SARB’s Kuben Naidoo in surprise bid to quit with speculation of political interference

File photo of Reserve Bank Deputy Commissioner Kuben Naidoo. Picture: Oupa Mokoena/Independent Media

File photo of Reserve Bank Deputy Commissioner Kuben Naidoo. Picture: Oupa Mokoena/Independent Media

Published Oct 24, 2023


Political interference over the South African Reserve Bank (Sarb) monetary policy stance is thought to be the reason for the shocking resignation of the bank’s deputy governor, Kuben Naidoo, just a month away from the final meeting of the Monetary Policy Committee (MPC) for the year.

News broke yesterday that Naidoo had tendered his resignation from the SARB, to President Cyril Ramaphosa, just less than 18 months before the end of his second five-year contract.

Naidoo is one of three deputy governors of the Sarb and a member of the crucial five-member Monetary Policy Committee (MPC), which oversees the interest rates in the country.

The MPC has been split 3-2 over the past two recent meetings about the interest rates trajectory, with three members of the Committee preferring to keep rates on hold at 8.25% per annum and two preferring an increase of 25 basis points

In May, the MPC decision was unanimous to increase the rates by 50 basis points to 8.25% per year.

If Naidoo leaves the SARB before the MPC’s meeting on November 23, a replacement would have to be found soon in order to balance the committee’s voting split and avoid a stalemate when it comes to interest rates decision.

Economist Redge Nkosi, founder and executive director of monetary, banking and macroeconomic policy research and advocacy organisation First Source Money, said Naidoo’s resignation might point to external influence within the bank.

“It is as much a shocker as it is to many,” Nkosi said.

“But what is known is that there are too many foreign interests that the SARB seems to be engaged with, perhaps to the dissatisfaction of a few there.”

According to reports, Naidoo’s last day has not been finalised and discussions between President Ramaphosa, Sarb Governor Lesetja Kganyago, and Finance Minister Enoch Godongwana are still in process.

The governor and deputy governors of the Sarb are appointed by the president in consultation with the finance minister and the board of the Reserve Bank.

The Sarb declined to comment on Naidoo’s imminent departure and referred all queries to the Presidency.

Ramaphosa’s spokesperson Vincent Magwenya confirmed that the President had received Naidoo’s resignation.

“The South African Reserve Bank Deputy Governor Kuben Naidoo has expressed a desire to resign and the matter is still under consideration,” Magwenya told Reuters.

Naidoo was first appointed deputy governor in 2015 and is a member of the Sarb's Monetary Policy Committee.

He oversees the Financial Stability and Currency Cluster, which incorporates the Sarb’s Economic Statistics Department, the National Payment System Department, the Fintech Unit, the Financial Stability Department, and the Risk Management and Compliance Department.

Before the rotation of the deputy governors on 1 April 2022, Naidoo oversaw the Prudential Cluster, and was the first CEO of the Prudential Authority which regulates banks upon its inception.

Prior to his appointment as a deputy governor, he served as Adviser to the Governor of the Sarb and as the Registrar of Banks.

Efficient Group chief economist Dawie Roodt said even though he was speculating at the moment as information was scant, this resignation smacked of political interference.

Roodt said the Sarb’s MPC would have increased interest rates again in November, but Ramaphosa might be putting pressure on the MPC not to increase rates again and squeeze the poor ahead of the election.

“This is highly, highly irregular. The Reserve Bank is independent. The President has no say over matters of monetary policy. This is the responsibility of the Governor of the Reserve Bank, and he must know because it has to do with one of his members of the Monetary Policy Committee, which is an extremely important committee,” Roodt said.

“The only conclusion I can come to is that the President is putting pressure on the Reserve Bank. The only other thing I can think of is that we've got elections around the corner, the economy is struggling, we've got inflationary issues.

“And under these circumstances, the right move for the Reserve Bank is to increase interest rates. So, it seems to me that maybe there was political pressure on some of the Monetary Policy Committee members not to increase again.”

Roodt ended by saying that an increase in interest rates was the right medicine but that was bad for the economy.

“It's the right thing for the economy, but it's painful. And of course, the politicians do not want that just before an election.”