Johannesburg - Outspoken former Treasury chief
Lesetja Kganyago's arrival on Monday may stiffen the South African Reserve Bank's (Sarb's) resolve to do what is needed to bring inflation back under control.
In February 2010, as the economy was exiting its first recession in almost two decades, Finance Minister
Pravin Gordhan asked the Monetary Policy Committee (MPC) to increasingly consider growth and employment in its deliberations and decisions.
That reflects continuing pressure from unions to keep interest rates low to help bring down national unemployment rates of around 25%.
But the government's appointment of former National Treasury director general Kganyago would seem to signal it will not risk compromising the Sarb's credibility with investors after a tough period following the 2008 global financial crisis.
In his 15 years at the Treasury, 46-year-old Kganyago distinguished himself for drafting 15 budgets that espoused sound fiscal management, even at a time when leftist allies of the ruling party were calling for increased spending on welfare.
He was a strong advocate of counter-cyclical fiscal policy that saw South Africa record a budget surplus for two years when the economy was growing, instead of bowing down to political pressure to spend more and swell the deficit.
"He has considerable standing of his own within the ANC, and is seen to be in touch with the challenges facing the grassroots," said Razia Khan, head of Africa research at Standard Chartered.
"(His appointment) should go some way towards strengthening the public accountability that the Sarb as an independent institution have been trying to foster," she added.
The number of bank policy board members has fluctuated and Kganyago's arrival as deputy governor brings the current total to eight after the appointment of
Rashad Cassim on March 1.
Experience
The central bank is at a critical point where it has to decide on the right timing to start tightening monetary policy, without risking crimping already sluggish growth.
It has left the repo rate unchanged at 5.5% this year, after reducing it by 650 basis points in the two years to December 2010. Last week it hinted at rate hikes, saying it would act timeously on inflation.
The Sarb's new forecasts show consumer inflation briefly topping its 3% to 6% target range at 6.3% in the first quarter of 2012, but rate hikes - expected by some to start in the fourth quarter - are unlikely to prove politically popular.
When many leftists in the ruling party were calling for strong intervention to weaken the rand last year, Kganyago was one of the first high-ranking officials to dismiss such steps, including the adoption of a tax on capital inflows to stem the currency's strength.
"Kganyago is going to provide a combination of helping the MPC to understand the fiscal space better and to enhance its capacity to give correct and informed decisions," said Eskom economist Mandla Maleka.
Before the Treasury, Kganyago was the Sarb's director of international commercial financing from 1994 to 1996.
Investors know him for his easy-going nature and sense of humour at international roadshows. He has also represented the country at the Group of 20 and International Monetary Fund meetings.
Like many black people in his position, Kganyago rose from poverty. He was born in Alexandra township, where much of the population lives in squalor in the shadow of palatial homes owned by the rich in the country's economic hub Gauteng.
Education, including a master's degree from the University of London, afforded him the opportunities denied to many blacks, whose poor living conditions have often seen little improvement even 17 years after the end of apartheid.
He is married with two sons and in his spare time, you will find him on the golf course or on a hiking trail.