President Zuma’s announcement yesterday (Sunday) that Gill Marcus will replace Tito Mboweni as Governor of the SARB in November is likely to feed anxieties about policy continuity – despite reassurance that policy at the SARB will not change under Marcus.

The issue is not that Marcus is less competent or more likely to side with organised labour’s attacks on inflation targeting or that she would join the ANC’s leftwing allies and support forcing down interest rates and the currency. If anything Marcus’s experience as outgoing Chairperson of ABSA and the markets’ experience of her in previous positions as a SARB deputy governor and deputy minister of Finance are positives.

The issue is rather one of timing. Zuma’s Sunday press conference came out of the blue and his explanation for why the sudden announcement was awkward:

I have re-appointed Mr Mboweni as Reserve Bank governor. However, he has indicated his wish to leave in November 2009 to pursue other interests.

Given the indication from Mr Mboweni, I have therefore decided to designate Gill Marcus as governor of the Reserve Bank with effect from the 9th of November 2009.

 Markus was in exile with the ANC and played an important role at ANC headquarters in Lusaka in the 1980’s. She was a member of the ANC NEC from 1991 until 1999. This makes her a more senior ANC politician than the deployed Tito Mboweni. There is speculation that Marcus fell foul of Thabo Mbeki  before she left government and the ANC NEC in 1999 – which, in and of itself, could put her closer to the “Zuma Camp”. However, these relatively deeper ties into the ANC and its current leading faction, will not necessarily make her a more compliant SARB governor.

The problem with the timing of the appointment is that Cosatu has been pushing for the non-renewal of Mboweni’s contract and doing so by marching on the SARB to hand over petitions and by threatening mass strikes. In an environment where macro-economic policy (including monetary policy, nationalisation and privatisation and aspects of trade policy) are less certain than they have been since 1996, appearing to give in to this trade union demand is not going to do much for financial market confidence.

This surprising appointment is a useful microcosm for perceptions about policy instability in South Africa under the Zuma government. The appointment is a good one (as far as it goes) but by making it now government has essentially deposed the person who has come to represent policy certainty (in this case inflation targeting). The action fails if it is seen as part of a strategy of communicating with financial markets.

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