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Reserve Bank must be credible and independent

2019-07-31 14:07

Politics must not dictate resolutions made about the bank. Its role and function must align with its constitutional mandate.

The three key appointments at the SA Reserve Bank this month don’t end the debate about the central bank, according to Reserve Bank deputy governor Rashad Cassim.

On July 10, President Cyril Ramaphosa announced that he had reappointed Lesetja Kganyago for a second term as Reserve Bank governor, and said the two vacant deputy governor positions would be filed by Nomfundo Tshazibana and Cassim.

Regarding whether the appointments ended the debate about the mandate and ownership of the Reserve Bank, Cassim said: “I don’t think it does. What the reappointment [of Kganyago] does is send a very clear signal that the president is serious about renewing the appointment of a fiercely independent but credible central bank governor who is highly skilled and appropriate for the job he currently holds.”

Cassim was Reserve Bank head of research and statistics prior to the announcement of his appointment, which will be effective on Thursday.

He was responsible for 160 people in his department. In this new role, he will be partly responsible for the whole central bank, which has a staff complement of 2 125.

“It’s a great privilege [to be] Reserve Bank deputy governor… It comes with a different level of responsibility,” Cassim said.

A previous role which he found to be a “baptism of fire” was that of deputy director-general of economics statistics at Stats SA, where he had to defend “the credibility of consumer price inflation” data.

Cassim said he had “mixed feelings” about stepping up to his new role.

“The hardest part of my job as head of research and statistics is really keeping up to date with the most frontier thinking and literature on a number of policy and conceptual issues. That will be a very, very nice job,” he said.

Following the retirement of Daniel Mminele as Reserve Bank deputy governor at the end of last month, Cassim said the former was the longest serving member of the monetary policy committee – a body that meets six times a year to decide on the cental bank’s key repo rate.

Mminele joined the committee in March 2011 after he was appointed by Gill Marcus, who was at the time Reserve Bank governor.

Cassim has worked under both Marcus and Kganyago.

“I feel enormously privileged to have been able to report to two really important figures who are respected. I learnt a lot from them – both have the kind of integrity, which is becoming increasingly rare; enormous amount of integrity,” he said.

“The most important thing is that both Marcus and Kganyago have this thing about ‘no such thing as a hierarchy’ ... you are equals. It doesn’t matter that Marcus and Kganyago are governors, you are intellectually equal and they respect you at that level. I feel very privileged to have worked with both of them.”

Regarding the ownership of the Reserve Bank, Cassim said: “I’m a technocrat. I don’t want to get dragged into the politics. The ANC’s resolution [on the nationalisation of the Reserve Bank] is what it is. Our role as central bank technocrats is to say whether the Reserve Bank is nationally owned or has private shareholders at the end of the day. The Reserve Bank’s role and function is well defined in the Constitution, so I think that whatever the mandate, nationalisation does not change the role and function of the bank.”

The man behind the title

Cassim was born in Mahikeng, the capital of the North West, and went to the school in the province.

He did his undergraduate degree at the University of KwaZulu-Natal and his master’s and PhD at the University of Cape Town.

He was doing his master’s degree when South Africa became a democracy.

“My specialist area was international economics. One of the things I got involved with in the early days of my career was working with the new government on whether we should get into free trade agreements with the Southern African Development Community and the EU, and what would be the costs and benefits of being part of the World Trade Organisation.”

In 1996 he established the Trade & Industrial Policy Strategies (Tips), an online resource centre for trade and industrial policy research, which still exists today.

“That was kind of a clearing house or think tank to help the department of trade and industry think through industrial and trade policy.”

After Tips, Cassim moved to the University of Witwatersrand to be head of the School of Economics and Business Sciences for three years.

“That was a classic academic job. I had a complement of a hundred academics in areas of economics, finance, marketing, information technology and a variety of fields.

“I guess managing an academic department really tests one because, for one, you have no hierarchy. You are challenged by everyone. Academics at the best of times are difficult to deal with.”

He joined Stats SA in July 2016 as deputy director-general of economics statistics.

“I worked very closely with my friend and boss at the time Pali Lehohla [the former statistician-general].

“I realised that in some respects the stakes were so much higher with statistics as they were with research.

“When you come out with a statistic, it is an indirect or direct evaluation of how well the government is doing. When you say the GDP is 3% – it is telling relative to its constraints – that government is largely successful. When you say the unemployment rate is going up by a number of percentage points, you are basically making a statement about the government’s ability to govern effectively.

“The reputational loss, the impact of getting numbers wrong, is really serious. I was amazed, the biggest revelation to me was how exciting but serious the job of being responsible for official statistics is.

“The credibility of the country hangs on you providing good economic statistics. The credibility of view as a statistical agency depends on how accurate you can be regarding a number of economic indicators that are used to make policy.

“Those five years were really one of my [most intense] learning curves. Getting to the [core] of how statistics work, there is no natural training. Being an economist doesn’t mean you are naturally an economics statistician, those are two very different professions.

“For five years I was responsible for 600 people. It was my initiation into the media because I spent a lot of time on TV and in the newspapers apologising for mistakes and errors. It was a very humbling experience.”

Cassim has worked under both Marcus and Kganyago.

“I feel enormously privileged to able to report to two really important figures, who are respected. I learnt a lot from them. Both have integrity and that is something that is becoming increasingly rare,” he said.

Regarding the ownership of the SA Reserve Bank, Cassim said: “I’m technocrat – I don’t want to get dragged into the politics. The ANC resolution [on the nationalisation of the SA Reserve Bank] is what it is.”

“Our role as central bank technocrats is to say – whether the Reserve Bank is nationalised or has private shareholders at the end of the day – the Reserve Bank’s role and function - is well defined in the Constitution.”

DIFFICULT ACADEMICS

After TIPS, he moved to the University of Witswatersrand to be head of the School of Economics and Business Sciences for three years from June 2003.

“That was a classic academic job. I had a complement of a hundred academics. I guess managing an academic department really tests one because you have no hierarchy. You are challenged by everyone. Academics at the best of times are difficult to deal with.”

Cassim then joined Stats SA in July 2016 where he was Deputy Director-General: Economics Statistics.

“I worked very closely with friend and boss at the time Pali Lehohla [former South Africa Statistician General].”

“I realised that in some respects – the stakes are so much higher – with statistics as it is with research.”

“When you come out with a statistic – its indirect or direct evaluation of how well the government is doing. When you say GDP is 3% - it is telling – relative to its constraints – this government is largely successful. When you say unemployment rate is going up – a couple of percentage points – you basically making statement about the government’s ability to govern effectively.”

RISK OF REPUTATIONAL LOSS

“The reputational loss – the impact for getting numbers wrong is really serious. I was amazed – the biggest revelation to me – how exciting but how serious – a job of being responsible for official statistics was.”

“The credibility of the country hangs on you providing good economic statistics.”

“Those five years were really one of my deepest learning curves. Getting to the bellows of how statistics work.”

“For those five years I was responsible for 600 people. It was my initiation into the media because I spent a lot of time on TV and in the newspaper apologising for mistakes and errors. It was very humbling experience.”

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November 10 2019