EDITORIAL: Urgent need to clear Reserve Bank of ANC spell
The president should already have announced new deputy governors and renewal of governor’s term
Insofar as the currency markets hardly reacted, with the rand driven by external factors, the impending retirement of Daniel Mminele as Reserve Bank deputy governor was hardly a surprise. His future has been the subject of speculation for months, and reasons for him to call it a day at the end of his second five-year term are compelling enough.
He leaves after almost 20 years, which by anyone’s standard is a long time serving a single organisation. Since his commitment and sense of duty to the Bank and the identity it has developed over the past two decades cannot be questioned, one can hardly begrudge him a desire to explore new ventures.
His retirement also comes as one of the country’s biggest commercial lenders, Absa, is looking for a replacement for Maria Ramos, who retired as CEO earlier in 2019. Unsurprisingly, Mminele has been linked with that role.
It’s almost six months since Francois Groepe resigned as one of the Bank’s deputy governors, and there has still been no word about a replacement
His departure should not be a matter for controversy if, as we do, one takes at face value the Bank’s statement that the decision to retire was his own, and not driven by politicians seeking a change of personnel.
Mminele has been a staunch defender of SA’s inflation-targeting framework which, along with governor Lesetja Kganyago and the rest of the monetary policy committee (MPC), he views as the best way to support economic growth. In the face of recent political attacks on the Bank by some within the ANC, he used speeches to emphasise this point.
While the country has a history of farcical handovers for governors, such as the circumstances around Tito Mboweni’s departure a decade ago, it doesn’t reflect well on President Cyril Ramaphosa and the government that uncertainty about the Bank’s leadership has been allowed to linger. It’s especially so in the current political climate in which the bank and its role have become a hot-button issue.
It’s almost six months since Francois Groepe resigned as one of the Bank’s deputy governors, and there has still been no word about a replacement. Initially investors were led to believe that this would have happened in time for the March MPC meeting.
This means that Kganyago is now left with one deputy, Kuben Naidoo. In a well-functioning government, the announcement of the new deputy would take place within hours of the announcement of the previous one stepping down. But as the Bank released its statement on Thursday Ramaphosa was out of the country on his way to the Group of 20 meeting in Japan.
The July MPC meeting could potentially be one of its most important, coming at a time when global policy trends, the local economy and increased political scrutiny have collaborated to place policymakers under intense pressure to make a change.
While commentary from the Bank this week suggesting that policy is broadly accommodative of economic growth may temper some expectations, there is a growing consensus that it will cut the repo rate. There are enough good reasons to do so as early as July, though some economists have argued for it to wait until at least September.
It’s a pity that it will be a diminished MPC — Chris Loewald only joined in June to take the number for July’s meeting to five — that will be making the call. Seven heads would have made for much more robust debate and intellectual diversity.
So just purely on a technical and intellectual level, the government’s lax attitude to ensuring a settled leadership at the Bank has been a disappointment.
And then there is the ANC’s politics.
With Kganyago’s five-year term due to end later in 2019, this would have been a great opportunity for Ramaphosa to show that he can be decisive on the key issues of state. Thursday’s announcement should have been followed by a statement with the names of replacements for both Mminele and Groepe, and confirmation that Kganyago’s term would be renewed.
Otherwise, we are stuck with a sense that the Bank is being held hostage to ANC internal conflicts.