BILLIONAIRE entrepreneur Mark Shuttleworth has struck the Reserve Bank a heavy blow — in the region of R350m. Most significantly and laudably, he is to put his R250m refund, plus interest, into a fund to help South Africans pursue their constitutional rights. In this way, he may well help to protect property against seizure by the government without proper compensation. Whether exchange control itself would survive a Constitutional Court action remains as moot as ever.
Shuttleworth’s appeal succeeded on the basis that the 10% levy collected by the Reserve Bank did not pass the constitutional test of "a money bill — as defined by sections 75 and 77 of the constitution" and not because the court decided that exchange control was either illegal or unhelpful.
His argument that the purpose of exchange control is to benefit SA’s banks provides a very narrow and inadequate case against exchange control. It is true that exchange control is administered diligently by SA’s banks and could not work without them. However, it is not at all so obvious that the banks (that is, their shareholders) in practice charge more than it costs them to provide the service demanded of them by the law. The considerable cost in management time and computer systems devoted to the task is mostly bundled into the fees all the customers of the banks are charged.
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Publish date: 10 October 2014
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.