Bank appointments will ensure continuity
President Cyril Ramaphosa has made a bold set of appointments that will lock in stable and credible leadership at the Reserve Bank until after SA’s next general election in 2029.
In the move, which has been welcomed by the market and the banking industry, governor Lesetja Kganyago will serve a third five-year term after the second expires in November.
Deputy governors Rashad Cassim and Fundi Tshazibana have been reappointed for five years from September. The departed Kuben Naidoo’ s vacant deputy governor post is filled by former Treasury deputy director-general Mampho Modise.
Market players hailed the extension of Kganyago’s term ahead of the May 29 elections, which has investors on tenterhooks over the prospect of a coalition government.
“The markets will take comfort from reduced uncertainty given the governor’s orthodox approach and strong track record in inflation targeting,” said Terebinth Capital head of multiasset strategy Carmen Nel.
While Naidoo’s resignation sparked debate about its meaning for interest rate decisions, this is only one part of the Bank’s work, which employs more than 2,000 people and regulates the soundness and integrity of SA’s banking and insurance sectors as well as overseeing its financial markets, payments system and currency and managing SA’s foreign reserves.
Kganyago reminded journalists at January’s monetary policy committee (MPC) meeting that these were high-level managerial roles with huge responsibilities. “Sometimes the thought is that the deputy governors after this press conference just go back to their offices and start reading what to do at the next MPC. It is not. Deputy governors are executives of this Bank and there is a lot to run in this Bank.”
The Banking Association SA (Basa) welcomed Kganyago’s reappointment, which it said would sustain confidence in SA as the country dealt with its challenging economic conditions and the political uncertainty that would be likely to grow ahead of the general elections.
Basa said the simultaneous announcements were an important signal of SA’s longterm commitment to responsible monetary policy, good management of its reserves and the stability of its financial system.
Ninety One portfolio manager Adam Furlan said the reappointments ensured continuity at a well-functioning institution, ahead of the uncertainty of the election outcome. Modise was well known to the market and had done an excellent job at the Treasury, Furlan said.
RMB chief economist Isaah Mhlanga said the continuity of leadership would be important for completion of the changes the Bank was implementing to the monetary policy framework and to ensure that tapping into the gold and foreign exchange contingency reserve account would align with global best practice and help reduce SA’s debt service costs.
Modise had the temperament and calmness to become a great leader at the Bank and added diversity of thought, Mhlanga said, while Nel said the appointment would contribute to gender equality at the Bank.
Modise has a PhD in economics and started her career at the Bank before leaving for the Treasury, where she has headed the public finance department since 2017. She will take responsibility for Naidoo’s former portfolio, which includes financial stability and economic statistics and notes and coins.
Tshazibana, who is widely viewed as the top pick to replace Kganyago once he steps down, will remain CEO of the Prudential Authority, which regulates SA’s banks and its financial sector. Cassim remains in charge of financial markets and the management of SA’s foreign reserves and of the international portfolio, which will be a busy one going into 2025 when SA takes over as chair of the Group of 20.
Modise’s appointment will bring the membership of the MPC to six, including recently appointed adviser to the governors David Fowkes.