Who will replace Gill Marcus?

Zuma can take his pick from a pool of skilled deputies that the governor leaves behind as part of her rich legacy at the SA Reserve Bank

South Africa’s new banknotes will, in all likelihood, bear the signature of current deputy governor Lesetja Kganyago.

He is the main contender to succeed outgoing SA Reserve Bank Governor Gill Marcus.

Marcus announced on Thursday she would not renew her contract when it expired in November, paving the way for one of her deputies to take over the top post.

It is now up to President Jacob Zuma to choose her successor, although Marcus clearly favours an insider.

She told reporters on Thursday that the bank “has a very strong talent pool from which to choose inside the bank and I’m sure that he [Zuma] will recognise that”.

Daniel Mminele, another of the three deputy governors who sits on the seven-member Monetary Policy Committee (MPC) is the other obvious candidate.

Mminele has by far the longest history at the bank, having worked his way up from assistant to the then deputy governor James Cross in 1999.

But Kganyago is considered a strong contender as he has also had a long career at National Treasury since 1996. He had been the Treasury’s director-general from 2004 and was sent to the reserve bank by Zuma in 2011.

Finance Minister Nhlanhla Nene, who worked with Kganyago for years at the Treasury, will inevitably weigh in on the appointment of a new governor.

Marcus’ departure is not particularly shocking, although she will be only the second reserve bank governor to step down after a single term of five years.

At 65, Marcus is at the South African age of retirement. Renewing her contract would have seen her heading the bank until the age of 70.

Several economic commentators this week said there was little reason to worry about the future of the bank or any sudden changes in policy.

The rand reacted very slightly, weakening by 10c to R11.10 against the dollar after the announcement.

According to John Cairns, a forex trader at Rand Merchant Bank, “the rand didn’t like the announcement”, but the slight weakening “seems a little panicky considering that there are competent deputy governors standing ready”, he said.

Barclays Africa economist Peter Worthington echoed that, saying the bank’s access to experienced people was “one of her important legacies”.

Apart from Marcus and Dr Gerard Rissik (1962-1967), every other governor in the bank’s almost century-long existence has held office for at least a decade and often more, including Marcus’ predecessor Tito Mboweni.

It was speculated this week that Marcus’ successor would not necessarily be one of her deputies.

Apart from Mboweni, virtually all other governors since 1920 spent most of their adult lives at the bank and first served as deputy governor or senior adviser to the governor before taking the top job.

Marcus had been deputy minister of finance from 1996 and deputy governor of the bank between 1999 and 2004. She took up a stint in the private sector, chairing Absa, before becoming governor in 2009.

What’s it all about

The reserve bank’s major public-facing entity is the MPC, which meets every quarter and makes a call on whether to change the repo rate which, in turn, affects the rates charged by South Africa’s banks.

The committee objective is to keep inflation within the official target range of 3% to 6%.

When inflation shoots higher than 6%, the repo rate is not automatically raised because the MPC has to pass judgment on whether the inflation is due to factors the rate would actually affect?–?which is often not the case.

Apart from the governor and three deputy governors, the MPC includes three economic advisers.

The committee was created in 1999 with 15 members.

This number was trimmed to eight members in 2002 when the inflation target regime kicked in.


Marcus is leaving the central bank at the end of a low interest rate cycle with expectations that her successor will inherit a situation that will call for increasing rates.

When Mboweni became governor in 1999, the repo rate was 12% and South Africa’s inflation rate was 5.1%. During his term, his MPC cut the rates down to a low of 7% by 2005.

But by 2008, the global economic downturn had helped push inflation back up to 11.5%. The repo rate was raised to a high of 12% again in June 2008.

By the time Marcus took over in 2009, the economic crisis had set in and the repo rate had already been cut back to 7% again. Inflation was at 7.1% that year.

In Marcus’ term, the rate was cut to a historic low of 5% in 2012 and inflation stayed at the high end of the target band. Inflation spiked to 6.6% in March this year. The reserve bank left it at 5.75% on Thursday.

I’m happy to see her go, says controversial shareholder

Reserve bank shareholder Michael Duerr is happy to see the back of governor Gill Marcus.

German-based Duerr, a controversial figure well known for disrupting the central bank’s AGMs, said her tenure over the past five years had been a “disaster for the country”.

“The tenure of Gill Marcus as SA Reserve Bank governor was a disaster for the people of South Africa, for the state in general and for the bank’s shareholders,” said Duerr.

Duerr is a relatively big shareholder.

Nine members of his family each own 10?000 shares?–?the most a single shareholder can own. Together, the family owns 4.5% of the bank.

Duerr said “some hint” had been “delivered by an ANC inner circle member already in July this year”. He said “Gill had to be fired and Lesetja would most probably be the chosen successor.

“I was betting on Daniel [Mminele] for a long time, but the political connections and friendship with the new minister of finance obviously made the deal,” he added.

Duerr said the recent curatorship of African Bank had helped to “dismantle her and more dirt could pop up”.

Duerr is an outspoken shareholder activist at the central bank and has had a few run-ins with those at the top, including former governor Tito Mboweni.

He has not been happy with Marcus.

“She produced in her five-year term five consecutive losses of more than R5?billion,” he said.

In its latest annual report, the bank reported a loss of about R1.6?billion in the year to March.

Duerr, who claims there were all sorts of “skulduggery” at the bank, alleged that Marcus was fired in 2004.

“She supposedly got fired after her five-year term as a deputy governor in 2004,” he said.

Duerr made claims about Mboweni “being not amused” about a report Marcus had penned and discussed with directors.

“Maybe the predecessor has some words to say about this strained relationship.”

The reserve bank has a little more than 660 shareholders who own about 2?million shares. The bank’s shareholders are not allowed to hold more than 10?000 shares individually and dividends are limited to 10c a share or R200?000 a year.

Mboweni is also a shareholder, with 10?000 shares; and another former bank governor, Chris Stals, is listed as holding 200 shares, according to a shareholder index as at end-July.?– Mamello Masote

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