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THE discussion around who should replace Gill Marcus, the outgoing South African Reserve Bank (Sarb) governor, has been remarkably personality-driven.
Supporters of the two leading candidates – Lesetja Kganyago, the deputy Reserve Bank governor and Daniel Mminele, also a deputy governor – have made their views known in public in the past week.
Kganyago’s supporters say he should be given the position because he has worked closely with current Finance Minister Nhlanhla Nene. And, they say, Nene would no doubt vouch for Kganyago as the next Reserve Bank governor. Kganyango joined the bank in 2011 from Treasury, where he was director general.
Mminele’s supporters claim the fact that he has been with the bank for 15 years specialising in the national payments system, financial markets and exchange control areas stands him in good stead to be the new governor.
What all sides seem to misunderstand, however, is that the new head of the Reserve Bank needs to be willing and able to confront the financial sector before threats become too big to control. And this has not been a factor among the two sets of supporters.
Personally, I am not sure if either of these candidates will be able to do this.
In addition, the new head of the bank should be an eminently qualified individual of undisputed integrity. There is no doubt that since Chris Stals, South Africa has had governors with integrity.
But governors are also human too, whose blind spots, sense of self and potential conflicts of interest raise real concerns about arrogance and even unfairness.
The answer is not to expose the bank to the urges of a dysfunctional ruling party, the ANC, but rather to scale back on meeting the ANC's demands.
Lastly, the bank must be held more accountable for its oversight of banks. It is banks, not the government, that successfully make most of the money South Africans use, by expanding credit where it is most needed.
As South Africa has painfully learned in the past, banks can over-lend and even set off enormous instability in financial markets.
Marcus showed that she is good at this when she solved the matter affecting troubled African Bank Investments (Abil), South Africa’s biggest provider of unsecured loans.
About two months ago, Marcus ordered a consortium involving major South African banks to infuse R10bn into the embattled Abil.
Read: Sarb to investigate failed Abil
The consortium undertook to countersign a R10bn capital raising and engaged with shareholders and other participants about this matter.
The consortium comprised Nedbank, Standard Bank, Absa Bank, Capitec Bank, First Rand Bank, Investec Bank and the Public Investment Corporation, the manager of government employees’ pensions. The private/public sector partnership would, she said at the time, lead to Abil being split into two – a good and bad bank.
In terms of this deal, the good bank would be recapitalised while the bad one would be housed in a vehicle supported by the Sarb.
Perhaps the most important qualification for the next Reserve Bank leader is humility.
Supporters of the two leading candidates – Lesetja Kganyago, the deputy Reserve Bank governor and Daniel Mminele, also a deputy governor – have made their views known in public in the past week.
Kganyago’s supporters say he should be given the position because he has worked closely with current Finance Minister Nhlanhla Nene. And, they say, Nene would no doubt vouch for Kganyago as the next Reserve Bank governor. Kganyango joined the bank in 2011 from Treasury, where he was director general.
Mminele’s supporters claim the fact that he has been with the bank for 15 years specialising in the national payments system, financial markets and exchange control areas stands him in good stead to be the new governor.
What all sides seem to misunderstand, however, is that the new head of the Reserve Bank needs to be willing and able to confront the financial sector before threats become too big to control. And this has not been a factor among the two sets of supporters.
Personally, I am not sure if either of these candidates will be able to do this.
In addition, the new head of the bank should be an eminently qualified individual of undisputed integrity. There is no doubt that since Chris Stals, South Africa has had governors with integrity.
But governors are also human too, whose blind spots, sense of self and potential conflicts of interest raise real concerns about arrogance and even unfairness.
The answer is not to expose the bank to the urges of a dysfunctional ruling party, the ANC, but rather to scale back on meeting the ANC's demands.
Lastly, the bank must be held more accountable for its oversight of banks. It is banks, not the government, that successfully make most of the money South Africans use, by expanding credit where it is most needed.
As South Africa has painfully learned in the past, banks can over-lend and even set off enormous instability in financial markets.
Marcus showed that she is good at this when she solved the matter affecting troubled African Bank Investments (Abil), South Africa’s biggest provider of unsecured loans.
About two months ago, Marcus ordered a consortium involving major South African banks to infuse R10bn into the embattled Abil.
Read: Sarb to investigate failed Abil
The consortium undertook to countersign a R10bn capital raising and engaged with shareholders and other participants about this matter.
The consortium comprised Nedbank, Standard Bank, Absa Bank, Capitec Bank, First Rand Bank, Investec Bank and the Public Investment Corporation, the manager of government employees’ pensions. The private/public sector partnership would, she said at the time, lead to Abil being split into two – a good and bad bank.
In terms of this deal, the good bank would be recapitalised while the bad one would be housed in a vehicle supported by the Sarb.
Perhaps the most important qualification for the next Reserve Bank leader is humility.
The supposed rivalry between Kganyago and Mminele - provoked by their supporters - may have made a case for the introduction of a third or fourth candidate.
- Fin24
