21 July 2009
While Gill Marcus will be taking over the reins at the South African Reserve Bank at a challenging time, analysts are confident that the country’s central bank will be in good hands.
On Sunday, President Jacob Zuma appointed Marcus to take over from Tito Mboweni as Reserve Bank governor on 9 November.
Among the questions now being asked is whether the Bank will adopt a new approach to monetary policy under Marcus – and, in particular, whether it will shift from the inflation-targeting framework it has followed for the past decade.
In 1999, South Africa adopted an inflation-targeting monetary policy framework that targeted the county’s inflation rate directly; a departure from the previous “eclectic” policy approach in which intermediate objectives still played a prominent role.
Taking over from Chris Stals in 1999, Mboweni, the first black governor of the Reserve Bank, had to oversee this process, and was at times required to make unpopular decisions.
While he has not been the darling of South Africa’s trade unions, Mboweni has been praised for ensuring stability in the country’s financial sector during his 10-year tenure.
Econometrix economist Tony Twine does not expect a significant shift away from inflation-targeting under Marcus, although he does believe there could be “changes in emphasis”.
The Reserve Bank’s mandate remained the same, irrespective of who occupied the position of governor, Twine told BuaNews.
Mbweni would be missed, Twine said, although the country’s financial markets seemed to be “relaxed and highly positive” following the announcement of his departure.
The reason for this, he said, was that the markets “anticipate working fairly well with Marcus … She is an engaging person; you can talk to her anytime and she always listens.”
As a former deputy finance minister, a former deputy governor of the Reserve Bank, and current chairwoman of Absa, one of the biggest banks on the continent, Marcus is no stranger to the markets.
She also has political know-how required for the job, having played a crucial role in South Africa’s liberation as an active member of the ruling African National Congress (ANC) during the 1980s.
She also has all the support she needs as she takes over one of the toughest jobs in the country.
“It is really such an important time in the world for us to have organisational cohesion, and to work together in terms of what we need to do in the interests of the country,” Marcus said following the announcement of her appointment on Sunday.
“I hope the style of leadership that I bring to the Reserve Bank is the style of leadership that I have exercised wherever I am and have been, and that is one of engagement.”
Marcus said that, in her early days in the job, she aimed to listen and to learn and to see where the Reserve Bank was at this point in time.
She did not expect her appointment to change her way of leading people, “and if it does I am sure there are enough people to pull me back to earth.”
SA Chamber of Commerce and Industry CEO Neren Rau said that, under Marcus, business was “assured of prudent implementation of monetary policy and an openness to engage with economic stakeholders.”
Rau saluted Mboweni for the contribution he had made over a decade at the helm of the Reserve Bank, saying he would be remembered “for the consultative manner in which he implemented monetary policy, and for making monetary policy accessible.”