Sunday, June 25, 2017

It's hard to get rid of the governor of a central bank. Here's why

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South Africa’s former finance minister Pravin Gordhan chats with Lesetja Kganyago, governor of the country’s Reserve Bank.
Reuters/Siphiwe Sibeko

With the continued harassment of South Africa’s Finance Minister Pravin Gordhan, it has become patently clear that no institution will be spared in the wave of state capture that is sweeping through the country.

The finance ministry has been at the centre of this wave for nearly a year. The latest move against Gordhan comes against a backdrop of efforts to wrest control of this particular portfolio. The most spectacular was President Jacob Zuma’s decision in December 2015 to fire then Finance Minister Nhlanhla Nene and replace him with someone more agreeable to his plans.

That plan backfired. President Zuma had no option but to reappoint Gordhan, the previous Minister of Finance. But Gordhan is now back in the firing line after refusing to give ground to Zuma on some crucial issues. Rumours persist that the finance minister is about to be fired or charged – possibly even arrested – by the elite police unit, the Hawks.

Is the Governor of the SA Reserve Bank next? This consideration comes on the back of political attacks directed at the country’s central bank by senior members of the governing African National Congress (ANC) aligned with Zuma.

The Deputy Secretary General of the ANC Jessie Duarte has raised questions about the central bank’s role. She is suggesting that the bank serves partisan interests because it has private shareholders.

It has also emerged that Mosebenzi Zwane, the Minister of Mineral Resources, tabled a working paper to the Cabinet recommending that the power to issue banking licences should be taken away from the SA Reserve Bank and given to the minister of finance.

But can the Governor be removed as easily as a minister of finance? My reading of the SA Reserve Bank Act is that the answer is no. The current legislation makes no provision for the President to dismiss the central bank governor.

Holding central bankers to account

Central banks’ governors need security of tenure once appointed. Security of tenure allows them the opportunity to conduct monetary policy in the interests of the whole country without fear of dismissal.

Imagine a scenario in which a central bank governor was dismissed every time he or she took a monetary policy decision that the government disliked - for example by raising interest rates. This would render the job unworkable.

Because of this, the appointment of central bank governors has been designed to ensure that they can get on with their mandate without political interference.

The Governor of the SA Reserve Bank is appointed by the President of the Republic after consultation with the Minister of Finance and the Board of the South African Reserve Bank. Appointments are for an initial five years. Once the first term is served, the President can reappoint the Governor for an unlimited number of further terms, each of a maximum period of five years.

So much for the appointment. What about getting rid of a governor?

The SA Reserve Bank Act lists conduct that will render the Governor unsuitable to complete any term of appointment. Other than on these grounds, no provision is made for the dismissal of the Governor.

So how would a governor would be removed if he or she was considered to be unsuitable for office? This is open to some debate, but it seems that there might be at least two possibilities:

  • The government (including Parliament) or any other party can take legal action to have the governor declared unfit to hold office. The governor and his deputies serve as directors of the central bank. As such they are bound by rules which demand that they remain fit and proper to serve. The act sets out in some detail what fit and proper entails. It includes avoiding conflicts of interest between personal interests and the interests of the central bank and not working for a bank. If the incumbent falls short of any of these requirements, there is recourse to taking legal action against them.
  • Parliament can amend the South African Reserve Bank Act to give the President power to dismiss the Governor.

My understanding is therefore that the President cannot simply remove the Governor of the SA Reserve Bank. It would require - at a minimum - legal action or a parliamentary process.

Central banks with shareholders

Duarte’s main point of contention is that South Africa’s central bank has private shareholders which means that it cannot act independently. This is not true.

South Africa isn’t the only country with a central bank owned by private shareholders. While most central banks in the world are publicly owned, there are a handful that aren’t. These include Belgium, Greece, Japan, Switzerland and Turkey. In the case of the US and Italy, only shareholding by commercial banks is allowed.

In none of these instances is there evidence that private ownership affects the institutions’ independence. In fact, it can be argued that a private ownership structure adds to the transparency and accountability of central banks. For example, the SA Reserve Bank publishes a comprehensive annual report for distribution to shareholders. In addition it has to hold an annual ordinary general meeting of shareholders at which the Governor responds to questions about the business of the central bank and the conduct of monetary policy.

The link that Duarte tries to make between the central bank’s shareholding and its approach to exchange rate policy simply does not exist. The SA Reserve Bank made this point clearly in a statement it issued shortly after Duarte’s salvo. This points out that shareholders play no role in the formulation and implementation of monetary policy.

On its approach to exchange rate policy, South Africa’s central bank takes a stance similar to most central banks in the world: namely, that any attempt to influence the value of a currency by intervening in the market is futile. China is an exception to this rule. It has a controlled economy and has substantial foreign currency reserves with which to support the yuan in the open market.

The ConversationThe SA Reserve Bank serves the best interests of all South Africans. The Governer’s security of tenure supports the efforts of the central bank to contain inflation. At the same time a structure of private shareholders in the central bank helps to improve monetary policy transparency.

Jannie Rossouw, Head of School of Economic & Business Sciences, University of the Witwatersrand

This article was originally published on The Conversation.

South Africans don't know much about science. Why this is a problem

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Most South Africans don’t visit places where they can learn about science such as zoos and museums.
Reuters/Siphiwe Sibeko

From the microchips in smart phones to the largest jumbo jets, science and technology influences the way people interact with the world around them. It brings them closer to friends and family, enhances health care, secures assets and keeps the world moving forward.

Traditionally, people have turned to science for certainty and confirmation. But in a sea of social media and allegations of fake news, it has become increasingly harder for people to distinguish fact from fiction. As a result, science’s authoritative place in society is being questioned more and more. This has the ability to erode the value and importance of science and technology in general.

One way to tackle this is to monitor people’s understanding of the scientific areas that are trending to establish what their understanding of science is.

We set out to measure South Africa’s understanding of science by conducting a survey looking at how much people know about different areas of science, what their attitudes are, what interests them and how they get their information.

Not surprisingly people know more about areas of science that influence them directly. Personal health, for example, takes precedence over astronomy. But at least 40% of the people we asked had no interest in any area in science. And few people are doing activities where they could learn about science.

Unless these gaps are bridged, South Africans will not see the value that science and technology adds to their daily lives. And the country will not be able to use the power of science to find innovative solutions to its problems.

Where the interests lie

To measure how people understood science, we did six exercises with our respondents.

In one, for example, we gave them nine true or false questions to see how much they knew about science. In another exercise we asked them which areas of science they were more interested in. We gave them a list of sevens areas:

  • technology and the internet
  • climate change
  • economics
  • politics
  • energy
  • astronomy, and
  • medical science

The respondents were more interested in areas such as technology and the internet but less in climate change, economics and energy.

Although most of the respondents had a positive attitude to science, nearly 40% were ambivalent. This is concerning because it means they could be open to questioning valid science in the future.

We also wanted to know how people learnt about science. We gave people 11 options of places they could find information about science. Radio (69.4%) was the primary source of information, followed by free-to-air TV (65.0%) and word of mouth. Surprisingly, online-based information sources like social media, blogs, institutional websites and news websites were at the bottom of their list of information sources.

A scientific way of thinking

Science should be considered as a systematic way of thinking to build knowledge and test experience through factual observation. Not just as a career or qualification.

RĂ¼diger Laugksch from the University of Cape Town, a researcher in scientific literacy and education in South Africa, argues that improving scientific literacy in South Africa is important for three reasons.

Firstly, it will lead to the country having a pool of people who can drive innovative and smart ways of doing things.

Secondly, it will mean that citizens will have a certain level of proficiency in science and technology. This will help them to make knowledge-driven decisions.

Thirdly, scientific literacy can help people make informed and effective decisions about public policy and nation building.

The ConversationThe products of science – like knowledge, technologies and innovations – can all close the gaps in development and infrastructure. But first, South Africa needs to get to the point of valuing and understanding the contribution science makes to daily life.

Dr Saahier Parker, Chief Researcher at the Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

This article was originally published on The Conversation.

South Africa's Jacob Zuma is fast running out of political lives

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South Africa’s President Jacob Zuma isn’t blinking despite suffering another resounding loss in the Constitutional Court.
Reuters/Mike Hutchings

Like the proverbial cat with nine lives, South Africa’s scandal-ridden president, Jacob Zuma, may well have escaped yet again with his political life. This despite another resounding loss in the country’s highest court.

The Constitutional Court ruled that there was no constitutional bar to the Speaker of the National Assembly, Baleka Mbete, opting to employ a secret ballot in a no confidence vote in parliament. She’d originally asserted that she didn’t have the authority to make this decision, prompting several opposition parties – furious at Zuma’s increasingly dictatorial project of “state capture” – to take the matter to court.

South Africa’s judicial system continues to hold firm. This is despite the fact that there appears to be a concerted and well coordinated campaign by a group of politicians and businessmen to undermine the integrity of state institutions as well as to exploit their weaknesses to prosecute a project of self-enrichment and rent-seeking. The campaign is pivoted around the now notorious Gupta family.

Zuma has been brought to book repeatedly by the courts. In March last year, the Constitutional Court found that Zuma, as well as parliament, had violated the Constitution. It did so by failing to defend and uphold the constitutional authority of South Africa’s ombud – it’s Public Protector – who had conducted an investigation into the president’s private homestead, Nkandla. She found that Zuma and his family had unlawfully benefited. He was required to pay back nearly R8 million to the state. Yet, following a half-baked apology, Zuma held onto power.

In parliament he’s survived a number of no confidence votes mounted by the opposition. He also dodged two such attempts in the national executive committee of his own party, the ruling African National Congress (ANC) – one in November last year and most recently in late May. He’s been backed by an increasingly slender yet sufficient number of loyalists and nationalists for whom Zuma provides political cover for their populist and self-serving call for “radical economic transformation”.

Tipping point

The tipping point for the latest legal skirmish was Zuma’s reckless and apparently self-interested decision to fire South Africa’s widely respected minister of finance, Pravin Gordhan, on 30 March this year.

Despite a cold war with Zuma, Gordhan had held the line against “state capture” for 15 months after his reappointment in December 2015. And so as night follows day, Gordhan’s removal precipitated an immediate ratings’ agency downgrade. The downgrade added further pressure to an already weak economy, undermining any prospects of economic growth to address the high levels of unemployment and inequality that threaten its precarious social stability.

Once again, in response to Zuma’s ill-considered cabinet reshuffle, the largest opposition party, the Democratic Alliance, tabled a motion of no confidence in the national assembly. There has been an apparent shift in attitude in the ANC’s parliamentary caucus suggesting that the no confidence vote might have a chance of succeeding. Many ANC MPs are now anxious about the party’s prospects at the 2019 national election and their own political future.

But there’s also concern over Zuma’s apparent hold over many backbench MPs. Many of them fear retribution and expulsion should they vote against the president. If an MP ceases to be a member of the party on whose list they stood at election time, they automatically lose their seat in parliament.

Because of this one of the smaller opposition parties, the United Democratic Movement, requested the speaker to use a secret ballot to enable MPs to vote with their conscience. Mbete, who is also the national chairperson of the ANC, refused. She claimed that she did not have the power to make the decision.

The Constitution is unclear. It provides for the president and the cabinet to be removed by the national assembly by a bare majority following “a vote”. In the secret ballot case, the court could have interpreted “a vote” to mean “a secret vote”. Equally, however, the failure of the Constitution to specify a secret ballot in the case of a no confidence vote could mean an open ballot was intended.

So on June 22, the Constitutional Court took neither route. It held that,

the Constitution could have provided for a vote by secret ballot or open ballot. It did neither.

Rather it held that,

the national assembly has … in effect empowered the Speaker to decide how a particular motion of no confidence in the President is to be conducted.

Accordingly, the Court set aside the Speaker’s decision that she lacked constitutional power to order a secret ballot. Notably, Zuma had entered the proceedings to argue, like the Speaker, that there was no power to order a secret ballot and no need to do so.

The court pointedly observed that Mbete has “an enormous responsibility” to ensure that when she decides whether on a “situation specific” case-by-case basis a secret ballot should be employed. She should do so on a “rational and proper basis”, with due and careful regard to a purpose of the no confidence vote. Importantly, the court noted that the primary duty of MPs is to the Constitution and not to their parties.

The implication is that the ability of MPs to vote with their conscience in such a situation is clearly a factor that the speaker should take into account when making her decision. Some critics will regard the court’s “guidance” as insufficiently precise. But the court was clearly anxious not to encroach on separation of powers – perhaps mindful of the virulent claims from some quarters of “judicial over-reach”.

Mbete will have to choose between her loyalty to her president as one of the ANC’s “top six” leadership and her duty to the Constitution as speaker.

Zuma unperturbed

Later on the same day of the judgment Zuma was answering questions in parliament. Judging by his typically thick-skinned signs of confidence, the president is not unduly perturbed by the court’s ruling.

While the court stated the power to decide on whether to hold a secret ballot or not should “not be exercised arbitrarily or whimsically”, Zuma has already made it clear that he expects Mbete to decide that a secret ballot is inappropriate or unnecessary.

Parliament returns after its current mid-year winter recess in August. If Mbete once again declines to hold a secret ballot, her decision will, in turn, then be subject to judicial review application. In due course the court could be forced to order her to hold a secret ballot.

So despite the Constitutional Court judgment, and the lucidity of it’s reasoning, a no confidence vote held with a secret ballot is still some way off. Until then, Zuma lives to fight another day.

But with every day passing, December’s ANC national elective conference gets closer. Then Zuma’s term as president of the ANC expires. Then his power will decline potentially decisively.

The ConversationOne way or another, Zuma is running out of political lives.

Richard Calland, Associate Professor in Public Law, University of Cape Town

This article was originally published on The Conversation.

Friday, June 23, 2017

Alien animals and plants are on the rise in Africa, exacting a growing toll

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The larger grain borer beetle attacks crops like maize and cassava, threatening food security.

This article is the first in a series The Conversation Africa is running on invasive species.

Let’s say you’re travelling from Uganda to South Africa for business. You finally arrive at your hotel after a long day and decide to change before dinner. You unlock and unzip your luggage, but there’s something in your bag that you didn’t pack. As you reach for a clean shirt, a moth flies out. Did that come with you all the way from Uganda? It’ll be fine, right? Surely, something so small won’t cause any harm.

Species are intentionally or accidentally transported by humans between continents to regions where they are not native. With the help of humans or by natural means like flight, these alien species can also spread within continents.

Their spread within continents can be rapid, affecting both the ecology as well as societies and the economy. Unfortunately, it’s really challenging to prevent species from spreading. Given the vast amount of people and goods that are transported between and around continents they can easily be moved across oceans as well as between countries.

The spread of alien species within Africa is increasing. Since 2000 more alien insect pests of eucalyptus trees have spread to other African countries from South Africa, than have been introduced to these African countries from other continents. To manage the spread of these alien species countries need to co-operate, communicate and share information and skills..

The spread of alien species

Many alien plants and animals have been introduced to Africa from other regions and then have spread from country to country, often having devastating effects.

Take the larger grain borer beetle, (Prostephanus truncatus) which is thought to have arrived on the continent in imported grain from Mexico and central America. The beetle was introduced to Tanzania before 1984, Togo before 1981 and Guinea before 1987. It then spread across the continent and within 20 years could be found further south in South Africa.

The beetle attacks crops such as maize and cassava, threatening food security and the livelihoods of the poor. Infestations often destroy maize that’s been stored by farmers, forcing them to buy maize as well as lose income they could have earned from selling any excess.

But alien species don’t just arrive from abroad. Many that are native to parts of Africa have also spread to countries on the continent where they are not native.

An example is the fish commonly known as the Mozambique tilapia (Oreochromis mossambicus) which is native to rivers on the east coast of southern Africa. Fishermen have transported the Mozambique tilapia to other areas and it is now found in river systems in southern and western South Africa and Namibia.

The Mozambique tilapia is a popular species for fishing but it can pose a threat to native fish and has been responsible for the disappearance of native species in some regions.

The spread of alien species within Africa is by no means a new thing. For instance, the bur clover (Medicago polymorpha), a plant from northern Africa, might have been accidentally transported by humans to South Africa as early as 760 AD.

A high and increasing threat

Recently a number of alien species have spread extremely rapidly across the continent, posing a particularly high threat to food security and livelihoods.

The fall armyworm, native to the Americas, was first recorded in west and central Africa in early 2016 and then in South Africa in January 2017.

One is a caterpillar known as the fall armyworm (Spodoptera frugiperda). The species, native to the Americas, was first recorded in west and central Africa in early 2016 and then in South Africa in January 2017.

The moths of the armyworm are strong fliers and the species may have spread through flight to South Africa from other African countries. Although the species attacks a wide range of crops, it poses a particularly serious threat to grain farmers. It is extremely difficult to manage.

Another example is a wasp known as the bluegum chalcid (Leptocybe invasa), which is native to Australia. In 2000 it was detected in Israel and shortly afterwards it was reported in Uganda and Kenya. From there it spread rapidly to many African countries including Zimbabwe, Mozambique, and Tanzania and was finally detected in South Africa in 2007. The insect probably reached Israel on live plant material and spread into Africa the same way, or was carried by people travelling between countries.

The wasp causes swelling or growths on eucalyptus trees, which can lead to decreased growth and tree death. As eucalyptus trees are an important source of income and fuel, this species could have an impact on the livelihoods of locals in these countries.

Preventing the introduction and spread

Once a species is introduced to one African country it’s highly likely it will spread to others on the continent because borders checks are weak.

The introduction and spread of species could be reduced if countries introduced biosecurity systems. These are used extensively in countries like Australia and New Zealand and involve using technology to check for alien species when people and goods enter a country. In Australia this involves inspecting goods, vehicles and luggage before they enter the country.

But even these systems aren’t a guarantee that species won’t spread. African countries would need to work together and share information and skills. This would also allow countries to prepare for the arrival of species, and to draw up plans to reduce their impact.

The ConversationThis is a tall order. But as a country’s defence against alien species introductions is only as strong as that of its neighbours, such action would benefit all of the countries involved.

Katelyn Faulkner, Postdoctoral research fellow, University of Pretoria; Brett Hurley, Senior Lecturer Zoology and Entomology, University of Pretoria, and Mark Robertson, Associate Professor Zoology & Entomology, University of Pretoria

This article was originally published on The Conversation.

The threat to South Africa's democracy runs deeper than state capture

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A protest in South Africa against housing shortages.
EPA/Kim Ludbrook

A recently released report written by a group of South African social scientists, “Betrayal of the Promise”, considers the widespread capture of state institutions by a network linked to President Jacob Zuma and declares it “a silent coup.”

The reference to a “coup” might seem odd given that the democratically elected head of state is described as its patron. But South Africa’s current predicament is not primarily about the individuals in specific offices. Rather, at its root, it’s about a crisis in the country’s democracy.

The report by the academics proposes a dividing line between those committed to social transformation – as set out in the country’s constitution – and those who aren’t. The Zuma-aligned camp is alone on the latter side of this line.

But, even though they don’t have much else in common, almost all the country’s key political alignments – political parties as well as social movements – share what I call a naive view of the state. They think that state institutions must be captured by one or another sector for state action to achieve a desired goal.

This is an analytical and political cul-de-sac. South Africa’s democratic crisis is a result of the unfinished project of remaking institutions first shaped under colonial and then apartheid rule. The challenge now is how to rebuild them so that they have both popular legitimacy and the capacity to achieve the promise of the country’s constitution: to create a more equitable society.

I describe this dominant view of the state as “naive” because it treats institutions as terrain for narrow manipulation by one group or another. In fact the crisis shows that South Africa doesn’t yet have, and desperately needs, effective institutions with the capacity to respond to broader society.

Various views

Zuma’s political allies in the African National Congress (ANC) insist that to reduce the power of “white monopoly capital”, the state must empower black industrialists by transferring public assets.

They envisage this being primarily through state controlled concessions, such as mines, as well as contracts with state owned enterprises such as the power utility Eskom and transport group Transnet. This is complemented by vague pronouncements around land redistribution.

The opposition Economic Freedom Fighters (EFF) take a vanguardist position, arguing that state power can provide for the working class by nationalising private assets and redistributing land.

The Democratic Alliance, the largest opposition party in parliament, advocates the privatisation of public assets. It insists that this will subsidise public projects, although it’s not clear how.

For their part, civil society organisations seem to realise that state institutions, free from narrow private capture, are essential for a more capable state. They are beginning to focus much more attention on the integrity and independence of state institutions. Some are focusing on issues of government transparency and privacy, others on resisting attempts to compromise key ministries, especially Treasury.

But civil society has little influence or connection to formal politics. Trade unions are split. Middle class professionals in the activist sphere have lost their links with trade unions and urban social movements, which proved such a powerful alliance for democratisation in the late 1980s and early 1990s. Protests in urban townships are frequent but localised. They are rarely linked to any city wide agenda or movement.

A failing democracy

Institutional “capture” is both a symptom and a cause of the country’s broader democratic crisis.

The constitution contains some of the most extensive socio-economic rights anywhere in the world. But inequalities have been extraordinarily durable.

Now the constitution itself is increasingly under attack. This shouldn’t be surprising given that many state institutions, especially at the local level, aren’t effective and, therefore, cannot realise the rights set out in the constitution.

Democratic South Africa’s challenge remains how to find a way to remake institutions so that they’re capable of ensuring the rights guaranteed by the constitution are realised.

Comparative insights from Brazil

In this it has lessons to learn from Brazil, which has similar constitutional guarantees. Despite recent political challenges, Brazil has managed to decentralise important parts of administering redistributive programmes. This has led to more capable institutions, especially at the municipal level.

Since 1988 when a new constitution came into force, Brazilian cities have used large federal government revenue transfers for redistributive ends such as health, education and housing.

On top of this, Brazilian cities have a long history of participatory councils, from city wide budgeting to specific policy sectors such as housing and health. In large cities like Sao Paulo, many of the social movements for housing, which helped drive the campaign for democracy in the 1980s, have remained important political and social movements. They’ve helped reconstruct Brazil’s local state institutions, which were previously a global example of weak and clientelistic politics.

Cities like Sao Paulo now have institutions that are able to make big gains for poor people in sectors such as transport, housing and sanitation.

This suggests important lessons for how to address South Africa’s democratic crisis.

Recapturing institutional legitimacy

A positive sum, redistributive agenda is the central promise of the South Africa’s Constitution. This is also a requirement for the success of any dialogue between all sectors of South African society as proposed by the authors of Betrayal of the Promise.

A debate over policy is going to be extraordinarily difficult while the country’s institutions continue to lose legitimacy. This means that a focus on the capture of state institutions will need to go hand-in-hand with a focus on how they can be refashioned to be more responsive to society.

The ConversationSouth Africa awaits the movements and parties with the ideas and organisational strategies to take such a vision forward. Until then, the country will struggle to move beyond today’s anti-democratic precipice.

Benjamin H. Bradlow, PhD candidate, Department of Sociology, Brown University

This article was originally published on The Conversation.
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