Former central banker Mboweni takes on South Africa’s hobbling economy

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South African markets rallied after the appointment of former central banker Tito Mboweni as finance minister, an ANC insider and ally of President Cyril Ramaphosa expected to focus on wooing investors and reviving an economy in recession.


Mboweni, 59, replaced Nhlanhla Nene who stepped down after admitting having meetings with the Gupta brothers, friends of former president Jacob Zuma who are at the centre of corruption allegations. Zuma and the Guptas have denied any wrongdoing.

Nene’s removal was in line with Ramaphosa’s promise to crack down on corruption and boost economic growth.

Mboweni, like Nene, is from Ramaphosa’s inner circle, a former government official who has held positions in private companies. The rand, bonds and banking stocks rallied on Tuesday on news of the appointment.

His immediate task will be to help haul Africa’s most industrialised economy out of the recession it slipped into in the second quarter. Ramaphosa’s response was to shift government expenditure and launch an infrastructure fund to ignite growth.

Mboweni will oversee this recovery plan, starting with a medium-term budget speech on Oct. 24. Ramaphosa is also championing a drive to mobilise 1.2 trillion rand ($82 billion) in new investment over the next five years.

“He (Mboweni) is a strong appointment in that he combines an insider knowledge of how the ANC (African National Congress) works with an insider knowledge of the broader business and corporate community,” said Daniel Silke, director of Political Futures Consultancy.

“He represents continuity with the Ramaphosa faction within the ANC in their attempt to reboot the economy. He is a credible messenger of the Ramaphosa philosophy.”


Mboweni is also a member of the ANC’s National Executive Committee, which handles party decisions.

HAWK

He was viewed as a hawk during his tenure at the helm of the South African Reserve Bank for a decade from 1999 and was behind a series of rate hikes, at one time raising the repo rate to 13.5 percent in 2002 to control inflation and boost the rand.

As governor, he oversaw the launch of the inflation targeting policy to help the bank achieve price stability and wrestled with the rand’s plunge due to global and local events.

As labour minister in South Africa’s first black cabinet led by former president Nelson Mandela from 1994, Mboweni oversaw the introduction of the Labour Relations Act which allowed for collective bargaining and the establishment of labour courts.

Peter Attard Montalto, head of capital markets research at Intellidex, said Mboweni has shifted to the left.


“As such we are cautious for now on exactly what role he will take on macroeconomic policy,” Montalto wrote in a note.

In April, Mboweni tweeted: “The State must own 40 percent of mining companies, start a State Bank, implement appropriate Land Use Planning and create a Sovereign Wealth Fund. What is so difficult? That is Radical Economic Transformation!!”

He did not answer his phone for comment on Wednesday.

Since leaving the central bank, Mboweni has been an adviser at Goldman Sachs and was chairman of bullion producer AngloGold Ashanti, among other company directorships.

“His skill set and deep understanding of financial markets are likely to see him embrace a market-orientated policy framework with a no-nonsense attitude and dedication to economic growth,” said Gary Van Staden at NKC African Economics.