COAL mines in the past employed canaries as sentinels that alerted miners to the presence of poisonous gases. Being more sensitive to gas than humans, the birds got distressed before the gases reached levels dangerous to humans, giving the miners time to evacuate the mine.

When at the top of their game, central banks in general (and the South African Reserve Bank in particular) are the early warning system in monetary policy. Of course, this means they are often the unpopular messengers bringing word of unfolding economic and financial risks.

This week, it was announced that the bank’s deputy governor, Lesetja Kganyago, would soon ascend to the position as the new governor, after the outstanding job Gill Marcus has done for five years.

“I do not have to reinvent anything,” said Kganyago. “I just have to carry on from the work she has done.”

Kganyago comes to the task with excellent credentials. His appointment as Marcus’s successor, with its promise of continuity, has been rightly well received.

The task of alerting decision-makers in the public and private sectors to emerging risks in the economy remains as important as before.

Kganyago will be the first governor whose earlier career included a stint at Cosatu, but he brings an extra dimension of experience with which to extend his antenna. He is seen as strong-minded and straight-talking, both qualities that are needed if the bank is to remain independent — not of the system, but within the system.

Frankness from a central banker can be a two-edged sword, of course, and should be used sparingly. Monetary policy is a complex and often controversial area in its own right, and central bankers should not use up valuable political capital pontificating on contentious issues outside their main brief.

Marcus has always been able to couch her wider concerns within the Reserve Bank’s inflation-targeting mandate and there is no reason to expect that Kganyago will not likewise use appropriate channels to “speak truth to power” when necessary.

Analysts have suggested that the Reserve Bank may become more hawkish about interest rates under Kganyago, and have speculated what might happen to the monetary policy committee, as its composition is determined by the governor.

Of course, Kganyago is also taking over in a year in which the Treasury also has a new leader in Nhlanhla Nene. Under other circumstances, this combination could have been a source of additional uncertainty.

But by appointing Nene and Kganyago from within, President Jacob Zuma has opted for experience and professionalism. Like several of his predecessors, Kganyago has had considerable experience in the National Treasury, which is a bonus particularly when cross-cutting policy dilemmas have to be managed.

These holistic insights will especially be needed now, when South Africa is facing three key deficits — the trade account of the balance of payments, the fiscal deficit and the so-called “growth deficit”.

While there is not much that monetary policy can do on its own to promote growth and job creation, in the growth-inflation paradigm it must steer a middle course. There are whirlpools on both sides, not on one only, notably when borrowing costs are being hiked at a time when the growth rate is dropping.

Analysts have suggested that the Reserve Bank may become more hawkish about interest rates under Kganyago, and have speculated what might happen to the monetary policy committee, as its composition is determined by the governor.

These two issues are interdependent, as it is hypothetically possible for the governor to now be outvoted at the MPC. More importantly, MPC analyses should in any case always be data-driven, not prejudged. A host of global studies show that the committee system usually yields the best outcomes in monetary policy.

Including a couple of outside economists on the MPC — as the Bank of England does — is also a possibility to be considered.

As the 10th governor since the bank was established in 1921, Kganyago is a worthy new incumbent of one of the top economic jobs in South Africa.

Parsons is a professor at the North West University Business School and former deputy CEO of Business Unity South Africa

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