‘Dovish’ deputy governor Kuben Naidoo resigns from Reserve Bank

Reserve Bank deputy governor Kuben Naidoo has handed in his resignation in a move that has long been on the cards, giving President Cyril Ramaphosa the opportunity to start bringing new leadership into the Bank before the 2024 elections.

Ramaphosa and Bank governor Lesetja Kganyago have to accept the resignation, which has not been confirmed by the Bank or the presidency, but could take effect as early as November. Naidoo, who turns 53 in 2024, can be expected to seek a new career and is likely to be courted by leading local and international players. But the Bank’s protocols bar him from taking a new job while in office and impose a strict six-month cooling off period.

Naidoo is a former senior Treasury and presidency official who joined the Bank in 2013 and was appointed deputy governor in 2015. His second term of office was due to expire in March 2025. This could potentially have seen the terms of all four of the Bank’s governors end within an eight-month period, with the terms of deputy governors Fundi Tshazibana and Rashaad Cassim due to end in August 2024 and Kganyago’s in November 2024.

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There is no limit on how many terms governors can serve but the appointments have to be made by the president. While the Bank’s independence is enshrined in SA’s constitution, the governor and deputy governors are crucial to ensuring this is safeguarded in practice.

It is understood Naidoo has over the past year floated the idea inside the Bank that he might want to leave before the end of his second term to do something different. He met Ramaphosa on July 4 to discuss his departure but has yet to receive a response.

Critics charge that his decision to tender his resignation has been poorly handled by the Bank and the presidency.

Analysts say, however, that while it has come as a surprise, there are no concerns about the Bank as an institution.

The main implication is expected to be a more hawkish tilt to the interest rate decisions of the monetary policy committee (MPC) given that Naidoo is widely viewed as being one of the more dovish members.

“Naidoo’s departure would leave a gap in the MPC discussion: Mr Naidoo’s views have been well received by market practitioners. In the current tightening cycle, we believe he has supported a proactive approach to tightening even if his own reaction function placed a higher weight on growth than some of the other committee members,” RMB Morgan Stanley economist Andrea Masia said in a note.

Naidoo is deputy governor in charge of financial stability but was previously the deputy governor in charge of bank supervision and CEO of the Prudential Authority (PA), which regulates the soundness of SA’s banks and other financial sector institutions.

He led the establishment of the PA in 2018 to give effect to SA’s new financial sector regulation, merging banking and insurance regulators and putting staff, IT systems and leadership in place for the new institution.

Naidoo has been widely hailed for his role in seeing SA’s banking sector through the turbulent early months of the Covid crisis and clearly enjoyed the challenge at the time: “Navigating a banking sector through Covid is not something you do every day,” he once said.

His tenure as SA’s banking regulator also saw the Bank decline to give the Guptas a banking licence when it refused to agree to the sale of Habib Bank. He helped to open up the sector to greater competition with the granting of the first new banking licences in more than a decade, to new players such as TymeBank and Discovery Bank.

Naidoo’s departure will leave the MPC with only four members and this could be the case for some time. When Daniel Mminele and Francois Groepe left it took several months to replace them.

The committee has in the past had as many as seven members, and though four is still a quorum, most in the market would prefer to see a larger grouping. The governor and his three deputies are automatically members, and the current committee includes the Bank’s head of research, Chris Loewald.

joffeh@businesslive.co.za