/ 12 July 2019

Kganyago gets another five years

Fundi Tshazibana and Rashad Cassim have been appointed as deputy governors as Lesetja Kganyago retains his post as governor of the central bank.
Reserve Bank governor Lesetja Kganyago. (Waldo Swiegers/Bloomberg/Getty Images)

Analysts have hailed the reappointment of Lesetja Kganyago as the South African Reserve Bank (SARB) governor as a positive move for the central bank.

His reappointment for another five-year term, effective from November 9, was announced by President Cyril Ramaphosa this week. Kganyago’s current term ends on November 8.

Ramaphosa also announced the appointment of Fundi Tshazibana and Rashad Cassim as deputy governors of the Reserve Bank for a period of five years each, effective from August.

Tshazibana is the adviser to the governors of the central bank and Cassim is its head of economic research and statistics. Both are members of the bank’s monetary policy committee (MPC).

Finance Minister Tito Mboweni welcomed the appointments, but warned the trio that they may face a tough road ahead.

“We need not remind them of the tough economic and fiscal circumstances facing South Africa at the current moment. They have my full support and confidence,” he said in a statement on Wednesday.

The head of capital markets research at Intellidex, Peter Attard Montalto, said the appointments are a positive move for stability, given the ongoing debate around the SARB’s independence and the question of nationalisation.

He added: “It will make the president’s life much easier, as does appointing two internal candidates for deputy governor whom investors will be happy with.”

Speculation among economists is that the MPC will cut interest rates after its meeting next Thursday.

Montalto said: “The potential fall in US [United States] rates gives the SARB space to cut rates here but it’s not a huge amount of space. It will be a marginal decision and a fraught decision for the MPC, given the mounting risks such as Eskom’s bailout and others.”

Kganyago’s reappointment comes in the aftermath of ANC factional battles regarding the expansion of the mandate of the Reserve Bank to not only include price stability but also growth and employment.

The governor and Mboweni have said that the mandate of the Reserve Bank is constitutionally enshrined and that boosting the country’s economy cannot be solved through monetary policy.

Montalto said that although Kganyago supports the independence of the Reserve Bank despite the ongoing discussions about the bank’s mandate, the political pressure from factions in the ANC will not go away anytime soon.

“The key thing for his [Kganyago’s] second term is formal communications about the mandate of the SARB. We probably have to see a lot more informal communications as well, such as taking the message to the people,” he said.

Zwelakhe Mnguni, the chief investment officer at Benguela Global Fund Managers, said Kganyago had performed well over the past five years. “We know that the Reserve Bank will remain safe in his hands. He’s not shy to go to court where necessary to defend the Reserve Bank and I think that’s the kind of governor we need,” he said.

Last week, Kganyago indicated that he would be available for the position if asked by the president. But he added that whoever is appointed should be an “independent thinker” in order not to compromise the “credibility of the institution”.

Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian