Markets and the wider business community in South Africa have welcomed President Cyril Ramaphosa’s decision to extend South African Reserve Bank (SARB) governor, Lesetja Kganyago’s term for another five years.
Economists and business lobby groups alike said that this announcement would sustain confidence in the country, as South Africa deals with challenging economic conditions and the political uncertainty that is likely to grow ahead of the general elections.
On Friday, Ramaphosa reappointed Kganyago as Governor of the SARB, along with Nomfundo (Fundi) Tshazibana and Dr Rashad Cassim as Deputy Governors of the SARB, each for another five-year term.
Ramaphosa also appointed Dr Mampho Modise as Deputy Governor, following the resignation of Kuben Naidoo in November 2023.
Modise’s five-year term will be effective April 1, 2024 until March 31, 2029.
This also means that the SARB now has a full compliment of executives after Naidoo stepped down.
The Banking Association of South Africa (Basa), wished the governor and his team the best in the years moving forward.
Basa said, “The simultaneous reappointment of Nomfundo (Fundi) Tshazibana and Dr Rashad Cassim as Deputy Governors of the SARB, along with the appointment of Dr Mampho Modise as a Deputy Governor are an important signal of South Africa’s long-term commitment to responsible monetary policy, good management of its reserves and the stability of its financial system.”
“Under Governor Lesetja and his team, the South African financial system has remained stable and resilient, despite challenging international and domestic economic conditions. Bank regulation has been transparent and firm; and the SARB’s commitment to keeping inflation in check and the currency stable has been of great benefit to the economy and the business environment,” Basa further stated.
North-West University’s Business School economist, Professor Raymond Parsons, said that the appointments made were welcome and confidence-building decisions.
Parsons told Business Report, “At a time when the economy faces critical challenges and at a stage where policy uncertainty is elevated. It is good news for those concerned about economic and financial stability in SA, to which the markets should respond positively. The reappointment and the selection of Modise as Deputy-Governor to replace Kuben Naidoo, and the reappointment of the two other Deputy-Governors, therefore, represent a balanced blend of continuity and change in the SARB’s top team.”
“While there will often be a robust debate about particular monetary policy decisions, the SARB, nonetheless, is well recognised for its professionalism and competence both inside South Africa and abroad and as an institution of high credibility. The SARB appointments send a strong message that the independence of the SARB, as outlined in the Constitution, is being upheld,” Parsons further said.
Association of Black Securities and Investment Professionals (Absip) also congratulated those who were appointed in a tweet which read, “Absip congratulates Lesetja Kganyago (Governor), Fundi Tshazibana and Dr Rashad Cassim (Deputy Governors) on being reappointed to the South African Reserve Bank.”
#ABSIPcongratulates Lesetja Kganyago (Governor), Fundi Tshazibana and Dr. Rashad Cassim (Deputy Governors) on being reappointed to the South African Reserve Bank (SARB) pic.twitter.com/hHgJalKHD3
— ABSIP NATIONAL (@absip) March 15, 2024
Meanwhile, Chief EM Economist at VanEck, Natalia Gurushina, said that this was great news for the country.
Gurushina said on social media platform x, “There are many factors that can drag ZAR down in the coming weeks, but today is a good day for the currency.”
Great news from South Africa – Governor Kganyago is re-appointed for another term (before the elections!). There are many factors that can drag ZAR down in the coming weeks, but today is a good day for the currency. pic.twitter.com/mY1CIp61C6
— Natalia Gurushina (@NGurushina) March 15, 2024
On Friday, the rand firmed, after slumping the day before on a stronger US dollar and mixed local data.
On Friday afternoon, the rand traded at R18.70 against the dollar, about 0.2% stronger than its previous close.
Investors will now turn their focus toward South Africa's inflation figures later this week.
Daniel Silke, a political economyanalyst, said, “Markets will be happy with another five-year term for Lesetja Kganyago as SARB governor. How he performs will still be predicated on the outcome of Election 2024 and the willingness of any future coalition to cement and continue the political independence of the SARB.”
Markets will be happy with another 5-year term for Lesetja Kganyago as SARB governor. How he performs will still be predicated on the outcome of Election 2024 and the willingness of any future coalition to cement & continue the political independence of the SARB. https://t.co/ymGaHiznnp
— Daniel Silke (@DanielSilke) March 15, 2024
The governor of SARB was first appointed Governor on November, 9, 2014 and was reappointed for a second five-year term on November, 9, 2019.
“A lifelong public servant, he has extensive experience in macroeconomic policy formulation, including fiscal and monetary policy, financial sector policy, international finance, public debt management and financial markets. Governor Kganyago also played a leading role in implementing public finance and budgetary reforms at the National Treasury which led to greater transparency and accountability of the country’s public finance and budget processes,” the SARB said in a statement following his reappointment.
BUSINESS REPORT