A succession plan or a renewal of contract for South African Reserve Bank Governor Tito Mboweni should be made public to avoid any “unnecessary uncertainty” that might arise in financial markets, says Democratic Alliance finance spokesperson Raenette Taljaard.
In a statement to parliamentary media, Taljaard warned of possible harm for foreign and domestic investment in South Africa in the climate of lack of certainty — with Mboweni’s contract ending in August.
“It seems most likely that Tito Mboweni’s contract will be renewed. If this is the case, it should be announced sooner rather than later.”
Mboweni declined to comment on his future when approached by journalists after the announcement of a syndicated loan signed by his bank with 39 international banks in Cape Town on Monday.
Taljaard, the shadow finance minister, said: “The expiry of the governor’s contract is less than three weeks away and no plan to manage the contract transition of the governorship has been announced to reassure the market in this regard.
“In contrast to this state of affairs, former President [Nelson] Mandela announced his intention for the governorship transition from Dr Chris Stals to Tito Mboweni more than a year before Dr Stals’s contract expired on August 7 1999.
“According to the South African Reserve Bank Act 90 of 1989, the state President, Thabo Mbeki, will appoint the governor for the new term after consulting with the minister of finance and the board of directors of the Reserve Bank.
“The controversial departure of deputy governor Gill Marcus at the beginning of this month saw Governor Mboweni take over her duties. This unexpected departure aggravated the general uncertainty around senior management and possible in-fighting in the bank.
“Given this fraught environment, it would have been prudent to announce a sound plan for the extension or cancellation of Governor Mboweni’s contract well before the expiry date.
“The Reserve Bank has been commendably independent of government throughout Mboweni’s term and has successfully created a stable and certain monetary policy environment. The appointment of the governor is the one occasion, however, when government has a direct influence on the operation of the bank.
“It would be tragic if the Reserve Bank’s hard-won credibility was compromised by inadequate government decision-making and communication,” said Taljaard, who entered her second term as an MP in April. — I-Net Bridge