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Lesetja Kganyago

President Jacob Zuma announced on Friday that Treasury director-general Kganyago would, on May 16, become the Reserve Bank's third deputy governor for five years.

The position has been vacant since Renosi Mokate left the bank at the end of July last year.

Albeit somewhat premature, Kganyago's departure did not come as a total surprise. His contract at Treasury was renewed for two years in January last year, but he indicated then it would be his last term.

While analysts welcomed his appointment at the bank, the biggest question was: who will be appointed in his place at Treasury?

Pravin Gordhan, the Minister of Finance, said on Friday there was a "clear process" to fill vacancies within the government and gave no indication of whether an appointment would be made from within or outside of Treasury.

"We have to advertise, give people time to apply, and have a panel do interviews. And as soon as we are ready, a successor will be announced. The whole aim of exercise is to ensure a smooth transition from one DG to the next," he said.

One of the possible replacements is Ismail Momoniat, head of tax and financial sector policy at Treasury.

"He is well regarded, but they might want to recruit externally," said Razia Khan, an economist at Standard Chartered in London.

Khan said Treasury might also look at some of its former officials who now work in the private sector.

"Kganyago's role at the Treasury has been so pivotal that there will be much more speculation on his replacement than there was about the vacancy for a deputy governor that existed at the Reserve Bank."

Investment Solutions economist Chris Hart said Treasury would be diminished by Kganyago's departure.

"Treasury is in a good space where they have quite a bit of good talent," Hart said. "But at that level there are quite a lot of political imperatives in appointments.

"So we will have to see whether the left of the (governing) alliance assert their influence to get one of their people in."

Another analyst said on Friday that Gordhan was probably making life difficult for some ministers by keeping them on the narrow road - and Kganyago supported him.

"The removal of Kganyago could undermine Gordhan as well," the analyst said.

Khan said Kganyago's appointment would be interpreted positively by markets as he is known to investors.

"He has been the face of SA policy to investors. He has been the guy reassuring them at all the bond road shows and they have known him for over a decade. He would be seen as a proponent of inflation targeting and taking the same centrist line as the rest of the Reserve Bank."

When asked whether Kganyago might be groomed as a possible replacement for Reserve Bank governor Gill Marcus, who was appointed in November 2009, Zuma said there was no "hidden agenda" behind Kganyago's appointment.

But, Hart said, with Kganyago's skills and capabilities he could well be governor in the future, just as he could follow in Gordhan's footsteps as finance minister.

Dawie Roodt, economist at Efficient Group, said Kganyago was a fiscal expert, not a central banker.

"The good thing about his appointment is the new blood and new ways of thinking it brings to the bank," Roodt said. "The downside is he does not know monetary policy.

"As someone from a fiscal environment he might have a softer stance on monetary policy. His real test will come when interest rates have to start rising towards the end of the year, but that will also be Marcus's first real test."

Who is Lesetja Kganyago?

Kganyago was born in Alexandra township, north of Johannesburg, in 1965.

He began his career in accounting at First National Bank, subsequently working for Cosatu and the ANC.

He studied accounting and economics, receiving a BCom from the University of South Africa in 1991 and a master's in economics from London University 1994. He spent two years at the Reserve Bank between 1994 and 1996 as an investment manager and joined the national Treasury in 1996 as director of international commercial financing.

In 2001 he was appointed the head of the economic policy and international financial relations division.

He has been serving as director-general of Treasury since February 2004, when he replaced Maria Ramos.