Swift action is needed to quell Sarb uncertainty, says analyst
A SWIFT move by President Cyril Ramaphosa to make appointments at the South African Reserve Bank (Sarb) is essential to maintain confidence in the institution as a second Sarb deputy governor, Daniel Mminele, resigned a mere six months after Francois Groepe, analysts said yesterday.
Mminele’s resignation, which was announced yesterday, precedes the end-of-term of current Sarb governor Lesetja Kganyago in November, though he has indicated availability for reappointment.
Mminele, 54, has reportedly advised Ramaphosa and the Sarb’s board of directors that he has decided not to serve another term when his second five-year term as deputy governor expires on Sunday, June 30, Sarb said.
Citadel Investment Service’s chief investment officer, George Herman, said not much could be read into Mminele’s retirement as it had been well communicated ahead of time.
“It is decent succession planning, it creates space for new blood at the MPC (Monetary Policy Committee). It had been well planned,” he said.
Mminele, who also serves as South Africa’s Group of 20 and BRICS’ Central Bank deputy, among other duties, joined the Sarb in 1999 and rose up through the ranks.
Speculation is rife that he is earmarked for the position of chief executive of Absa, though he still has to serve the six months cooling off period, which is effectively a restraint of trade measure.
Opinion from analysts was mixed on the implications of Mminele’s resignation, especially in the context of the raging debate within the ruling party over the mandate of the Sarb.
Lawmakers have piled pressure on the institution to use monetary policy to foster growth in South Africa’s flagging economy and match rate hikes in other emerging markets in response to monetary tightening in the US.
Business maintains that the Sarb is already fulfilling its mandate of maintaining price stability in the interest of balanced and sustainable economic growth.
The resultant investor uncertainty caused by ANC secretary-general Ace Magashule over the Sarb’s mandate has led Ramaphosa as well as Finance Minister Tito Mboweni to reaffirm the institution’s autonomy. Ramaphosa held a meeting with the Sarb board earlier this month on the issues of the vacancies at the bank. The presidency has not yet made an announcement about replacements for Groepe and Mminele. The Sarb governor and his three deputies are appointed by the president of the country.
The Wits School of Business’s Johann Rossouw said it was imperative that Ramaphosa makes the appointments swiftly to preserve the integrity of the Sarb. “These are very senior executives and with the end-of-term of governor Kganyago in November, it is very important that President Ramaphosa acts quickly and judiciously in making new appointments,” he said.