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IN SOME ways, Lesetja Kganyago is a well-known quantity. He was former South African Reserve Bank (Sarb) governor Tito Mboweni’s favoured successor, an Alexandra-born master's degree graduate who has represented South Africa at the World Bank and the International Monetary Fund.
The fact that President Jacob Zuma this week appointed Kganyago as the next Reserve Bank governor, succeeding the respected Gill Marcus, has made him the focus of this week's column.
Zuma described Kganyago as having a “wealth of experience” after having worked for the government for the past 20 years.
Kganyago’s appointment marks continuity with the Marcus era. This argument is informed by the fact that he has admitted this week that he will seek advice from her whenever he needs it.
Additionally, Kganyago shares some of Marcus’ views about the South African economy and Sarb's role in it, with many experts assuming a fairly all-in-one changeover from the Marcus leadership to his, based on this. Therein lies the rub.
Though Marcus did a sterling job during the past five years at Sarb, she failed to keep South Africa's economy steady, which is one of the central bank’s mandates.
It remains to be seen how the economy will fare under Kganyago’s guidance.
One of his first major decisions will be to deal with protecting the value of the rand, as South Africa's constitution demands.
Kganyago agrees with the view that the central bank must protect what the rand can buy for all South Africans.
He says this means that inflation has to be kept in check, adding that if prices surge faster it means they eat away at the buying power of the rand and the most susceptible people are in fact the destitute, because they have no means of protecting themselves against inflation.
Despite this, he refuses to be compartmentalised into being a hawk – the promoter of high interest rates to keep inflation in check - or a dove – the promoter of low interest rates to promote economic growth.
Kganyago prefers to be a “dawk, which has the beak of a dove and the nails of a hawk”.
“I don’t think it’s a very useful characterisation because in arriving at the monetary policy stance, you actually look at what the figures are telling you. You look at high frequency data. You model. You forecast,” he told BizNews’ Alec Hogg this week.
“You make assumptions and most of the time by the way, it is in the process of making assumptions that the thing ceases to become a science and becomes more of a judgement thing. You can have very sophisticated models. They are never going to replace professional judgement and that is what you would face,” he added.
Kganyago can be as eloquent as he likes about the work he is about to start early next month, but the challenge he faces is to keep both the markets and the economy steady.
However, in conclusion I am sure Zuma and Kganyago’s backers inside government did not support him simply to put someone they like in one of the most important positions in the country, but because they are certain that he is unquestionably the best man for the job at hand.
- Fin24
The fact that President Jacob Zuma this week appointed Kganyago as the next Reserve Bank governor, succeeding the respected Gill Marcus, has made him the focus of this week's column.
Zuma described Kganyago as having a “wealth of experience” after having worked for the government for the past 20 years.
Kganyago’s appointment marks continuity with the Marcus era. This argument is informed by the fact that he has admitted this week that he will seek advice from her whenever he needs it.
Additionally, Kganyago shares some of Marcus’ views about the South African economy and Sarb's role in it, with many experts assuming a fairly all-in-one changeover from the Marcus leadership to his, based on this. Therein lies the rub.
Though Marcus did a sterling job during the past five years at Sarb, she failed to keep South Africa's economy steady, which is one of the central bank’s mandates.
It remains to be seen how the economy will fare under Kganyago’s guidance.
One of his first major decisions will be to deal with protecting the value of the rand, as South Africa's constitution demands.
Kganyago agrees with the view that the central bank must protect what the rand can buy for all South Africans.
He says this means that inflation has to be kept in check, adding that if prices surge faster it means they eat away at the buying power of the rand and the most susceptible people are in fact the destitute, because they have no means of protecting themselves against inflation.
Despite this, he refuses to be compartmentalised into being a hawk – the promoter of high interest rates to keep inflation in check - or a dove – the promoter of low interest rates to promote economic growth.
Kganyago prefers to be a “dawk, which has the beak of a dove and the nails of a hawk”.
“I don’t think it’s a very useful characterisation because in arriving at the monetary policy stance, you actually look at what the figures are telling you. You look at high frequency data. You model. You forecast,” he told BizNews’ Alec Hogg this week.
“You make assumptions and most of the time by the way, it is in the process of making assumptions that the thing ceases to become a science and becomes more of a judgement thing. You can have very sophisticated models. They are never going to replace professional judgement and that is what you would face,” he added.
Kganyago can be as eloquent as he likes about the work he is about to start early next month, but the challenge he faces is to keep both the markets and the economy steady.
However, in conclusion I am sure Zuma and Kganyago’s backers inside government did not support him simply to put someone they like in one of the most important positions in the country, but because they are certain that he is unquestionably the best man for the job at hand.
- Fin24
