BACK IN THE HOT SEAT
The return of the governor
Delight but some trepidation that Tito Mboweni, a bold, outspoken candidate, is set to take up the reins at the Treasury
The markets have reacted positively to former SA Reserve Bank governor Tito Mboweni’s appointment as finance minister.
An independent thinker, who doesn’t suffer fools and railed against the forces of state capture, Mboweni is likely to be SA’s most colourful and opinionated finance minister since Trevor Manuel.
But Mboweni’s appointment, after the resignation of the embattled Nhlanhla Nene, is still something of a surprise given his low profile compared to other prime contenders such as Bank governor Lesetja Kganyago and former deputy finance minister Mcebisi Jonas. Perhaps neither wanted the job. Mboweni, on the other hand, seems to have been champing at the bit to return to public life ever since leaving the Bank in 2009.
During the state capture years he occasionally took to Facebook to rant at those attempting to subvert the state. His most acerbic retort was aimed at ANC deputy secretary-general Jessie Duarte for asserting that the Bank’s private shareholders compromised its ability to calm the markets on news of then-finance minister Pravin Gordhan’s imminent arrest.
After a lecture on the Bank’s history, Mboweni said: "In short, before you open your mouth and shout crazy, ignorant things about the SA Reserve Bank, please read this and visit the SARB website for more literature … The ANC has long ago resolved these issues … No leadership must act and look so stupid! At that level, we expect better!"
In other postings he argued for the creation of a state bank and for the government to own 40% of mining companies — views that now concern DA shadow finance minister David Maynier. Maynier feels that the former governor "often came over, on social media at least, as a little looney, posting content that seemed at odds with government policy".
Peter Attard Montalto of Intellidex expects Mboweni to re-establish the National Treasury at the heart of macro policy-making and spending oversight and to enable and defend the institution and its core conservatism. However, he warns that it "could come at the risk of political complications and upset" given the man’s "strong personality".
During his decade-long stint at the Bank (Mboweni succeeded Chris Stals in 1999 and was replaced by Gill Marcus in 2009), he secured a reputation as a monetary policy hawk who liked to throw his weight around the monetary policy committee (MPC). He once famously declared that if he was the only member of the MPC there would be no more rate cuts.
If Mboweni can be faulted it is for politicising the position of governor. Towards the end of his tenure his relationship with the unions became rocky. They considered him high-handed and they had a point — he once failed to descend from the Bank’s black granite tower to receive a memorandum from workers who were protesting outside. In his defence he said that he hadn’t gone down to receive it because he knew exactly what it would say.
After leaving the Bank, Mboweni worked in the private sector, including as an international adviser to Goldman Sachs International. He was recently made a nonexecutive director for SA at the New Development Bank (Brics Development Bank).
"This suggests he is up to speed with institutional investor concerns and the dire need for fiscal policy consolidation," says Citibank economist Gina Schoeman.
Gordhan, who held the post before Nene, is effusive about Mboweni’s skills: "[He] has vast experience in both government and private sector institutions. He will bring invaluable knowledge and experience to cabinet."
Certainly, his experience on the boards of companies like packaging company Nampak, cement company PPC, mining giant AngloGold Ashanti and insurance company Discovery will make the business sector feel entirely comfortable. This was evident on the markets. When news began to leak out on Tuesday about Mboweni’s imminent appointment, the rand began to regain lost ground. After earlier weakening past R15/$ it had gained 30c to around R14.70/$ later in the day.
Coronation chief investment officer Karl Leinberger believes Mboweni is an "outstanding candidate" and should continue in the vein of a "conservative central banker" now he is finance minister.
Schoeman also considers Mboweni’s "hawkish tendencies" to be a plus since it suggests he will be a strict finance minister who might be able to accelerate fiscal consolidation.
While the departure of someone with the character of Nene is a sad moment, Leinberger believes Nene did the right thing in resigning. "It signals a strong stance taken by principled people, which is good for the country," Leinberger says.
It emerged last week that Nene lied for years about never having met the Guptas.
"The entire process reflects well on President Ramaphosa," agrees Schoeman. She considers it prudent of the president to have moved swiftly to protect the credibility and functioning of the finance ministry even though Nene has only been caught in a lie, not found guilty of corruption.
Independent economist Mike Schüssler says he expects a "change of style but not of substance" at the ministry.
"The big difference is that [Mboweni] has the seniority to say ‘no’. When you’re sitting on the chest full of money, you’re in the unfortunate position of having to say no when people make claims on you. And he’ll have his glass of wine and tell you where to go."