Five, four, shareholders and appointed proxies, members of the board of directors, deputy governors, ladies and gentlemen. Good morning. I hereby welcome you to this hybrid meeting and declare this 106th annual ordinary general meeting of the shareholders of the South African Reserve Bank duly constituted in terms of the regulations framed under the South African Reserve Bank Act number 90 of 1989 as amended. Please be advised that this meeting is being recorded for future reference if required. The meeting complies with the Protection of Personal Information Act number four of 2013, as shareholders were requested during registration on the Lumi Technologies South Africa proprietary limited platform to consent to the collection, collation, processing, and storage of their personal information by the SARB and Lumi. Before I start my address, since this is a hybrid meeting and we have shareholders attending in person and online, can I ask if everyone attending in person had signed the attendance register? Even if you are not a shareholder, please do sign the register and also indicate whom you are representing to ensure that we have a complete attendance record of the meeting. All shareholders present in person who hold 200 or more shares in the SARB and are entitled to vote in accordance with the provisions of the SARB Act and its regulations should have an electronic voting device. Please indicate if you are a shareholder entitled to vote but have not yet registered or received a voting device. Please note that only shareholders or their valid proxies will be permitted to speak during the formalities of the meeting. Every shareholder attending in person should have received a yellow laminated card upon registration. It looks like this. It's for shareholders, so don't worry if you are not a shareholder and you don't have it. The card must be raised for identification purposes whenever a shareholder would like to comment or ask a question at this meeting. Likewise, any shareholder attending this AGM online who holds 200 or more shares in the SARB and is entitled to vote in accordance with the provisions of the SARB Act and its regulations should vote in accordance with the instructions outlined in the notice. Shareholders attending online can submit written comments or questions at any time during the meeting by using the messaging function on the Lumi platform. Online attendees can also comment or ask questions by selecting the virtual microphone option and following the instructions provided. An operator will verify the shareholder's eligibility and unmute the shareholder when he or she is invited to speak. All questions will be addressed during the meeting and recorded in the minutes. Questions received after the close of the poll and question period will be answered directly via email. Please allow me to introduce my colleagues who are joining us today to respond to any questions that the shareholders may have. They are Deputy Governor Rashad Kasim, Deputy Governor Fundi Chasana, Deputy Governor Mois, Chairperson of the Audit Committee Mr. Norman Bazima, Chairperson of the Remuneration Committee Dr. Ivon Muian, Chairperson of the Board Risk and Ethics Committee Mr. Zoe Wen, Chairperson of the Non-Executive Directors Committee Miss Larado Mulati, Secretary of the SARB Miss Zuli Piso, and Mr. Mululei Shong from the Legal Services Department. The terms of office of Miss Laradi and Dr. Kabubadimu, who had been serving as government-appointed non-executive directors, expired on the 31st of May 2025 and they were subsequently reappointed by the President of the Republic of South Africa on the 5th of August 2025 for another three-year term. The terms of office of Munomi and Miss Ka Zundi, who are serving as government-appointed non-executive directors, is due to expire on the 24th of September 2026. The President will confirm his decision in this regard in due course. Now allow me to move to my formal address.
This year we celebrate a milestone birthday for the South African Reserve Bank. It sounds like a cricket score. We are 105 not out. As you know, we are the oldest central bank in Africa. We are also among the 20 oldest central banks in the world. At an age like this, people are often confined to an old age home. I am happy to say this hasn't happened to us. We finished the stay-at-home phase in 2025 and we have now been back in the office full-time for exactly one year. We were honored to host the President here in June 2026 to launch our new museum, and we appreciated his comment that the SARB head office is one of the architectural gems of our capital city. Our new building is indeed beautiful and a fitting headquarters for the SARB as we work on our next 100 years. Our constitutional mandate is to protect the value of the currency in the interest of balanced and sustainable economic growth. Since our previous annual ordinary general meeting, we have taken a big step to do that better. After 25 years, our inflation target has finally been reformed. We used to target a range of 3 to 6%. From 2017, we explicitly aimed at the 4.5% midpoint of that band. In 2025, South Africa formally adopted a 3% target plus or minus 1 percentage point. This new target is in line with the inflation rate of our peer countries as well as major economies. It will also deliver rand users an experience much closer to price stability.
We have just been hit by a big oil shock which pushed headline inflation to 4.5% in May and 5% in June. Everyone feels the pain of rising prices and everyone is worried about inflation being too high, including us. But until very recently, 4.5% was our inflation goal and we were satisfied when we got there. In the last decade, we have often tolerated inflation at 6%. We now see clearly that those rates were too high. Last year, we made a choice to have lower inflation. Yes, we have now been hit by a shock that was completely exogenous and has nothing to do with our choices, but shocks will happen. For the SARB, our job is to ensure inflation reverts to target. Monetary policy does not control the prices of individual goods and services. But we do have a lot of influence over the longer-run buying power of the rand across a broad purchase basket, and we intend to protect that. That is why we raised rates to 7% in May to ensure that inflation gets back to target. This created the space for us to hold rates at our MPC meeting in July. Before this shock hit, our main forecasting model showed the policy rate declining to about 6%. Markets had similar expectations. As a monetary policy committee, we do not make any promises about the path for interest rates. That kind of forward guidance often fails with embarrassing results. But I can say with confidence that lower inflation produces lower interest rates. Financial markets have already priced in this principle across the yield curve. This helped drive the big drop in longer-term rates we have seen since last year. Those lower rates also seem to have survived the oil shock. Long bond yields are close to where they were before the war started. I think this shows an understanding in markets that the shock is temporary and inflation will converge to the new target. We will continue to work through our communication and our policy to ensure that our message on driving inflation down is widely heard and widely believed. And of course, we will act as appropriate to deliver this outcome.
The oil shock is not the only challenge we have had coming out of the global environment lately. Last time we met, we held the Group of 20 presidency. I'm happy to say that we fulfilled our responsibilities and we are remembered for our effective and efficient stewardship. Unfortunately, we have not been invited to the G20 this year, which is not consistent with G20 practice. We look forward to participating in the G20 under the presidency of the United Kingdom. Meanwhile, we continue our international engagements across many other forums. One engagement that has borne fruit is our work with the Financial Action Task Force. Since our grey listing in 2022, there have been major investments by the South African authorities, including the SARB, to get our house in order. We were happy to come off the grey list last year and stand ready as we face the next FATF mutual evaluation.
The global central banking community is also wrestling with technological change, particularly artificial intelligence as well as fintech products like stablecoins. These present opportunities but also threats. It seems clear that AI will transform how we work by making large data sets much more tractable. At the same time, it is equally clear that AI presents new threats. For instance, if it is used to hack sensitive systems that previously seemed secure. Just as AI presents both unprecedented opportunities and risks, there are also two sides to stablecoins. If they can make cross-border payments faster and cheaper, that would be welcome progress. But if they mainly make it easier to transact anonymously, helping their users get around credential controls or escape with the proceeds of crime, that is dangerous. Our broad task as regulators is to achieve a balance: to limit risks without stifling innovation.
Of course, finding that balance is not easy and our efforts can leave people unhappy. We saw this, for example, with the draft cross-border regulations on crypto assets. The fact of the matter is that South Africa has a system of capital flow measures. It has been cumbersome and the much-needed reforms to modernize the framework are underway. But if we have these rules, we cannot simultaneously have weak regulatory frameworks for crypto assets alongside a rigorous system of reporting and permissions for everyone else. That is not a level playing field. What we are trying to do is get common rules here for everyone. At the same time, we would like those rules to be more appropriate for contemporary conditions. When it comes to innovation, it may be that fintech solutions will radically improve payments, but it could be the simpler, less hyped technologies that deliver larger gains. Our payment ecosystem modernization program does not use tokenization or distributed ledger, but we still expect it to achieve much cheaper and faster digital payments, just like countries such as Brazil, India, Thailand, and the Philippines have achieved. With our purchase of a 50% stake in Bank South Africa in November last year and its rebranding as Pay Inc., we are making progress. We nonetheless acknowledge that other emerging markets are ahead of us. We have a lot of catching up to do.
Ladies and gentlemen, to conclude, the SARB is in a strong position. We have taken a big step forward with our new 3% inflation target. Our financial system continues to demonstrate resilience in an uncertain and difficult world. We are driving payment innovation to close the gap with the leading countries. I should also mention that our balance sheet is strong. We have grown our foreign exchange reserves. 10 years ago we had $47 billion in reserves. This time a year ago we had $68 billion. The latest number is actually $74 billion. In the last decade, we often made losses and coped with a relatively thin capital cushion. More recently, the SARB has been more profitable and equity has grown sustainably, making us one of the better capitalized central banks in the world. I am very grateful to the SARB staff and to my leadership team for all their work over the past year. If the South African experience of the past decade teaches anything, it is the importance of having well-governed institutions. The SARB's institutional strength is clear, but it comes from a lot of hard work and dedication.
Let us now turn to the formal business of the day, which covers the following matters. Firstly, to receive and accept the minutes of the AGM held on the 8th of August 2025. Secondly, to receive and consider the SARB's annual financial statements for the financial year ended 31st of March 2026, including the directors' report and the independent external auditors' report. Thirdly, to approve the remuneration of the SARB's independent external auditors, namely BDO South Africa Incorporated and EY Incorporated, in terms of regulation 221B read with regulation 73C of the regulations for completing the audit for the 2025/2026 financial year. Fourthly, to appoint BDO and EY as the SARB's independent external auditors for the 2026/2027 financial year in accordance with regulation 221A read with regulation 73C of the regulations. Fifthly, to elect one non-executive director to serve on the SARB board of directors in terms of regulation 73B of the regulations read with section 41B of the SARB Act. Finally, to consider any further business that may arise from the items mentioned in terms of regulation 73E of the regulations. I can confirm that the secretary of the SARB has not received any request for special business in terms of regulation 73D of the regulations. I now invite the secretary of the SARB to confirm the shareholder representation at this meeting.
Good morning everyone. Thank you, Governor. I'm pleased to confirm that at this stage the total number of issued share capital of the South African Reserve Bank is 2 million shares. We have 29 shareholders that are present in person and online. We have six shareholders that are represented by proxy, and we have 380 votes that can be exercised by the shareholders present in person and online as well as those holding duly certified proxy forms for this purpose. Thank you, Governor.
Thank you, Secretary. I have determined that voting on each of the matters under consideration at this AGM will take place by means of a poll. This hybrid meeting together with the voting procedure is being facilitated by an independent external party, Lumi. All the shareholders attending this AGM either in person or online who hold 200 or more shares in the SARB and who are entitled to vote in accordance with the provisions of the SARB Act and its regulations will be allowed to vote at any time before the vote is closed. Since this is a hybrid meeting, can I please request Mr. Andre Flada from Lumi to come forward to outline the housekeeping rules and to instruct the shareholders present in person and online on how to use the platforms.
Thank you, Governor, and good morning to you. Good morning to the deputy governors, the board, and good morning to everybody present here as well as those of you that are online. As the governor mentioned, this is a hybrid meeting. So I will be explaining the voting on how to vote within the room as well as how to vote online. We are going to run two test resolutions. So we're going to simulate how we're going to vote on the four items of business that we have today. So the voting on those test resolutions is open and I'll start with those of you in the room. So for those of you in the room that are entitled to vote and have chosen to vote at this meeting, you would have received what looks like an old Blackberry. Please make sure that your smart card is inserted correctly, that's with a gold chip facing you, inserted into the top of the handset, and you should see your name in the top bar of the screen. So for those of you in the room, I'll start with you. Just follow along with me. On your screen, you'll see two resolutions, test resolution one and test resolution two. You can scroll between those resolutions using the blue track ball in the middle of your keypad. But let's scroll to test resolution one and then click on the blue track ball. You'll see it gives you the text for the resolution. You'll then click on the green button to go to vote. And please note, these are not smart devices, so they're not soft touch. These are conference devices, so they might need a bit of love. So a bit of a hard press on the buttons. Once you press the vote button, you can then press either one to vote in favor, two to vote against, or three if you wish to abstain. Once you've made your selection, you'll then press the green button to go next. And you'll move on to the next resolution, at which point again, you'll press the green button to vote. You'll then enter your vote, and then you'll hit next again. And you'll repeat that process for every resolution that we're voting on. Once you've finished all the resolutions, you'll get to a list that shows you all the resolutions and how you voted for them. If you wish to change your mind, you can do so while the vote is still open. You can scroll to any one of those resolutions in the list. Click on it, press the X button, and then re-enter your new vote that you wish to submit, and then go through to next to submit it. If you do struggle in the room, please raise your hand and my colleague in the room will be able to assist you. But for now, if you could start voting on your handsets so we can get those votes in. So long and I will then move on to those that are participating virtually. So for those of you that are participating virtually, you would be able to see a voting button either in the top left or bottom left of your screen depending on the device that you're using. You'll then be presented with what looks like an electronic ballot form. So you'll have the two resolutions one after the other. You'll then vote on each of those resolutions in turn by making your selection either for, against, or abstain. You'll see when you make your selection, it changes color. The button changes color. There is no submit button. So once you've made your selection, the vote has been captured. You'll see a received message. You're also welcome to change your mind if you need to by just selecting your new option that you wish to make. Our system will take the last choice that you make once the vote closes. For those of you online that are if you do struggle, we do have a support helpline. You'll find that information on the home screen and you're welcome to use that if you need any support. And with that, Governor, I'll hand the meeting back to you. Oh, wait. No, sorry, Governor. Sorry. Sorry. Sorry. You're right. Almost forgot. We actually have to vote. The poll is now open. Is there anybody that still needs to vote within the room? Has everybody managed to finalize their testing? It looks like it. And I'm going to... Yes. Okay. So we are now going to close the vote and we are going to go through the results and the results will display one at a time. So first res that's test resolution two. Anyways we'll deal there we go. Test resolution one. We have 232 votes in favor, 56 votes against. So 80.53% in favor. So that resolution carries. We'll then move to test resolution two. And there we have 157 votes in favor and the resolution just carries with 57.87% of the vote. And now I'll hand the meeting back to you, Governor.
Thank you very much, Andre. We now proceed to the business of the meeting. Voting will now commence on the first four ordinary resolutions, namely the acceptance of the minutes of the 2025 AGM, the acceptance of the annual financial statements for the year ended 31st March 2026, including the directors' report and the independent external auditors' report. Third, the approval of the remuneration of the SARB's independent external auditors in the amount of 30,090,870 rand excluding value added tax, and the reappointment of BDO and EY as the SARB's independent external auditors for the 2026/2027 financial year in terms of regulation 221A read with regulation 73C of the regulations. Are there any questions or comments on any of these four matters? Well, if there aren't, then we can proceed. The polls are now open and you may exercise your votes. The polls are now closed and the results are as follows. Resolution one: 370 votes for, one against, and 52 abstentions. The resolution has carried. Resolution two: 421 votes for, none against, and two abstentions. The resolution carries. Resolution three: 415 votes for, six against, and two abstentions. Resolution carried. Resolution four: 363 votes for, 60 against, and zero abstentions. Resolution carried.
I now turn to the matter of the election of one non-executive director to the board of the SARB. The term of office of Miss Makaya Mahoro Triforce Ramano as a non-executive director with knowledge and skills in commerce or finance expires at this AGM. Mr. Ramano is eligible and available for reelection by the shareholders for another term of 3 years. The panel appointed in terms of section 41C of the SARB Act considered the nominations for this vacancy. This panel comprises the Governor of the SARB, retired Constitutional Court Judge Biti Elizabeth Kabinde, and Professor Dion Rouso, Chairperson of the Bank Node Ethics Initiative and Extraordinary Professor at Stellenbosch University, both nominated by the Minister of Finance, and Mr. Tilani Tua, Mr. Gerald Tuana, and Mr. Alonga Malloy, all three nominated by the National Economic Development and Labour Council. The panel has confirmed that the one candidate for the consideration by the shareholders for the one vacancy was eligible as well as fit and proper to stand for reelection as a director of the SARB in terms of section 41G of the SARB Act. The curriculum vitae of this one candidate had been sent to shareholders together with the notice of the meeting. Are there any questions? There being no questions, please exercise your vote by voting for or against Miss Ramano or abstain from voting. The poll is now open and we will proceed with the director's election. The polls are now closed and the results are as follows. 303 votes for, 68 against, and 53 abstentions. On the basis of the voting results, I now declare that Miss Ramano has been reelected as a non-executive director with knowledge and skills in commerce or finance. Miss Ramano is congratulated on her reelection as a non-executive director. In terms of section five of the SARB Act, this appointment shall be effective from the 1st of August 2026 to the day of the AGM in 2029.
This concludes the voting procedure for the day. I would like to thank Lumi for their assistance and contributions. As mentioned earlier, the secretary of the bank has not received any requests from the shareholders for special business to be placed on the agenda of this meeting in line with the regulations. Are there any other questions or comments arising from the matters under consideration at this meeting?
Thank you, Governor. I think everybody saw me running out to put off my car's lights. But I ran back. I want to raise the matter of seigniorage that I've raised before and in relation to the size of the denomination of banknotes in South Africa. Seigniorage can be calculated depending on the source you use in about four or five different ways depending on whether you use a narrow or broad definition. So my request really is that we get from the Reserve Bank, say in next year's annual report or during the course of this year, a clear understanding of how the or get clarity from the Reserve Bank how you understand seigniorage and how it would be calculated in the case of the South African Reserve Bank because it is an important source of revenue, source of income for this bank. Now related to that is the size of the biggest bank note in circulation in South Africa which is the 200 rand note. It's been the biggest note since 1993. I've checked back in 1970 the biggest bank note in circulation was the 10 rand note. If you adjust that for inflation, the value of that is about 1,100 rand. If you're in just the 200 rand note with inflation since 1993, it's about 30 rands. Now, if a place like Orania with its own coupon and the Aura saw fit to introduce a 500 Aura coupon, the size of Orania's economy in my calculation is about the gross geographical product is about 600 million rands, which is very small. It's a small town. But they saw fit to introduce a 500 aura note. We don't see fit or a need for a 500 rand note. Something sounds wrong to me. And now I know the argument is that the 200 rand note is not popular. There is research that shows that notes that start with a two or has a brown color, those notes are not popular. So perhaps the 200 rand note is not popular because it starts with a two or is brownish. So really, is it not time for a 500 rand note in South Africa? The 200 rand note has really just lost its real value over time. Thank you very much, Governor.
Thank you very much. I hope the statistical agency of Orania has got the GDP size right there. There was a question at the back. Please again identify yourself.
Thank you, Chairperson. Yan Muhan. My questions are in two areas. They'll be very brief, done within 2 minutes. The first area is in the section about investments in associates, specifically Pay Inc. and African Bank. The first question under that area talks to the 50% stake which is also then raised by the external auditors around whether this is control or significant influence. Obviously on page 97 the auditors detail the process they have followed but it is still not clear to me what specifically convinces them that this is actually significant influence and not control when SARB obviously owns 50% of that and the next shareholder owns less than 10%. It seems like control and I'm just trying to understand what the issue is there. And then the last question on the Pay Inc. question is, are the non-banks going to be allowed to be shareholders in that entity? That's the last one on that. The second under this category is African Bank where the SARB has 45%. That business reported a loss of more than 600 million. And despite that, a 70 million dividend was declared. I just want to understand with the 45% shareholding, what would be the I don't know if there's a SARB nominee but what would have been the position on that vote? And then the last question on African Bank is given these losses, the report still refers to the intention to exit. Is there a sense on the timelines on that given the financial performance of that business? Then the last area of the questions is on governance. And obviously this is not criticism of the CEO or the Chairperson, I need to state that, but the Chairperson continues to also be the CEO. My question is, obviously in line with guidance on good governance, is there a reason why that needs to continue to be the case? Should the two roles not be separated? What is practice generally in central banks and is there any good reason why we stick to that structure? And then the last, the last...
Independence obviously mandate of the reserve bank. I'm asking the question: could there be a governance like kuna here in that things that will normally go to the shareholders? It is not clear to so, for example, things like remuneration of strategy and all of that, it is not clear where those things would go. And of course they do not come to the shareholders. Is that not another reason then to look at separating the CEO and the chairperson role, given that the role of shareholders in this entity is limited? Thank you. Thank you, chairperson.
