whites) without compensation, but perhaps even more worrisome, the ruling party has decided that the Reserve Bank must be wholly owned by the state:
- SOUTH AFRICA'S ANC ECONOMIC COMMITTEE CHAIR GODONGWANA SPEAKS
- S.AFRICA ANC SEEKS CONSTITUTION CHANGES FOR LAND EXPROPRIATION
- S. AFRICA'S ANC SAYS LAND EXPROPRIATION MUSTN'T HURT ECONOMY
- S. AFRICA'S ANC SAID TO DECIDE CENTRAL BANK MUST BE STATE-OWNED
Enoch Godongwana, head of the party’s economic transformation committee, told reporters that ANC’s National Executive Committee will seek an amendment to the constitution to allow for land expropriation, noting that the confiscation must be sustainable and mustn’t damage economy and food production.
South Africa’s ruling party has also accepted a proposal that the central bank should be wholly state-owned rather than an institution with private shareholders, according to two people familiar with the matter.
Delegates at the African National Congress’ elective conference in Johannesburg decided 100 percent of the Reserve Bank should belong to the government, said the people who asked not to be identified because it hasn’t been made public yet.
It appears investors are sellers of this renewed nationalism...We last saw these headlines in the summer - sparking a ZAR selloff of over 3.0%.
The ANC will now have to ask parliament to change the South African Reserve Bank Act. The party holds more than 60 percent of the seats in the legislature.
After fighting the anti-graft ombudsman’s mandate-change proposal, Reserve Bank Governor Lesetja Kganyago said the central bank would only oppose ownership changes if there is encroachment on its independence.