South African Reserve Bank governor Lesetja Kganyago. Picture: PUXLEY MAKGATHO
South African Reserve Bank governor Lesetja Kganyago. Picture: PUXLEY MAKGATHO

Lesetja Kganyago has had his detractors during his first term as Reserve Bank governor No. 10, as finance minister Tito Mboweni likes to refer to him.

Most of the criticism, of course, has been around monetary policy and the idea that he has been overly dogmatic in his approach to pursuing the 3% to 6% inflation target, without the necessary regard for supporting an economy strangled by a lack of growth and a socially unsustainable unemployment rate close to 40%.

Perhaps his biggest contribution and the reason he is not well liked by the populist elements in the ANC is the unwavering commitment to protecting the Bank’s independence, especially in the later period of Jacob Zuma’s presidency. 

The bonus is that we are spared months of yet more uncertainty and speculation about Kganyago’s position and his appointment, four months before his term was due to end, is a welcome show of decisiveness.

Kganyago has not been shy to stand up and make his voice heard on the debates that have consumed elements in the ruling party over the Bank’s ownership, mandate and more recently the appropriateness or otherwise of its policy stance.

Before that, he had taken a strong stance against public protector Busi Mkhwebane after her infamous 2017 report on the Bank’s apartheid-era loan to Bankorp, now part of Absa. That report also instructed that action be taken to amend the constitution to change the Bank’s mandate, a ruling the central bank challenged as unlawful.

That report was set aside by the high court and the constitutional court is yet to rule on Mkhwebane’s appeal against a ruling which requires her to pay, in her personal capacity, a portion of the Bank’s legal costs.

So it is not a surprise that the Bank and Kganyago have found themselves in the middle of the factional battles within the ANC, culminating in that notorious statement by the party’s secretary-general, Ace Magashule, directing among other things that the Bank be ordered to consider a policy of “quantity easing”.

While the Bank became a proxy for battles in the ruling party, Ramaphosa’s handling of changes in its leadership likewise has become a test of his strength within the ANC and his ability to face down factions loyal to Zuma.

The worry for investors was that the Bank and the credibility of the country’s policy framework would be sacrificed in Ramaphosa’s futile attempt to seek consensus with people who would settle for nothing less than his complete failure.

Investors will cheer the news of Kganyago’s appointment as something that ends uncertainty about one of the country’s most important institutions.

The appointment of current monetary policy committee members Fundi Tshazibana and Rashad Cassim as deputies from August will go a long way to maintaining confidence that policy will continue to be driven by an independent assessment of economic conditions rather than orders from politicians. 

Tshazibana especially always seemed an obvious candidate and the only surprise is that it took the government so long to come to a decision, more than six months after Francois Groepe’s resignation in January. The failure to fill that post, and allowing Daniel Mminele’s term as deputy to end in June without a replacement, created unnecessary anxiety about the direction of the Bank.

All the time Tshazibana, a suitably qualified economist who has worked at the National Energy Regulator of SA, the Treasury and the IMF was already at the Bank acting as an adviser to the governors.

Her appointment will also go some way to addressing the gender balance, or rather the lack of it, in the monetary policy committee.

One out of five is still nowhere near good enough, and something that should be looked at if and when the numbers go back to seven, the number before Brian Kahn’s retirement in 2018.

The bonus is that we are spared months of yet more uncertainty and speculation about Kganyago’s position and his appointment, four months before his term was due to end, is a welcome show of decisiveness.

With ANC populists seemingly having worked out that their obsession with the Bank’s mandate and ownership was a bit of a red herring and that having a pliant governor would have been the bigger prize, this has been a good time for Ramaphosa to show who is in charge.

We just wish he would do it more often, and quicker.