Leading economists agree on choice of governor
WITH LESS THAN 60 days in his position in the Zuma dispensation, some of South Africa’s leading economists agree without reservation that SA Reserve Bank Governor Tito Mboweni will stay on in that position for the next five years. Failing that, the only possible change might come from within the Bank. That’s despite trade union pressure for Mboweni to go when his contract expires in August.
“ There’s nobody else that’s been (visibly) groomed for that position at the moment,” says Tony Twine, economist at Econometrix. Twine says the fact there haven’t been any announcements as to who would step into the governor’s position can be seen as a sign of continuity.
Although Mboweni has three equally capable deputies, there’s no clear candidate at the moment. Says Twine: “I still believe it’s a good public relations exercise to advance the profile of any junior officer if he’s going to be pushed upstairs.”
Twine says the most obvious outcome is that Mboweni will continue in his current position. “If there was a change there would have been a signal by now. We’re not talking about a corner bank manager here.”
Sanlam group economist Jac Laubscher advances a more technical reason for Mboweni remaining governor. He says one of the main requirements to be appointed to the job is a minimum one-year experience in banking. Section 4 (2) (a) of the SA Reserve Bank Act vaguely states the governor “shall be a person of tested banking experience”. That was probably the reason why Mboweni was seconded to the Bank to understudy then governor Chris Stals a year before Stals was due to leave. “It was to allow him to gather the experience,” says Laubscher. “It appears unlikely any of the current deputy governors could be Mboweni’s successor as governor.”
Perhaps recently appointed deputy governor Daniel Mminele could be groomed as the next governor, but only after another Mboweni term. “He’s well regarded by the markets. He’s done a credible job as head of financial markets since 2004,” says Laubscher.
President Jacob Zuma likes to present an image of “business as usual” and continuity on monetary and economic policy, says Brait economist Colen Garrow. “It’s very important to stress that Zuma has confidence in the people running monetary policy. Having left it so late for any announcement of a change, means there will be continuity.” Garrow says there’s clearly no outsider coming into the governor’s seat, as there’s no longer the one-year understudy opportunity.
Garrow says another reason Mboweni will stay on is that he’s done “wonderful things” as governor. “One can’t be pessimistic about Mboweni retaining his post. He’s been very transparent in his conduct of monetary policy – more transparent than any governor we’ve had,” says Garrow.
Mboweni’s also fulfilled the promises he made before taking over as governor: those being to close the US$25bn forward book of the Bank and that he wouldn’t squander SA’s currency reserves in defence of the rand. “He’s done all those and they did a lot of good for currency stability,” says Garrow, before adding the odds are in favour of Mboweni staying on as governor.
The fact that rating agencies have also maintained their sovereign rating and future outlook of SA also gives the impression they’re comfortable with the future of the Bank and economic policy. “ They’ve done their homework and have a fair idea of what’s going to happen,” says Garrow.
In the unlikely event that change might occur, Garrow and Twine concur it will be internal. Garrow says Mminele would be the most probable appointment if any of Mboweni’s deputies were to take over. He says the global recession isn’t a time to manoeuvre or “kick people around like chess players. We’ve got to build on to the base and keep the people that contributed to our monetary and economic stability.”
The long-serving Xolile Guma could be a possible successor, says Twine, but he hasn’t been adequately exposed by the powers that be. “ Things are likely to remain the way they have been even if one of the deputy governors becomes governor.”
Missed opportunity. Tony Twine
No chess players. Colen Garrow
Another Mboweni term. Jac Laubscher