Marcus’s Main Achievement May Be Indifference If She LeavesRene Vollgraaff
It’s less than three months to go until Gill Marcus’s term expires as South African central bank governor, with no word on whether she will remain in her post. Yet investors aren’t panicking.
Marcus, who turned 65 on Aug. 10, will end her five-year term on Nov. 8. While President Jacob Zuma hasn’t given any indication on whether he will replace her, investors have faith that if she goes, one of her experienced deputies -- Daniel Mminele or Lesetja Kganyago -- will take up the reins.
“I don’t think the market is terribly worried because they see the people under her as really quite competent,” Nazmeera Moola, an economist and strategist at Cape Town-based Investec Asset Management, said by phone on Aug. 14. “Provided they change to one of the deputy governors, there wouldn’t be concern.”
Marcus, a former deputy finance minister and chairwoman of Barclays Plc’s South African unit, took office in 2009 after the global financial crisis hit, dragging the local economy into its first recession in 17 years and pushing up inflation. Her appointment was announced weeks after Zuma, 72, was elected as leader, dogged by corruption allegations and investor concern that he would push for looser fiscal controls.
Marcus helped steer the economy through the turmoil, providing stability to monetary policy that’s become a hallmark of her term. During the time that she’s led the Monetary Policy Committee, the benchmark rate has been adjusted just six times compared with 17 in the previous five years.
The next governor, whether it’s Marcus or not, will need to contain the fallout from the collapse of African Bank Investments Ltd. The central bank stepped in this month to save the Johannesburg-based lender after its share price plunged 95 percent. Moody’s Investors Service downgraded South Africa’s four biggest lenders on Aug. 19, adding to speculation that the sovereign credit-rating may be cut.
“There are no special reasons why we should be anticipating a change in the governorship,” Razia Khan, head of Africa research at Standard Chartered Bank Plc in London, said in an e-mailed response to questions on Aug. 19. “With the Reserve Bank’s institutional strength well-established, this is less of a risk-event for markets” if Marcus is replaced, she said.
Marcus said in June the renewal of her contract hadn’t yet been discussed with Zuma. Mac Maharaj, spokesman for the president, said on Aug. 20 the matter is still under consideration and a decision will only be announced once the process is finished.
The rand has swung from a high of 6.5686 against the dollar to a low of 11.3176 during Marcus’s term amid turmoil in global financial markets. Yields on the benchmark rand bond due in December 2026 have dropped 68 basis points, or 0.68 percentage point, to 8.22 percent since her appointment.
The currency gained for a second day, adding 0.2 percent against the dollar to 10.6917 as of 4:30 p.m. in Johannesburg.
Mminele, 49, has been with the Reserve Bank since 1999 and was appointed for a second five-year term as deputy governor on July 1. Kganyago, 48, joined the central bank in May 2011 from the National Treasury where he had been director-general for more than seven years.
Kganyago “would be the obvious candidate,” Iraj Abedian, chief executive officer of Pan-African Investment and Research Services, said in an interview in Johannesburg on Aug. 14. “He is more experienced. He was the director-general of finance, so he is an obvious candidate internally.”
The newest of the three deputy governors is Francois Groepe, a former chief executive officer of Naspers Ltd.’s Media 24 unit, who took office in January 2012. Prior to his appointment, Groepe, 44, had served as a non-executive board member of the central bank for eight years.
“I suspect that she might take retirement,” Azar Jammine, chief economist of Econometrix, which provides economics analysis to businesses, said by phone from Johannesburg on Aug. 14. “She is at an age where the majority of people retire. She is the kind of person who probably would also not want to be seen to be hogging the position and may well want to leave with a good name and a good track record.”
Marcus’s predecessor, Tito Mboweni, stepped down at the age of 50 after serving 10 years and three months at the helm of the central bank.
The Reserve Bank doesn’t have a mandated retirement age for the governor or deputy governors and a 2010 amendment to legislation governing the central bank allows the president to appoint them for less than five years following their first term in office, said Jannie Rossouw, a former secretary of the bank.
“It may be a good thing if the Reserve Bank governor’s new term is less than five years to move the appointment of the central bank head and the national election to different years,” Rossouw, who is now head of the school of economic and business science at the University of Witwatersrand in Johannesburg, said.
Zuma has already made an unexpected change to the other key economic post in his government by replacing Pravin Gordhan, 65, in May as finance minister after one term. His successor was Nhlanhla Nene, who was deputy finance minister for more than five years.
The delay in announcing the governor’s contract may suggest Marcus will remain in her post, said Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg. When Zuma replaced Mboweni with Marcus, he gave market participants four months of advance warning before she took office.
“The longer they leave it, the higher the probability is that they’ll continue with the status quo,” Nalla said by phone.