Charismatic Tito Mboweni may breathe some life into the dull world of central banking, writes Donna Block
He’s handsome, he’s young, he’s flamboyant and he knows it. Tito Mboweni, the charismatic new governor of the Reserve Bank, oozes personality.
Not only is he bringing to the job a huge smile, but a persistence and determination that will make the bank his own.
It’s a bit paradoxical, however, that such a colourful character is going to be occupying such a grey job. By its very nature, central banking is boring.
Prior to Mboweni’s appointment to the Reserve Bank it was rumoured that he was tipped for the deputy president’s office. Speculation was rife that the political ambitiousness of this 40-year-old son of a chief was pointed in that direction.
But his aspirations at the time were not in line with the African National Congress’s hierarchical plans, and he was thus “redeployed” to what was considered a “hot potato” – the Reserve Bank.
He remarked that he was serving his country better by favouring the bank.
At a dinner with journalists last week he appeared to be content with his new role and talked about his boredom with his previous job as minister of labour. The question is how long will it take for the new governor to get bored in his present job and what are his plans for the future?
Mboweni made a point of saying during the evening that he had no future political ambitions and, if anything, might consider eventually going into academia.
But someone with Mboweni’s personality and character is not likely to fade quietly into the sunset.
A stint as governor of a central bank has never been a stepping stone for political success anywhere in the world.
Central bankers are often the figures who plague politicians and citizens alike by manipulating interest rates to either defend their currency or fight inflation. If they’re good at their job, they could stay there for ever; if not, their options are limited.
Observers believe Mboweni will do a good job. He holds a masters degree in development economics from Britain’s University of East Anglia, and he was deputy head of the department of economic planning for the ANC before the party gained political power.
The new Reserve Bank governor has spent the year since his appointment getting his feet wet by visiting central banks in the United States, Europe and South America, and familiarising himself with the 14 departments of South Africa’s central bank.
He has also familiarised himself with the most up-to-date thinking about monetary policy. In his comments to journalists Mboweni was reluctant to impart anything specific about what approach he will take towards monetary policy.
What he did say was that the focus would be on the inflation rate and not on the exchange rate.
Mboweni also said he does not favour currency targeting, a monetary policy tool he said has been “discredited”.
Mboweni added that the Reserve Bank will not intervene heavily in the currency markets to defend the rand, and unequivocally stated that rand weakness is not a disaster.
“It’s a waste of time to try and defend the rand against speculators; they’ll take you to the cleaners,” he said.
This comment is in line with the approach by outgoing governor Chris Stals, who announced last year that the central bank will adopt an “asymmetrical” exchange rate policy – buying and selling foreign exchange at any time rather than intervening during periods of rand weakness.
Mboweni said inflation will be his main priority and hinted at the possible introduction of inflation targeting. He said the issue of inflation targeting will be addressed at the Reserve Bank’s annual meeting on August 24.
This will be the new governor’s first policy speech. Some pundits are betting that although the continuity of monetary policy will be at the top of the agenda, it will be presented in a manner that – in keeping with Mboweni’s personality – will be both colourful and poetic.
It has also been mooted that he will use the platform to take to task those who expect his tenure to be the beginning of an easy money era.
Mboweni also intends to transform the mainly white-staffed bank to make it more representative of South African society. Currently the staff is 82% white and male.
“By 2005, we will have 50% white and 50% black and 33% women,” he said.
As Mboweni takes the reins and guides South Africa’s central bank through what will most likely be some choppy waters there is a subtle undercurrent that implies that someone as young, ambitious and somewhat arrogant as Mboweni has a long career path in front of him.