Reflecting on Tito Mboweni's Life and Legacy

At the weekend, Africa lost its only Duke, Tito Mboweni, the self-styled Duke of Machobas Cliff, passed on at the weekend, aged 65. He leaves a rich legacy. He was the architect of South Africa's labour reforms, which have been blamed for the country's inability to attract meaningful foreign and local investment. But at the Central Bank, as you heard from Kobas, you will be remembered for introducing South Africa's widely respected monetary policy regime, transforming the national payment system and taking South Africa's monetary policy to the provinces through the Monetary Policy Forum. And of course, he also gives huge credibility to South Africa's monetary policy regime. OK, let's get a deeper look into that conversation and for that I am joined by Azar Jammine, Director & Chief Economist, Econometrix, as well as Colin Coleman, Co-Chairman, Youth Employment Service and former Goldman Sachs Partner. And I've got to start with you, Colin, because you worked with Tito post his political career. The first part of his political career. And I just wanted your thoughts in reflecting on his legacy. Well, thanks very much. A pleasure to be on with Azar as well. Tito was a giant. I met him in 1987 and I was very much part of his journey through the negotiation process, his leadership in the ANC, you know, all his capacities in the government and in the Central Bank and post that and hired him in to Goldman Sachs when I was CEO there in the region for his role as an international advisor. I mean, he was basically the godfather of ANC economic policy, helped to modernize the economic policy of the ANC for a post-apartheid administration, a democratic administration. He was absolutely key to the Mandela pivot away from nationalization to a market-led mixed economy, which was a struggle and at the end was very instrumental in helping both with monetary policy independence, the independence of the South African Reserve Bank and with the fiscal discipline of the government and was very much focused on what the capacity constraints, the binding capacity constraints of the economy were and how to unblock them through structural reforms and authored Operation Bullet Laila. So what I've just described is a massive life, gigantic contribution. Somebody who was loved by many people, was a character and extremely popular, but never populist. As I would imagine, you also would have worked with Tito Mboweni, given your earlier work before Democracy in the lead up to the democratic dispensation. Yes, I first met Tito in 1990. I was a co-author at the time of a book called Economic Alternatives, which was basically sponsored and produced by Robin McGregor. And I was asked to write a number of chapters on what economic policy should look like under a future government. And obviously, I was in what would now be called the neoliberal camp. And on the other side, there was a series of chapters written by one Lawrence Harris, a professor of economics at Sussex University. And Tito Mboweni was basically Lawrence's representative in South Africa at the time. And I met him, and at the time, Tito was, of course, punting the whole notion of nationalization, a very anti-privatization and the like. Obviously, he underwent a fairly significant Damascus experience, and subsequently became a pillar for what one would see as neoliberal economic policies of the kind that has, I suppose, served South Africa relatively well in terms of keeping it in the mainstream of global economics. And of course, his role in terms of the monetary policy, again, here, there was a big scare when he was first appointed as governor of the Reserve Bank. People had seen him introducing a whole lot of labor reforms that many found were anti-market oriented. But he worked with the governor, the erstwhile governor of the Reserve Bank at the time, Chris Stoltz, for a year before taking over as governor and basically oversaw the introduction of monetary policy aimed at achieving inflation targeting, and was highly successful. And one of his most successful achievements was also rebuilding the country's foreign exchange reserves that were basically negative and depleted at the end of apartheid. They are now respectable, and this has prevented a massive depreciation of the rand of the kind that many other emerging markets have seen with their currencies. Obviously, later in life as Minister of Finance, again, he ran into opposition in the same way as with his monetary policy when he pursued fairly austere fiscal policy, which again contributed to the maintenance of tremendous stability in the South African economy and prevented it from being seen as a basket case that could well have emerged in the absence of Dito Mboweni. Absolutely. And I suppose, I mean, given the legacies that you both have described, I mean, it's not a contradiction to say that he was also a man of contradictions, right? I wanted to talk about that Damascus moment that you referred to, Zaa, and ask whether that was perhaps the time that we lost the idealist. And once he was in government, he then, I don't know what transformation took place. He became a totally different economist to the one that went in as the Minister of Labor. Very much so. And I think that that experience has been manifested by a number of politicians. Trevor Manuel was almost in the ilk as well. You remember when he became Minister of Trade and Industry, he scared the markets when he spoke about the amorphous markets and became one of the most highly respected finance ministers in the world subsequently. And there were other characters like that, that we must be very grateful for when the aura of practicality seems to supersede the idealism at some point in time. Yeah. Colin, were those contradictions? Yeah. You want to come in? Come in, please. You know, not disagreeing, but just to say, I think Tony Blair put it very well. He said something along the lines of, he spent his life effectively campaigning for a reformed labor government or labor party. And the minute he stepped as a successful candidate for Prime Minister into 10 Downing Street, everything he'd learned up until that point had no relevance to what was going to happen when he stepped into 10 Downing Street. And I think the pressures of facing the conditions, and we must remember that South Africa's economy was broken. We had very high inflation and very high interest rates in 1994. We had a very depressed economy. And the combination of what the central bank and the fiscal authorities did with growth under the Mandela administration was remarkable. And only in the post-global financial crisis and Polokwane environment, where we had the double whammy of the GFC and Zuma, did we then experience this 15-year-long growth trap, which again changed the environment in which people in the administration had to operate. So today we have 43% broad unemployment rates, 1% historic growth rates that are now expanding towards 1.8% according to base case economic forecasts by the end of 2026, which isn't sufficient to deal with unemployment problems. And yet our fiscal situation has risen in terms of debt to GDP to around 74% debt to GDP from 33% 14 years ago. So it's a situation that the leadership of the monetary and fiscal environment have to deal with. They can't but engage and prioritise and come to terms with how they're going to deal with the cards that they are dealt. Yeah. And I suppose another word that could use instead of perhaps contradictions, you could say it is pragmatism, right? As you say, you quote Tony Blair coming into office and dumping everything that he had been thinking about before. When we look at his legacy between monetary policy and fiscal policy, I'm asking you guys to make a choice in terms of where you think he left his biggest stamp. I'm beginning with you, Colin. It's very difficult to say. As I said, he was the godfather of economic policy of the ANC. I think he made his greatest contribution in introducing inflation targeting in my mind as the central bank governor, and his greatest contribution was the introduction and authoring of Operation Villanueva as his last act of being Minister of Finance. Absolutely. Azhar? I would totally agree with that. As I mentioned, also, the rebuilding of foreign exchange reserves was essential and basically maintained an element of confidence in the economy, despite so many headwinds, and especially after the global financial crisis in the Zuma era, when we experienced a mini-crisis again in 2016-2017, when Gigaba became Minister of Finance, and then Tito Mboweni had to basically rectify the damage that was caused by that. I know the debt-to-GDP ratio is relatively high at 74% by historical standards, but we have to see that in the context of what has happened globally, where similarly, debt-to-GDP ratios of many countries, including the world's largest economies, have done that, and relatively speaking, South Africa is not looking that bad as a consequence of it. And for that, we have to be grateful, even for the contribution made by Tito Mboweni as Minister of Finance, let alone his contribution to monetary policy a decade earlier. It sounds to me like we can't make a call between one or the other. Colin, I understand you have to go. Thanks very much indeed for your time and joining us this afternoon, as I'm just going to share with you my own anecdote of Tito Mboweni. So, I came here in 2001, a reporter at Bloomberg, and I went in to attend a dinner where we had been invited by the central bank governor then, which was, of course, Tito Mboweni, and I roped up, like I am now, without a tie, and I was told, young man, you go and find a tie. You got an anecdote for me, Azar? Sorry? Yes, certainly. I had a similar anecdote. Tito liked being called governor. I think he enjoyed the status that he had. But also, there was a time when he took issue with me for suggesting that the reserve bank was intervening in the foreign exchange market to build up foreign exchange reserves, and it was supposed to be secret, and I said, it appears as if, and he didn't enjoy that at all and berated me for it. But, I mean, that's the kind of person he was. He was a man of contradictions, but had a lot of charisma, and I think we can be very grateful for the legacy that he has left behind. Absolutely incredible human being, Azar. Thank you for your time, Azar Jamin, director, chief economist at Econometrics. Earlier, we also had Colin Coleman, who is an ex-Goldman Sachs regional CEO. One more anecdote from me on Tito Mboweni. So, this time, it was a discovery. Discovery asked some journalists to come over and engage in some cooking exercises. Now, I will raise my hand. I'm no cook, but there was the governor, and he had prepared his famous dish, the pilchards, and of course, the garlic was there. I shall not pass judgment, but rest in peace, Tito Mboweni.

Joining CNBC Africa for more is Azar Jammine, Director & Chief Economist, Econometrix and Colin Coleman, Co-Chairman at Youth Employment Service and Former Goldman Sachs Partner.

Reflecting on Tito Mboweni’s life and legacy

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Reflecting on Tito Mboweni’s life and legacy

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