New treasury man spells confidence
The appointment of Lungisa Fuzile as director-general of the treasury ensures continuity and confidence from international investors, though Fuzile's name is unknown to most South Africans.
Finance minister Pravin Gordhan announced on Wednesday that Fuzile will replace Lesetja Kganyago, who becomes a deputy governor of the Reserve Bank on May 16.
Fuzile has been with the treasury for 13 years. He has been deputy director-general in charge of asset and liability management for the past three years, succeeding Phakamani Hadebe, who became CEO of the Land Bank.
Although Fuzile is not well known to South Africans, the appointment of someone from within the treasury did not come as a surprise to most analysts.
Gordhan said there were 11 applications, from inside and outside the treasury, for the position, but declined to say how many were outside applications.
Fuzile has been one of several people mentioned as a possible successor to Kganyago, along with Kuben Naidoo, head of the budget office, and Ismail Momoniat, head of tax and financial sector policy.
Razia Khan, an economist at Standard Chartered in London, said the fact that the new director-general is an internal appointment is important for investors because it conveys the sense of "business as usual".
Khan said when Kganyago's move to the Reserve Bank was announced last month, the big question was who would replace him and Fuzile's appointment was unlikely to cause any worries.
"The fact that they were able to find an internal candidate speaks to the institutional strength of the treasury," she said.
"This will be positively received by market, given that the fear was that there might have been more political overtones to the change in the treasury."
According to Chris Hart, economist at Investment Solutions, the internal appointment ensures continuity in the treasury, a department that has a high degree of credibility and confidence in the business community.
"This is a career progression as opposed to someone new who still has to go through a learning process," Hart said.
Dawie Roodt, economist at Efficient Group, said that whereas it is a good idea to bring in a new minister of finance from outside the treasury, technocrats in the department should be appointed from inside.
Gordhan said Fuzile has in his current position been the treasury's lead person in foreign and local bond road shows.
"He and his team are the people we send around SA and the world to talk to and listen to investors," Gordhan said.
The successful raising of $750-million in March this year was a tribute to how well Fuzile and his colleagues had explained the SA investment story to investors, the treasury said.
Fuzile is also currently responsible for liaising with the Reserve Bank on the financing of cash used by the bank to buy foreign exchange reserves.
Roodt said the fact that Fuzile was head of asset and liability management should mean he is an expert in capital markets and state debt - a very important part of treasury.
"But if I had to choose someone, I would have gone for a tax expert, someone on the income side of state finances."
Fuzile said on Wednesday that SA must return to a budget surplus, or at least narrow the current budget deficit, which is predicted to be 5.3% of GDP.
After running a budget surplus for two years, which attracted criticism from trade unions, the treasury allowed a deficit of 1.2% in the 2008-2009 financial year in the wake of the international financial crisis.
The deficit widened to 6.6% in 2009-2010, but is budgeted to narrow to 3.8% by 2013-2014.
Who is Lungisa Fuzile?
Lungisa Fuzile (44) matriculated from Ngangelizwe High School in Mthatha.
He studied for a BCom at the former University of Transkei and started his working life teaching economics at Mount Ayliff Senior Secondary School in Eastern Cape.
He later obtained honours and masters' degrees in economics at the former University of Natal and lectured economics there in 1995 and 1996.
He joined Stats SA in 1997. In February 1998 he moved to the treasury as a deputy director in the international relations division and became head of the division in July 2006.
He was appointed deputy director-general in charge of asset and liability management in July 2008.