Kganyago outlines key challenges for Reserve Bank

Lesetja Kganyago says the mandate for price stability is clear & involves inflation targeting.

FILE: South African Reserve Bank Governor-designate Lesetja Kganyago. Picture: Sapa

CAPE TOWN - Newly-appointed South African Reserve Bank Governor says his key challenges will be to maintain price stability in the country as well as financial stability.

Lesetja Kganyago says the mandate for price stability is clear and involves tools such as inflation targeting.

However, he mentions that maintaining price stability is more complex.

"The issue of financial stability is one that is underdeveloped for central banks globally."

He says financial stability will involve using counter-cyclical policies including loan-to-value ratios.

Kganyago adds when times are good, banks should not be allowed to lend clients 100 percent of the value of an asset like a house or car.

However, he insists when times are bad, they should be able to do so.

This, he says, will help stimulate the economy.

At the same time, the Black Management Forum (BMF), says Kganyago must try to transform the bank from within while also managing tough economic conditions.

The BMF's Themba Dlamini says the reserve bank itself needs to change.

"You look at the boards extension you will see that the demographics are not so good. We have a few women in the board and if you go into the management component it's a bit more challenging."

President Jacob Zuma formally appointed Kganyago on Monday and he will take over from Gill Marcus whose a five-year term ends on 8 November.

Kganyago has expertise in macroeconomic strategy, financial sector regulation and oversight, public sector financial management, organisational leadership and transformation.

He worked at the Reserve Bank as assistant manager for investment dealing in 1994, which gave him insight into what happens at the lower levels of the institution.

He also brings the experience of serving in government at a top management level, as a former Director-General of the National Treasury from 2004. He joined the Treasury in 1996.

During his tenure, Kganyago successfully steered several public finance and financial market reforms leading South Africa's technical team to various meetings of G20 Ministers and Governors of Finance and G20 Presidential Summits.

He played a lead role in the fundamental reform of the micro-structure of domestic bond markets, including reforms to the auction system and introduction of new financial instruments such as inflation-linked bonds, buy-backs, switches and STRIPS.

The Governor-designate holds a Master of Science degree in Development Economics from the University of London's School of Oriental and African Studies and a Bachelor of Commerce degree in Accounting and Economics from the University of South Africa.

Among various positions earlier in his career, Kganyago served as economics coordinator and accountant for the African National Congress and as accountant for the Congress of South African Trade Unions.

He is currently responsible for bank supervision, financial regulatory reform and financial surveillance.