Kganyago sitting pretty at the Bank

The unsettling change of the guard at the Treasury following the cabinet reshuffle recently is unlikely to affect Reserve Bank governor Lesetja Kganyago, who was emphatic about the security of his position this week.

"I'm appointed for five years, I must act independently. You can't just come and wake up one day and say I want my own governor, I'm getting rid of this one. It doesn't work that way," Kganyago said on the sidelines of the Reserve Bank's monetary policy forum in Soweto on Tuesday.

"The Reserve Bank Act does not provide for the removal of the governor just because you want to remove the governor."

President Jacob Zuma's abrupt firing of former finance minister Pravin Gordhan and his deputy Mcebisi Jonas in a midnight cabinet reshuffle two weeks ago led to the country's first credit-rating downgrade since the turn of the century and stoked fears that a campaign to capture important state institutions was under way.

The resignation of Treasury director-general Lungisa Fuzile last week heightened concerns in financial markets as Fuzile had vast institutional knowledge, having worked at the Treasury for 20 years. Also unnerving investors are populist pronouncements on radical economic transformation and the ruling party's elective conference later this year.

But Kganyago's position is apparently secure.

Lumkile Mondi, an economist at Wits University, said Kganyago could be under "enormous pressure" from the ruling party concerning the bank's policies. "What is comforting is there is a constitution and any changes [to the Reserve Bank Act] to be done have to go through parliament."

Radical economic transformation was a misnomer, he said. The intention may be to make finance accessible but that agenda could ultimately push inflation higher and bankrupt the state.

"Constitutionally the Reserve Bank is accountable to parliament. That's a comfort. If we didn't have the Reserve Bank under the constitution it would be game over for this economy because this ruling lot is up to no good."

Susan Booysen, a Wits University political analyst, said the country's leadership was unpredictable. "Given how brazen they have been it is possible" that there could be a plan to replace the governor. But public scrutiny had been heightened as well, she said.

Kganyago, appointed governor in November 2014 during Zuma's second term, is the last man standing of the old Treasury order.

Asked about the Reserve Bank's independence, Kganyago said no shareholder or any other individual had the right to interfere in monetary policy.

"We have to act without fear or favour as tasked by the constitution. [Monetary policy] is the preserve of the governor and the deputy governors so you can sleep peacefully with the knowledge that the independence of the Reserve Bank will not be under threat ... They can't even tell us how to do licensing. It is not their business."