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Cheers all round for Lesetja Kganyago

Oct 06 2014 20:41
Matthew le Cordeur

Incoming SA Reserve Bank governor Lesetja Kganyago with governor Gill Marcus at the Union Buildings in Pretoria. (GCIS).

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Cape Town – It was cheers all round for SA Reserve Bank (Sarb) governor designate Lesetja Kganyago, with the financial services sector, economists as well as the rand reacting positively on the announcement on Monday that he will succeed outgoing governor Gill Marcus.

READ: New Sarb governor appointment - as it happened

Economist Mike Schüssler, from, said the appointment showed that a technical post is not a political post. “It’s the first time in more than two decades that someone is appointed from within the bank,” he said.

“It is good also for the people at the bank who can now think that they could have a chance of going to the top via the traditional route for most central bankers in the world – experience,” he said. “It’s a good decision and they have talent at the Sarb.”

Emerging markets economist Peter Attard Montalto said the appointment signalling policy continuity and continued assured independence of the institution as a credible backstop for markets.

Montalto, who is an analyst for global markets research firm Nomura, said Kganyago has a long history of policy making in South Africa, from most recently overseeing the build-out of the Sarb's financial stability mandate, to previously a lengthy stint as director general of the National Treasury securing that institution’s conservatism and credibility.

"He blends that with a firm sense of independence, analytical mindset and strong leadership.

"Yet he has the struggle credentials within the ANC and historically Cosatu, in a similar way to governor Gill Marcus, to be able to connect with the ANC and its policy-making and political structures at the same time as remaining independent – explaining there South Africa’s vulnerability and issues, its policy choices and offering counsel as well as bringing a more market and investor perspective into the organisation.

"In all these ways we think he was the best choice for the job," said Montalto.

Standard Bank agreed, saying that the internal appointment demonstrated the depth of skill and experience embodied in the Sarb.

“Mr Kganyago is one of South Africa’s most experienced public servants and has served with distinction as director-general of the national Treasury and as deputy governor of the Reserve Bank with responsibility for bank supervision,” said Sim Tshabalala, chief executive of the Standard Bank Group.

Rand strengthened

FNB economist and spokesperson Alex Smith said the fact that the rand strengthened slightly following the announcement indicates that investors are broadly in support of the decision.

“At this difficult time for SA’s economy it is important that fiscal and monetary policy work together as efficiently as possible in order to foster economic growth,” he said.

Montalto said Kganyago is well known and well liked by the markets, which "is a bonus".

READ: Markets welcome new Sarb governor

Montalto did not expect any major shift in policy as Kganyago "is likely to be just as open and candid, in our view, as Gill Marcus."

He said Nomura expected the communications style, including in the Monetary Policy Committee statement and the Sarb bluntly calling out South Africa’s issues to remain unaltered.

Old Mutual Wealth said the MPC under Kganyago's leadership would strike a balance between the challenges of weak domestic growth, above-target but local stable inflation, and a tough external climate with US interest rates expected to start rising next year, potentially putting further downward pressure on the currency.

“This suggests higher interest rates ahead, but a far more gradual hiking cycle than in the past,” said Izak Odendaal, investment analyst at Old Mutual Wealth. “In other words, it is a very difficult time to become head of the Sarb, but Mr Kganyago has the necessary experience, the respect of the market and also the support of a strong team at the Sarb.”

Tshabalala said Marcus successfully led the Sarb through a challenging period and significantly advanced South Africa’s proud tradition of strong, wise and independent central banking. “We are confident that governor Kganyago will continue and add further lustre to this tradition.”

News24 Live's Jerusha Sukhdeo-Raath spoke to Fin24's Matthew le Cordeur on Kganyago's appointment:


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sarb  |  lesetja kganyago  |  sa economy



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