Ferial Haffajee: Newly-minted PIC board and billions in investment! Hello economic reform

It has been a good week for economic reform in South Africa after a period of bleak news.  

  • Stability has been returned to the SA Reserve Bank with the confirmation by President Cyril Ramaphosa on Wednesday that the highly-regarded governor Lesetja Kganyago will stay for a second term. The announcement was made three months ahead of his scheduled end of term in November. The announcement of two deputy governors also put in place a top-notch leadership team.
  • While the Mpati commission of inquiry is hearing from former PIC CEO Dan Matjila, a new board was appointed. It is a top-drawer set of directors who are likely to ensure that the political interference and dodgy deals at the biggest pension fund manager are stopped
  • The President’s Economics advisor Trudi Makhaya has told Fin24 that by the Presidency’s calculations, R250-billion of the R300-billion pledged at last year’s Investment conference is in progress 

Lesetja Kgangyago keeps a steady hand at the central bank helm 

Three and a half months before his term is due to end in November, President Cyril Ramaphosa on Wednesday confirmed that Kganyago will return for a second 5-year term as SARB governor. 

Kganyago and his team have come under extraordinary pressure from the governing ANC and its allies after ANC secretary-general Ace Magashule knocked the currency and confidence when he misstated an ANC resolution that the party would change the bank’s constitutionally enshrined mandate. 

His reappointment and Ramaphosa’s statement in support of central bank independence has now put that effort to bed. The Presidency has also repeatedly asserted, and the National Treasury supported, the practice that monetary policy is subject to discussions between Finance Minister Mboweni and Kganyago. 

In addition, Ramaphosa also announced the appointment of Nomfundo (Fundi) Tshazibana and Rashad Cassim as deputy SARB governors. Currently an advisor to the governor and to the bank’s monetary policy committee, Tshazibana has worked at the electricity regulator, Nersa, at the National Treasury and at the IMF where she held the pivotal role of alternative executive director of the board running the day to day operations of the IMF. 

Cassim is head of economic research and statistics at the SARB and is also a member of the MPC. He is chairperson of the Central Bank Statistics committee at the Bank of International Settlements and was previously deputy director-general of the StatsSA. Previously the head of school of economics at Wits, Cassim holds a PhD in Economics from UCT. 

New interim leadership for struggling PIC 

As Matjila gave evidence of how he faced significant political pressure to fund the ANC, to do deals with politically connected business people and to fund rescues he did not believe made sense, Mboweni announced a stellar cast, interim, to take over the governance of the PIC. 

In an almost complete clean-out, the interim board features a selection of South African leaders who are known for their independence and are the harbingers of a new era at the institution which manages over R2-trillion in pensions owned by 1.3-million civil servants. While the appointment of former ABSA CEO Maria Ramos has caught attention, it is, in fact, other appointments which are more significant. 

Former Nedbank chairperson Reuel Khoza who is perhaps the business world’s finest intellect has been appointed; so has Sindi Mabaso-Koyana who fought for Transnet’s independence from the Gupta patronage network’s state capture long before it became common knowledge. 

Mabaso-Koyana is a legendary SA businesswoman and co-founder of the organisation, African Women Chartered Accountants which has been the progenitor of many storied South African business leaders. The interim board is big on qualification and experience. 

MTN co-founder and former National Union of Mineworkers office-bearer Irene Charnley who is now chairperson of Smile, the telco start-up. The interim board includes a good mix of trade union leaders and people with investment nous and it excludes the deputy finance minister as the deputy chairperson. 

Traditionally, the deputy finance minister has chaired the PIC board but Mboweni has signalled a change which Bloomberg says invests greater independence in the pension fund manager.  Instead, the government is now represented by Tshepiso Moahloli, the chief director of liability management at the National Treasury.  Mboweni retained the services of Pitsi Moloto and Xolandi Mkhwanazi as directors.      

Investment pledges: R250-billion of R300-billion in investment pledges is in implementation, says Presidency  

Ramaphosa’s economics advisor Trudy Makhaya says that R250-billion of the R300-billion pledged at last year’s investment conference hosted by the president is in implementation.

It may not be felt in indicators yet, but is it in the works. This includes investments like Vedanta’s Gamsberg mine in the Northern Cape; Mara’s smartphone manufacturing plant at the Dube Trade Port at Durban’s King Shaka airport; a Proctor&Gamble factory which manufacturers nappies; a further Rio Tinto investment into Richards Bay Minerals; the upgrade of a Mondi plant, also in Richards Bay and the construction of Base stations for Rain’s 4G and 5G networks.

Mercedes Benz has started construction on its C-Class manufacturing plant with roll-off planned for 2020. Makhaya says the year has been tough with growth plummeting in the first quarter, long strikes and Stage 4 load-shedding. 

But things are looking up.