Page 195 - SARB: 100-Year Journey

The security detail gave Mbeki and Mboweni space to talk. “We have decided that you should be the Governor of the SARB,” Mbeki told Mboweni.
“I said it was fine, no problem at all. That’s how it really started. Then, I had to start my own preparations in advance of the announcement. We agreed to keep the conversation close to our chests because that might have had some impact on the markets,” Mboweni recalled.
His governorship is significant for various reasons. While Stals was the first Governor appointed by a democratically elected president, Mboweni was the first Governor who had no links to the pre-democracy era. He was black, and his appointment was a crucial test for the markets’ trust in President Mandela’s judgement.
When Mboweni stepped into the role in 1999, there had been initial jitters that the SARB’s autonomy would be compromised. However, these misgivings were ironic given how, in Stals’s own account, SARB monetary policy decisions had to be presented to and debated within Cabinet, a situation that could not occur in a democratic setting because the central bank’s independence is guaranteed in the new Constitution.
During his decade as SARB Governor, Mboweni never found himself in a position where he needed to defend the institution’s independence. On the contrary, under Mboweni the central bank readily submitted itself to the authority of Parliament as an oversight institution. He appeared before Parliament often to provide context on and clarity about the SARB’s policy decisions.
It was also during his time that the central bank’s repo rate decisions were first decided by the MPC, and whose monetary policy statements were read and broadcast live as well as accompanied by a detailed explanation about underlying assumptions informing decision-making.
Mboweni established the MPC, the Monetary Policy Review and the Monetary Policy Forums after consultation with SARB staff about the institution’s future strategic direction, and in preparation for the introduction of inflation targeting as government policy. The MPC met for the first time in October 1999, months before then Minister of Finance Trevor Manuel’s Budget Speech in 2000, when the formal adoption of inflation targeting as official policy, with a target band of 3–6%, was announced.
Although it was already falling, it was also during Mboweni’s time as SARB Governor when South Africa finally exorcised the ghost of high price increases, which had haunted consumers and the poor for decades before. Stals had also made inroads in that regard.
The success of the SARB’s monetary policy work during Mboweni’s term helped to reframe the narrative about South Africa’s ability to manage its economy, which had been subject to constant doubt. But a credible monetary policy framework eventually won over sceptics and helped gain the confidence of the market. The SARB’s efforts were complemented by sound fiscal policy.
Mboweni holds an Honours degree in Economics and Political Science from the National University of Lesotho. He read for his Master’s in Development Economics at the University of East Anglia in the United Kingdom. In October 2018, Mboweni was appointed Minister of Finance, a position he still holds.
In 2018, Mboweni returned to the public service as Minister of Finance. /Getty Images
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