Rites of passage for three of Africa’s leading central bankers

The possible replacement of the governors of three key African central banks in 2019 could yield an unexpected surprise: policy stability.

Time is running out on the first terms of SA’s Lesetja Kganyago, Nigeria’s Godwin Emefiele and Kenya’s Patrick Njoroge. While all three are eligible to serve another term at the helms of their central banks, this is not guaranteed.

Still, deepening institutional strength means there should be broad buy-in of the policies these governors have overseen, according to analysts including Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Bank.

Here is a look at what the three governors have achieved, and how likely they are to remain in their positions:

Kganyago fought off a proposal by the public protector to change the Reserve Bank’s inflation-targeting mandate in 2017 and is a strong voice for central bank independence. His first term as governor ends in November and he has said he would be available to stay on if asked. The Bank head is appointed by the country’s leader and there is no limit on the number of terms.

With the ANC likely to retain its majority in the 2019 elections, the decision whether to retain Kganyago would be made by President Cyril Ramaphosa.

By appointing Kganyago again, Ramaphosa would boost policy certainty and consistency at the central bank.

Whether Kganyago stays or goes, there will be changes in the Bank’s senior leadership.

Deputy governor Francois Groepe has resigned and will leave the Bank at the end of January, taking the monetary policy committee (MPC) down to five members. Daniel Mminele’s second term as deputy governor ends in June and he has not commented on whether he would be available to stay. Kuben Naidoo’s term as deputy governor ends in 2020.

Emefiele removed a naira peg in 2016 to allow for a more market-driven currency and persisted with tight monetary policy that resulted in a gradual inflation slowdown, even as the economy contracted.

The future of Emefiele, whose first term ends in June, is likely to be determined by the outcome of Nigeria’s February elections, which are expected to be closely contested. The president nominates the central bank head, and legislators have to approve the appointment.

“So far, the governor seems to have enjoyed a good working relationship with this present administration,” Abiodun Keripe, head of research at Elixir Investment Partners, said.

Since the end of military rule no Nigerian central bank head has served more than one term. Still, a new bank governor may not affect the interest rate trajectory there as the rest of the MPC would remain mostly unchanged, Michael Famoroti, an analyst in Lagos at Vetiva Capital Management, said.

One of Njoroge’s biggest challenges has been the government’s decision to introduce rate caps, which he has said has frustrated the central bank’s attempts to transmit monetary policy. He has also had to deal with a disruption of financial market stability after three banks were placed in receivership within a year of his taking over the central bank. Njoroge’s four-year term ends in June and he may be reappointed.

“Njoroge, in my opinion, has played a tricky hand with considerable finesse,” said Aly-Khan Satchu, the CEO at Nairobibased Rich Management.

“It would be a big net loss for Kenya Inc if his term wasn’t extended.”