Ramaphosa is making moves to reclaim SA's Reserve Bank
Economy / 11 July 2019, 07:50am / Sechaba and Kabelo
President Cyril Ramaphosa yesterday reaffirmed his authority over the SA Reserve Bank (Sarb), reappointing current governor Lesetja Kganyago for the next five years in what is seen as a bid to stem noises around the independence of the bank.
The appointment saw Ramaphosa pushing aside ANC, trade union and other alliance partners factional fights over the independence and mandate of the reserve bank.
Ramaphosa has steadfastly defended the SARB mandate against calls for its nationalisation and the review of its mandate to include economic growth and job creation.
ANC head of economic policy Enoch Godongwana said Kganyago’s reappointment sent a clear message to the market that the independence of the bank remained important.
“It is important for the President to show the world that the Reserve Bank would remain a critical institution in South Africa,” Godongwana said. “One of the key messages that needs to be sent is that the bank will remain credible.”
Kganyago’s appointment comes just weeks after Ramaphosa reaffirmed the bank’s role to monitor currency and price movements.
During the State of the Nation address last month, Ramaphosa assured investors that the mandate and the independence of the bank would not be meddled with.
This as ANC secretary-general Ace Magashule stunned the markets telling by claiming that the party’s Lekgotla decided that its deployees in government had to implement resolutions that included the review of the SARB mandate to include job creation and economic growth.
Magashule said the governing party also wanted the country to consider quantitative easing to buy government bonds and to bail out state-owned entities.
His statement was largely seen as attacking the bank’s independence and saw the rand react sharply soon after his comments.
Ramaphosa also appointed Sarb’s monetary policy committee members Nomfundo Tshazibana and Rashad Cassim as Kganyago’s deputies following the resignation of Francois Groepe in January and David Mminele last month. Mminele is rumoured to be the hot favourite to be appointed as the new Absa chief executive.
Tshazibana is a National Treasury veteran and an economist with extensive experience in public policy analysis and formulation.
She also had extensive experience at the National Energy Regulator of South Africa and at the International Monetary Fund, where she ran the day-to-day operations.
An ANC insider told Business Report yesterday that the appointments were also meant to assure investors that the bank’s independence would not be sacrificed in the next five years.
“The noises around the independence of the (Reserve) bank have been worrisome to most of us,” the insider said. “What the president has done has been to put in a team that has extensive knowledge of the market and would give investors assurance that the bank is in the right hands. Once you tamper with the independence you invite all sorts of trouble that can bring the country’s economy to its knees.”
Kganyago’s steadfast defence of the independence of the bank has seen him challenging Public Protector Busi Mkhwebane’s remedial action in June 2017 that Sarb had to change its mandate from price and currency stability to include economic growth.
Kganyago said the recommendations represented Mkhwebane’s flagrant disregard of the law.
In another move to appease investors, Finance Minister Tito Mboweni also moved to arrest the unrest at the PIC with the appointment of a high-level interim board, which includes former Absa chief executive Maria Ramos and former Nedbank chairperson Reuel Khoza.
Mboweni said the board would serve for one year.
It includes trade unionist-turned businessperson Irene Charnley, Sindi Mabaso-Koyana, Tshepiso Moahloli, Barbara Watson, Ivan Fredericks, Zola Saphetha, Bhekithemba Gamedze, Angelo David Sabelo de Bruin, Bonke Dumisa and Makhubalo Ndaba.
Only two members of the strife-stricken board - Pitsi Moloto and Xolani Mkhwanazi - made it back to the new board.
Fired PIC chief executive Dan Matjila this week told the Lex Mpati Commission probing alleged misconduct at the state-owned asset manager that the appointment of Mkhwanazi into the PIC board in 2017 was a turning point for him at the company. He largely blamed Mkhwanazi for orchestrating his misfortune at the R2trillion asset manager.
The appointment of Ramos to the PIC board marks her first high-profile appointment since abruptly leaving Absa early this year. She has also been linked to the newly created chief reorganisation officer at embattled state-owned power producer Eskom.
Mboweni has confirmed that she is in the running for the job as the government scrambles to turn around the operational and financial woes of the cash-burning entity.
Mboweni said the appointments at both the PIC and the Sarb were welcome developments.
“We congratulate the appointees and look forward to working with them. 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 that they will take South Africa forward as we move to bring development to our people,” Mboweni said.