The shifting sands of South African politics post-Polokwane seem to have created some rather curious temporary alliances - and even curiouser historical ironies. There were a number of these in evidence yesterday as the Governor of the Reserve Bank, Tito Mboweni, announced that he was planning to complete his current term in August 2009 and would remain in office, if asked. He also noted that, "In terms of Section 4(1) (a) of the South African Reserve Bank Act, the President of the Republic of South Africa appoints a governor of the bank after consultations with the Minister of Finance and the Board of Directors of the Bank."

This announcement came after he seemed to suggest, last week, that he would not seek a further term in office. COSATU, one of the main power brokers in the new ANC, has been highly critical of the Reserve Bank's policy of inflation targeting. Last month its General Secretary, Zwelinzima Vavi, said that Mboweni "continues to insult us by telling us to tighten our belts. There's no more space to tighten. The belt is on our bones. Perhaps he must look at his own stomach and tighten his belt."

As Moneyweb reports the apparent behind-the-scenes reason for Mboweni's about-turn was "a complaint from the presidency that the post is a presidential appointment and consequently it was not his prerogative to speculate about the future."

The Democratic Alliance meanwhile released a statement saying that they would welcome a third term in office for Mboweni - "for he has had an excellent record at the central bank; in particular, he has maintained the independence of the bank in a commendable fashion."

Quite how good Mboweni's performance has been remains an open question. The power he exercises over the banking industry makes it unlikely that senior bankers are going to voice any private concerns they may have about his record publicly. And, given the history of his initial appointment, Mboweni is a somewhat unlikely poster child for Reserve Bank independence.

Mboweni's appointment as governor-designate of the Reserve Bank was announced by Deputy President Thabo Mbeki in July 1998. (Mbeki had ascended to the ANC Presidency the December before.) He was Labour Minister at the time and a member of the ANC's National Working Committee. He was thus part of the leadership collective which had adopted a policy of bringing all "levers of power" under party control through cadre deployment - including ones whose independence was supposedly guaranteed by the constitution.

The inside story of his appointment was related by Ranjeni Munusamy in late 2002. In mid-1998 Nelson Mandela, "then still President of South Africa, was abroad on an official visit." During this trip Mbeki phoned him "to inform him that he had decided to appoint" Mboweni to the Reserve Bank job. Munusamy wrote that, "Mandela was livid. While he did not have serious objections to Mboweni's appointment, he was riled that Mbeki wanted to make the announcement in his absence. He demanded that it be delayed until he returned to South Africa. Mbeki refused. ‘I will report you to the NEC,' Mandela threatened. ‘But Madiba, you are no longer a member of the NEC,' Mbeki replied. The announcement was made the next day." (Sunday Times December 15 2002)

So much then for Section 4(1)(a) of the Reserve Bank Act and the appointment of the Governor being the prerogative of the state president. Section (4)(2)(a) of the Act meanwhile requires that the Governor "be a person of tested banking experience". Mboweni had no banking experience at all when he was chosen for the top job. He did however understudy the person he was replacing, Dr Chris Stals, for a year before formally taking over. One contemporaneous press report, quoting unnamed ANC insiders, described his appointment as "part of a continuing process of putting key ANC people in charge of the country's major levers of power."

At the time Ken Andrew, the Democratic Party spokesman on finance, criticised the appointment saying that Mboweni lacked the requisite experience. His independence was also open to question. "Time and again he has bowed before the political pressure brought to bear by COSATU and the labour movement. His commitment to GEAR and the economy has also come under fire" Andrew said.

In office Mboweni seems to have allayed some of these concerns while confirming others. If annoying COSATU is a reflection of political independence then he seems to have done quite well in that regard. However, he did dutifully follow the Mbeki-ite line on race.

Like all other deployed cadres Mboweni prioritised the pursuit of ‘demographic representivity' in his institution. Shortly before the appointment was announced Stals warned that he would be concerned if his retirement led to the outflow of the many "highly experienced and professional people" in the Bank.

Mboweni initially took a reconciliatory stance. However, under his leadership the Reserve Bank soon implemented an aggressive programme of racial transformation. In an effort to accelerate the departure of senior white staff in April 2003 those aged 50 and above were offered enhanced early retirement. 173 out of the 282 individuals offered such packages took it.

In his 2004 governor's address Mboweni said that at the end of June 2004 the total workforce was 54.1 percent black and 45.6 percent female but the Bank's "ultimate goal" was "a workforce reflecting at all levels of seniority the demographic and gender composition of the South African population".

However, a couple of years later Mboweni did appear to soften his stance on race. At a business breakfast in September 2006 he told his audience that, "My frustration [is] that I have sought to recruit as many competent black people as I can and no sooner have we recruited and trained them, than they leave. Recently we appointed the first African woman to head the financial markets department ... Within three months she had left. I got so upset, I said to people I am stopping this recruitment of black people. I am okay with my Afrikaners. They stay and do the work and become experts."

It is not clear if this represented a real shift in priorities. A few days later he was back to racial bean counting in an address to the Black Management Forum.

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