Mboweni stays

Lead­ing economists agree on choice of gov­er­nor

Finweek English Edition - - Openers - SIKONATHI MANTSHANTSHA sikonathim@fin­week.co.za

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

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