Empty space in Reserve Bank: Who will Cyril appoint?

SA Reserve Bank. Picture: File
SA Reserve Bank. Picture: File

President Cyril Ramaphosa is applying his mind to the recommendations of the central bank’s board for filling key positions.

Later this year, President Cyril Ramaphosa may make three key appointments at the SA Reserve Bank.

In consultation with the finance minister, the president of the country appoints the governor and three deputy governors for five-year terms.

In November, Reserve Bank governor Lesetja Kganyago’s first term ends, and he has indicated that he is available for another term.

Isaac Matshego, an economist at Nedbank, said that, historically, most governors served two terms, with Gill Marcus, who served only one, being a notable exception.

He said it was pretty much a certainty that Ramaphosa would reappoint Kganyago for another term.

Matshego said that it was likely that Ramaphosa would announce his decision regarding the position of Reserve Bank governor about two months before Kganyago’s first term expired.

George Glynos, ETM Analytics MD and chief economist, said he hoped that the president would appoint Kganyago for a second term.

Another economist said that investors were expecting Ramaphosa to reappoint Kganyago for another five-year term.

After 10 years in office, at the end of this month, Reserve Bank deputy governor Daniel Mminele’s term expires.

Matshego said it looked like Mminele wanted to move on and he didn’t expect that the deputy’s term would be renewed.

He said that, while there was an outside chance that Mminele could be appointed as Reserve Bank governor, it would be a shock if Kganyago was not reappointed.

Glynos said that he rated Mminele very highly as he was “an exceptional banker”. Mminele has also been linked with a move to Absa and he could be headed to the private sector.

The other Reserve Bank deputy governor position has been vacant since January 31, when Francois Groepe resigned.

Groepe served at the Reserve Bank for 14 years – seven years as a non-executive director and the remaining seven as an executive.

Glynos said that it didn’t look like there was any rush to fill the vacant Reserve Bank deputy governor position and that Ramaphosa was looking for the right candidate.

“It looks like they are going to take their time to fill that position.”

An economist who wished to remain anonymous said that it was unclear if the vacant deputy governor position would be filled.

Earlier this month, Ramaphosa met with the Reserve Bank board at the Sefako Makgatho Presidential Guesthouse in Tshwane, the presidency said.

“The meeting, which was attended by the deputy minister of finance [David Masondo], representatives of the non-executive component of the Reserve Bank board and the governor of the bank was called to discuss vacancies that have risen in the executive leadership of the central bank,” the presidency said.

“The president has welcomed the engagement with the board and will be applying his mind to its recommendations.”

In another development related to the Reserve Bank, last week’s consumer inflation figures for last month came out at 4.5% year on year.

Investec chief economist Annabel Bishop said in a note that she expected a 0.25 percentage point cut in interest rates as early as next month.

PwC chief economist for Africa Lullu Krugel and PwC Strategy& economist Christie Viljoen said in a note that the latest consumer inflation figures added weight to expectations that interest rates could decline in the short term.

The implied path for interest rates, generated by the Reserve Bank’s quarterly projection model, point to a 0.25 percentage point cut in interest rates by March 2020, the PwC economists said.

In a speech on June 12, Kganyago said that current inflation and economic growth expectations suggested the Reserve Bank might have room to cut interest rates “over the next year or so”.

reserve bank
Faces of the Reserve Bank of SA. Graphics24

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