GILL MARCUS APPOINTED SOUTH AFRICAN RESERVE BANK GOVERNOR

UNCLAS PRETORIA 001499 DEPT FOR AF/S; AF/EPS; EB/TPP USDOC FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND TREASURY FOR DAN PETERS DEPT PASS USTR FOR WILLIAM JACKSON E.O. 12958: N/A TAGS: ECON EFIN EINV EMIN ENRG ETRD BEXP KTDB SF SUBJECT: GILL MARCUS APPOINTED SOUTH AFRICAN RESERVE BANK GOVERNOR ¶1. Summary. South African President Jacob Zuma announced the appointment of ABSA Group Non-Executive Chairperson Gill Marcus as South African Reserve Bank (SARB) Governor on July 19, 2009. Born in 1949 to African National Congress (ANC) activist parents, Marcus went into exile in 1970 and joined the ANC's Department of Information in London. She returned from exile in 1990 and was elected to the ANC's National Executive Committee in 1991, and to Parliament in 1994. Marcus served as Deputy Finance Minister from 1996 to 1999, and as Deputy SARB Governor from 1999 to 2004. Since 2004, she has held various senior positions in the private sector. Politicians and the business community welcomed her appointment. End Summary. -------------- Marcus Appointed SARB Governor -------------- ¶2. (U) South African President Jacob Zuma announced on July 19 that Gill Marcus will take over from Tito Mboweni as Governor of the South African Reserve Bank (SARB). Mboweni, whose current contract expires on August 8 after two five-year terms, will remain at the helm of SARB until Marcus takes over on November 9, 2009. Marcus will be the first woman to hold the position of SARB Governor. Her appointment came after months of speculation that Mboweni's contract would not be renewed after public rows with trade union leaders over monetary policy. President Zuma said at the press conference that Marcus had "qualities of proven leadership, sound judgment and integrity." He added, "She will prove a worthy successor to Mr. Mboweni". -------------- Background -------------- ¶3. (U) Marcus was born in Johannesburg in 1949 to ANC activist parents. In 1970, while studying for a business degree at Wits University, she left the country with her family. Marcus switched majors to industrial psychology and finished her degree in London, while doing volunteer work for the ANC's London office. From 1975 she worked full time for the ANC's Department of Information in London, where she was the editor of the ANC's weekly bulletin, which was distributed at the United Nations and to parliamentarians in Britain and Europe. According to Trevor Manuel's biographer Pippa Green, Marcus became a significant voice of the ANC in London, so much so that undercover South African police agents planted a bomb in her office in 1982. The bomb went off, but Marcus was not at the office that day. ¶4. (U) In 1990, Marcus returned from exile to set up the ANC's information department. She was elected to the ANC's National Executive Committee in 1991, and served on the national working committee. Before the 1994 elections, she trained ANC media workers and voter educators, and accompanied Nelson Mandela on his election campaign in the provinces. Marcus played a leading role in determining media policies for the ANC in the run up to the 1994 elections. ¶5. (U) After the 1994 election, she was chosen for parliament and quickly established a reputation for efficiency as chairperson of the parliamentary joint finance committee. She held this position from June 1994 until June 1996, when she was appointed Deputy Minister of Finance. As Deputy Minister from 1996 to 1999, she worked closely with Finance Minister Trevor Manuel. She served as SARB's Deputy Governor from 1999 to 2004. Since 2004, Marcus has served as Director of the Gordon Institute of Business Science, Non-Executive Director of Bidvest, Executive Chairperson of Western Areas (a mining company),and Non-Executive Director of Gold Fields (also a mining company). She has held her current position as ABSA Group Non-Executive Chairperson since 2007. -------------- Monetary Policy Changes -------------- ¶6. (SBU) Marcus side-stepped questions by journalists on the future of inflation targeting, saying only that "down the line we will have many debates." An ABSA economist told Embassy Economic Specialist that Marcus is "not likely to favor any changes to inflation targeting, given her involvement in the debates around the current policy during her tenure as Deputy Finance Minister and Deputy SARB Governor." In a media briefing after the announcement of Marcus's appointment, ANC Secretary General Gwede Mantashe said that Marcus will implement the policies she finds in place at the SARB. Mantashe mentioned that while "any change presents an opportunity," policy was not a function of an individual. He stressed that policy changes, if any, would take a long time and that "individual tastes" would not be a factor. [Note: The SARB receives its mandate from the Finance Ministry and is, therefore, only tasked with policy implementation. The Finance Ministry will have the final word on inflation-targeting. End Note] -------------- Local Reaction -------------- ¶7. (SBU) The local reaction to Marcus' appointment has been overwhelmingly positive, with business groups as well as the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP) all applauding the appointment. Economic analysts were equally enthusiastic. A Democratic Alliance economist told Deputy Economic Counselor, "Marcus has the potential to have a very good impact on the image of the SARB." [A reference to Mboweni's reputation for high-handedness.] In a note for investors, Standard Bank said that Marcus would "reconcile multiple stakeholders" with different interests. COSATU said it hoped that Marcus' appointment "will mark a change of policy by the SARB to one more geared to economic growth rather than a rigid obsession with inflation targeting." Investec Asset Management Strategist Michael Power wrote in a press article, "Marcus will bring to the Pretoria table during her governorship a willingness to entertain new ideas." ANC spokeswoman Jessie Duarte told journalists that Marcus enjoyed the confidence of all sectors, especially the financial institutions. There is general agreement that Marcus is intelligent, hardworking and honest. -------------- Comment -------------- ¶8. (SBU) Zuma made a shrewd move by appointing Marcus. Unions are pleased that Mboweni will leave SARB, while business can reasonably expect that few policies will change under Marcus. Zuma's selection of Marcus was a choice for competence and continuity and shows that the ANC understand the importance of monetary policy. Given Mantashe's comments on monetary policy, as well as Marcus' appointment, post does not expect any significant changes to monetary policy in the near term.