Marcus will be a hard act to follow

Steady hand: Outgoing Governor Gill Marcus leaves a stellar track record as her legacy at the Reserve Bank. (Madelene Cronjé)

Steady hand: Outgoing Governor Gill Marcus leaves a stellar track record as her legacy at the Reserve Bank. (Madelene Cronjé)

It appears that behind-the-scenes jockeying and discussions about a suitable replacement for outgoing Reserve Bank Governor Gill Marcus have been going on for some time.

According to Reserve Bank and financial sources, Marcus’s decision to resign after her first term did not come as a complete surprise to all.

Marcus had indicated as early as May that she was frustrated by the government’s lack of co-operation with the treasury and the Reserve Bank, it is claimed. Marcus (65) was also not that keen on the travel involved in the job, an industry source said.

She said she was frustrated with the lack of implementation of the National Development Plan. “The Reserve Bank would also come up with ideas they would present to government and they were simply not considered,” the source said.

For analysts comfortable with Marcus’s steady sailing of what has been turbulent economic waters, accompanied by her good communication and easy-to-understand analysis, her replacement will be key to future development.

The market, which wobbled a bit on the news on September 18, took comfort from the fact that in the wings are at least two competent and highly respected deputies: Danile Mminele (49) and Lesetja Kganyago (48), who serve on the monetary policy committee.

It was initially expected that Kganyago would replace outgoing governor Tito Mboweni in 1999 when Kganyago was moved from the bank, shortly before Mboweni left.
Instead, Marcus was brought in from outside the bank.

Running favourite
Mminele is considered the running favourite, but many feel Kganyago might well be appointed. Kganyago joined the bank in May 2011 after heading the national treasury for more than seven years as director general.

Some feel he had begun to emerge as the natural choice: he has overseen bank supervision, exchange control regulation and risk and compliance. Kganyago spent several years at the Congress of South African Trade Unions and has worked with Finance Minister Nhlanhla Nene at the treasury.

Mminele joined the Reserve Bank in 1999; and was appointed deputy governor in 2009. He also worked at African Merchant Bank and Commerzbank AG. Azar Jammine, chief economist of advisory service Econometrix, said Mminele was a popular choice. “But quite frankly, both men are highly respected and more than capable,” he added.

A review by Nomura financial services group of voting by the monetary policy committee, showed that the pair would not be averse to voting in favour of interest rate hikes if the situation required it, depending on the circumstances.

“No matter how you look at it, Marcus is going to be a hard act to follow,” said Jammine. “She had a broad, detailed view and political experience and a history in the struggle against apartheid.”

There is concern that the loss of Mminele and Kganyago would leave a vacuum at the bank, which would require a suitable deputy to be found.

President Jacob Zuma may also look outside the bank for a replacement. Brian Molefe, former deputy director general (DG) of the National Treasury, who is currently the group chief executive officer of Transnet, has served as the chief executive officer and chief information officer of Public Investment Corporation (PIC), has allegedly been discussed as a possibility, but it’s not clear if such discussions remained anything more than corridor talk. He does have treasury experience, having worked there as director general.

Marcus is a former deputy finance minister and chair of Absa. She also worked under Mboweni at the treasury for five years, starting in 1999. She allegedly left because of personality clashes between them.

Asked what he would like to see in a new Reserve Bank governor, Stanlib chief economist Kevin Lings said he would like to see a continuation of much of what they had seen under Marcus.

“The market likes stability,” he said. “We have set an inflation target of between 3% and 6%, and while we don’t achieve it every time, analysts and economists know that the bank is constantly striving to achieve the target.” He would also welcome “more of the open communication that we are presently seeing”.

Marcus’s contract ends in November.

Among other challenges, the new governor faces rising inflation and an economy that looks set to grow at the slowest place since the 2008 recession.

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