Mboweni’s future remains unclear

NOW that the political future of former finance minister Trevor Manuel is ensured at the head of the new national planning commission, the way seems to be open for reappointing Reserve Bank governor Tito Mboweni.

Governors are appointed by the president for five-year periods. Mboweni’s second term ends in August.Since the ANC’s change of leadership in December 2007, Mboweni’s future has been uncertain, because trade union federation Cosatu and the SACP, staunch supporters of President Jacob Zuma, have consistently opposed his monetary policy – particularly inflation targeting, which was introduced in 2002.Cosatu spokesman Patrick Craven on Tuesday reiterated the federation’s opposition to the bank’s conservative monetary approach. Asked whether Cosatu was pressing for a new appointment, he did not answer directly, but said: ‘We have been very critical of his (Mboweni’s) performance. There have been ongoing consultations with the alliance. And if there is a proposal, I am sure we will be consulted by the president.’However, Zuma’s inclusive approach to his cabinet appointments is a sign that he is not drawing only on the left wing of his support base in such decisions. And Manuel’s new influential position is an indication that the president understands the importance of maintaining the confidence of the financial markets.The rand and the JSE fell sharply on news of Manuel’s resignation last September. And both recovered when Manuel’s office said he would be prepared to serve in a new government. Manuel, who was appointed finance minister in 1996, resigned along with many other ministers in former president Thabo Mbeki’s cabinet, after the latter’s resignation.Mboweni has played a pivotal role in the economy by countering inflation, which destroys the purchasing power of money.He is highly respected by financial market participants both at home and abroad.Iraj Abedian, the chief economist and chief executive at Pan African Advisory Services, said: ‘Mboweni has been an anchor of macroeconomic stability in South Africa and it wouldn’t make sense not to reappoint him. In the light of the cabinet appointments, there is no reason to expect Governor Mboweni will not serve another term. The last thing we want at this point is to change everything and everyone.’Goolam Ballim, the chief economist at Standard Bank, said Manuel’s new role ‘recognises the content and spirit of his leadership at the finance ministry’. Manuel’s ‘pragmatism and balance has generally been echoed by the Reserve Bank’s monetary policies, so it would be consistent for Governor Mboweni to be reappointed’, Ballim said.Cees Bruggemans, the chief economist at First National Bank, said Mboweni’s reappointment and the continuity it would bring ‘would be good for the country’.Richard Fox, the head of sovereign ratings for Africa and the Middle East at ratings agency Fitch, said the agency’s response to any new appointment would depend on who the replacement turned out to be and what he did in the job.While the central bank governor is appointed by the president, he is accountable to Parliament, ‘so the government cannot exercise undue influence over the bank in furthering any party political agenda’, according to the bank’s website.Mboweni has struggle credentials. He was deputy head of the ANC’s economic policy department before 1994 and served as labour minister in the first two ANC cabinets.The Reserve Bank has had only eight governors since its inception in 1921. Mboweni’s immediate predecessor, Chris Stals, served from 1989 to 1999, while former governor Gerhard de Kock served from January 1981 until his death in August 1989. The longest-serving governor was Michiel de Kock, who headed the bank for 17 years between 1945 and 1962.The presidency did not say when an announcement would be made on Mboweni’s future at the bank. -Business Report