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Ex-central banker Mboweni takes on South Africa's hobbling economy
* Mboweni appointed after Nene's resignation
* Finance minister headed central bank for a decade
* Markets in recession-mired S.Africa welcome Mboweni
By Olivia Kumwenda-Mtambo
JOHANNESBURG, Oct 10 (Reuters) - South African markets
rallied after the appointment of former central banker Tito
Mboweni as finance minister, an ANC insider and ally of
President Cyril Ramaphosa expected to focus on wooing investors
and reviving an economy in recession.
Mboweni, 59, replaced Nhlanhla Nene who stepped down after
admitting having meetings with the Gupta brothers, friends of
former president Jacob Zuma who are at the centre of corruption
allegations. Zuma and the Guptas have denied any wrongdoing.
Nene's removal was in line with Ramaphosa's promise to crack
down on corruption and boost economic growth.
Mboweni, like Nene, is from Ramaphosa's inner circle, a
former government official who has held positions in private
companies. The rand, bonds and banking stocks rallied
on Tuesday on news of the appointment.
His immediate task will be to help haul Africa's most
industrialised economy out of the recession it slipped into in
the second quarter. Ramaphosa's response was to shift government
expenditure and launch an infrastructure fund to ignite growth.
Mboweni will oversee this recovery plan, starting with a
medium-term budget speech on Oct. 24. Ramaphosa is also
championing a drive to mobilise 1.2 trillion rand ($82 billion)
in new investment over the next five years.
"He (Mboweni) is a strong appointment in that he combines an
insider knowledge of how the ANC (African National Congress)
works with an insider knowledge of the broader business and
corporate community," said Daniel Silke, director of Political
"He represents continuity with the Ramaphosa faction within
the ANC in their attempt to reboot the economy. He is a credible
messenger of the Ramaphosa philosophy."
Mboweni is also a member of the ANC's National Executive
Committee, which handles party decisions.
He was viewed as a hawk during his tenure at the helm of the
South African Reserve Bank for a decade from 1999 and was behind
a series of rate hikes, at one time raising the repo rate to
13.5 percent in 2002 to control inflation and boost the rand.
As governor, he oversaw the launch of the inflation
targeting policy to help the bank achieve price stability and
wrestled with the rand's plunge due to global and local events.
As labour minister in South Africa's first black cabinet led
by former president Nelson Mandela from 1994, Mboweni oversaw
the introduction of the Labour Relations Act which allowed for
collective bargaining and the establishment of labour courts.
Peter Attard Montalto, head of capital markets research at
Intellidex, said Mboweni has shifted to the left.
"As such we are cautious for now on exactly what role he
will take on macroeconomic policy," Montalto wrote in a note.
In April, Mboweni tweeted: "The State must own 40 percent of
mining companies, start a State Bank, implement appropriate Land
Use Planning and create a Sovereign Wealth Fund. What is so
difficult? That is Radical Economic Transformation!!"
He did not answer his phone for comment on Wednesday.
Since leaving the central bank, Mboweni has been an adviser
at Goldman Sachs and was chairman of bullion producer
AngloGold Ashanti, among other company directorships.
"His skill set and deep understanding of financial markets
are likely to see him embrace a market-orientated policy
framework with a no-nonsense attitude and dedication to economic
growth," said Gary Van Staden at NKC African Economics.
(Editing by James Macharia and Janet Lawrence)
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