Soon after President Jacob Zuma announced that Lesetja Kganyago would take over from Gill Marcus as the governor of the Reserve Bank next month, the rand made an almost 1 percent gain in afternoon trade, while the All-Share Index on the JSE also firmed 1.46 percent. At R11.24 to the dollar, the rand was R12.08 firmer than at the same time on Friday.
It was a sign of approval by financial markets of the president’s choice. It was an appointment that saw the ANC and the DA in rare agreement, with the opposition party’s deputy finance spokesman, David Ross, giving Kganyago the thumbs up.
“Mr Kganyago brings a wealth of experience earned as the deputy governor of the South African Reserve Bank and as director-general at National Treasury among other positions,” said Ross.
ANC spokesman Zizi Kodwa said Kganyago will bring “experience” and “diligence” to the position.
Marcus had three deputies – Kganyago, Daniel Mminele and Francois Groepe – and Zuma did well to select from this team, instead of picking a political appointee from outside. Kganyago’s choice signals continuity in terms of general approach to monetary policy.
A graduate of Unisa and the the University of London’s School of Oriental and African Studies, he joined the National Treasury in 1996 before being appointed deputy governor of the Reserve Bank in 2011.
He has worked with Marcus and others in steering the country’s economic policy in the aftermath of the 2008 global financial crisis.
Kganyago, who turned 49 yesterday, will have to tread a fine line in maintaining, in the face of chronically weak growth, the Bank’s mandate of keeping inflation below 6 percent. This may mean raising the benchmark 5.75 percent repo rate in the months ahead – perhaps even as early as next month when the monetary policy committee meets.
He has in the past asserted that interests rates needed to be raised to rein in the consumer inflation index, currently sitting at 6.4 percent, just outside the 3-6 percent target.
These are challenging times for the economy, and we wish South Africa’s 10th governor Godspeed.