In 2025, six months after the formation of the GNU when the ANC failed to achieve an overall electoral majority, the country entered a period of greater political uncertainty than at any time since the early 1990s.
There were two rocks to cling to in the storm: the National Treasury, led by finance minister Enoch Godongwana, and the Reserve Bank under governor Lesetja Kganyago. Though they were not always aligned, their leadership was arguably the major factor in the surge in national confidence that came towards the end of the year.
This is why Godongwana and Kganyago are the FM’s newsmakers of 2025, along with President Cyril Ramaphosa, whose laid-back political style for once seemed both appropriate and effective.
There have been only 10 governors of the Bank since it was founded in 1920 — and only four since the advent of democracy in 1994. It is a story of continuity and stability. Kganyago was appointed in 2014 and is now in his third term, which ends in 2029.
Kganyago’s personal prestige is immense. He is one the world’s most respected central bankers. He has consolidated and enhanced the Bank’s reputation, conscious of the work done by his three distinguished predecessors in the democratic era.
Chris Stals was appointed in 1989 in the dying days of the National Party government and served until 1999, the culmination of a 44-year career at the Bank. His retention by then president Nelson Mandela ensured stability in a time of uncharted political and economic waters.
Stals’s successor, Tito Mboweni, came from a very different background. He had been minister of labour and the ANC’s deputy head of economic policy. Mboweni joined the Bank in July 1998 as “adviser” to Stals but was in fact being groomed to take over. (This appointment was necessary in any case, as the South African Reserve Bank Act states that the “governor shall be a person of tested banking experience”.)
Mboweni was anything but a dull technocrat. Unlike his predecessors, he relished sparring with the media and showed a touch of mischief. Yet he was a strong advocate for central bank independence. He had both the struggle credentials and the personality to protect the Bank from political pressure and ignorant populists, and to maintain focus on its constitutional mandate to protect the value of the rand and control inflation.
Like finance minister Trevor Manuel, Mboweni was determined to make the workings of government accessible. Both understood the importance of keeping inflation under control. Mboweni’s successor, former activist and struggle exile Gill Marcus, was another unlikely candidate to be a central banker, but she proved no less effective and was unafraid to criticise the Zuma government.
Both Mboweni and Marcus were politicians who adapted to the role. The appointment of Kganyago represented a return to an experienced finance and banking professional.
Kganyago studied accounting and economics at undergraduate level, and has an MSc in development economics from the University of London. He began work at the Treasury in 1996 at the age of 31, and from January 2005 until May 2011 gained extensive experience as director-general.
He had the good fortune to work with two outstanding ministers, Manuel (1996-2009) and, following his success at the South African Revenue Service, Pravin Gordhan (2009-2014). In 2011, Kganyago was appointed deputy governor of the Bank.
Bank insiders say Kganyago is never afraid to approach experts for advice. He is a very effective chair of meetings and likes to “get the business done”. As a deputy governor under Marcus, he tended to be reticent, “as she spoke a great deal”, but he “flowered” when he became governor.
Kganyago has been no less forthright than his predecessors in defending the independence of the bank, which has not always been an easy task. That independence depends partly on the political weight of the governor within the ruling party, but also on its ownership model.
The Bank was the fourth central bank established outside the UK and Europe. It is one of only eight reserve banks worldwide that is privately owned.
As the Bank itself notes: “The shareholders have no rights or involvement in determining monetary policy, financial stability policy or regulation and supervision of the financial sector. Their rights are limited to considering the Bank’s annual financial statements, electing seven of the nonexecutive directors of the board of directors, and appointing the external auditors and approving their remuneration.”
The issue of “nationalising” the Bank surfaces regularly. The ANC passed a resolution at its 54th conference at Nasrec in 2017 to make the bank 100% state-owned. Ramaphosa later told parliament that the state intended to do away with the Bank’s private shareholders. But nothing has happened, and the advent of the GNU probably means the idea has been moved to a backburner.
Perhaps the most important component of the Bank’s shareholder ownership is the role of nonexecutive directors. They are appointed to represent various sectors of the economy — mining, commerce, industry, labour and so on — as well as the government itself. Kganyago is known to value their input highly. An important function of the nonexecutive directors is to make recommendations, with the governor, on the appointment and reappointment of deputy governors.
All of this helps to build the Bank’s institutional knowledge and doubtless helps the governor to feel confident that he is in touch with what is happening in the economy.
In contrast with the stability at the Bank, there were several distressing years of musical chairs in the finance ministry.
After the initial stability in the democratic era, first with caretaker Chris Liebenberg (1994-1996) and then 14 years of Manuel and Gordhan, there were six finance ministers between 2014 and 2021. The nadir was the appointment of David van Rooyen in 2015, which caused such an uproar that then president Jacob Zuma was forced to rescind it after four days.
Gordhan returned as minister (2015-2017) but it was clear he did not have the support of the Zuma government. This was the period where state capture was pervasive. Gordhan was succeeded by Malusi Gigaba, a smooth communicator but clearly without the personal or professional credentials for the job. Then came the respected Nhlanhla Nene but he lasted only seven months, followed by Mboweni, nearly a decade after he left the Bank. A safe pair of long-term hands was needed.
In retrospect, Godongwana’s appointment in 2021 ushered in a new period of stability. Though he had not been as politically prominent as many of his predecessors before taking the job, he offered an interesting blend of academic qualification, trade union experience and leadership of important institutions.
Godongwana holds an MSc in financial economics from the University of London. He has served as chair of the Development Bank of Southern Africa and on the boards of the New Development Bank and Mondi Plc.
But he also had extensive experience in organised labour as general secretary of the National Union of Metalworkers of South Africa. His political route to becoming an MP included membership of the Eastern Cape legislature and executive council. Interaction with business leaders came through his participation in Nedlac and in the drafting of new labour laws, including the Labour Relations Act.
It is a formidable CV — and Godongwana needed all his experience and expertise when the ANC hit an unprecedented crisis early this year. For the first time in the country’s history, the national budget was rejected before it could even be put to a vote in parliament.
This was the first concrete signal to the ANC that it could no longer pretend to still be in power alone, and that the GNU power-sharing arrangement was not merely a technicality. No previous finance minister had faced such a situation.
The budget row in February was over the proposed increase to VAT. Coalition party leaders and even ANC ministers were briefed only on the eve of the tabling of the budget. Godongwana and his team at the Treasury were accused of arrogance and of taking parliament for granted. They were clearly taken aback. For them it had been a matter of business as usual — but for the first time, political realities had intruded on the intricate budget planning process.
Eventually the budget was passed, without the VAT increase, and there was a sense that the Treasury had not yet managed to reclaim its usual commanding role in the process.
What a difference a few months can make. In October Godongwana delivered a medium-term budget policy statement (MTBPS) that, unexpectedly, was greeted as realistic and drew political support across the spectrum. This time there had been detailed interaction between the Treasury and a range of stakeholders. It is a tribute to Godongwana that he was able to retain his authority, while changing course in both style and content.
As the FM noted at the time, “the wide welcome the MTBPS received (DA caucus members were even seen standing and applauding) seemed to be the first signs that the GNU coalition is stabilising. Insiders across parties said Godongwana has shown significant leadership in the way he and the Treasury team managed the budget process, consulting at every step of the way”.
While the GNU’s broad agreement over the budget marked a shift from the March-May confusion, the reforms already initiated across the economy during Ramaphosa’s first term and into his second were beginning to yield results.
Predating the GNU, Godongwana and his team were leading from the front with reforms holding the line on state finances. This was demonstrated by South Africa’s exit from the global Financial Action Task Force greylist, as well as the first investment ratings upgrade in almost two decades by S&P Global Ratings.
Across at the Bank, meanwhile, Kganyago had spent the earlier part of the year mounting a calculated campaign to change the inflation target for the economy.
Before the democratic era, it had often been argued that South Africa would never get inflation under control. For example, in 1987 the annual rate was close to 17%. Interest rates in the mid-1980s had run as high as 24%.
However, after the success of Stals in the 1990s in wrestling inflation down to single digits, inflation targeting was introduced by Mboweni when he was governor. An inflation target of 3%-6% per year was announced in 2000 and this proved effective over the next 25 years. It helped to armour South Africa against the worst effects of the global financial crisis, along with clear-eyed and firm supervision of lending practices by Errol Kruger, the Bank’s registrar of banks.
Kganyago was determined to do better. He believed that the failure to reduce the 3%-6% inflation target band to 2%-4%, as originally planned, was “a major monetary policy mistake”. After 2017, at his direction, the Bank moved from implicitly tolerating inflation at the top end of the target band (6%) — which had allowed higher inflation expectations and higher inflation to become entrenched — to explicitly targeting the 4.5% midpoint.
Since 2021, however, the Bank had been emphasising that even at 4.5%, our target was high compared with other emerging markets and most of our developed-nation trading partners, which imposed various costs on the economy and made it less competitive.
Higher inflation means higher interest rates, which in turn affects everything from national debt servicing to consumers’ home mortgage bonds. In March 2025 Kganyago argued that “the current inflation target is too high and inconsistent with price stability”. The Treasury seemed unresponsive to these messages.
This was the background to the unusual step taken by the Bank’s monetary policy committee (MPC) after its May 2025 meeting.
It announced a 3% inflation target, saying it was “more attractive” than sticking with the current 4.5%. Kganyago said: “A lower target will lock in lower interest rates going forward. South Africa would be a lower-inflation, lower-interest rate economy.”
At the same time the Bank released a working paper co-authored by its chief economist, Chris Loewald. The paper estimated that with a lower target of 3%, the fiscus could save about R130bn in the first five years or R600bn by the end of the decade.
“This was a deliberate signal,” the FM noted, “to markets, policymakers and society to prepare for a pivotal recalibration of South Africa’s monetary policy framework.”
However, the signal was unorthodox. As FM columnist Prof Jannie Rossouw pointed out: “In the past, the inflation target (and changes in the specification of the target) were announced by the minister of finance. This is therefore the direction in which we should look for the announcement of target revision.”
Clearly, Kganyago was impatient and was prepared to take the risk of being seen to trespass on the minister’s territory — not least by the minister himself and by other senior ANC figures.
When he was asked at the May MPC press conference if the Bank would go ahead without the support of the Treasury, Kganyago replied: “Of course we can go alone. Will we do it? We don’t think it’d be desirable.” He explained that this was because inflation targets work when they’ve got the whole of government behind them.
The FM commented that “this is precisely why the misalignment between the Bank and the Treasury is so unfortunate. In short, it is a time for boldness and ambition. South Africa has an opportunity to achieve permanently lower inflation and, therefore, permanently lower interest rates at very little cost. We should seize it.”
It is now a matter of record that the opportunity was indeed seized. Having openly disagreed with Kganyago, and after the Treasury had proposed alternative routes, Godongwana announced an adjustment to the inflation target — 3%, with a one-percentage-point tolerance band on either side to allow for shocks.
It was a significant win for Kganyago, but (a sign of a leader) he claimed it as victory for the country. “There is only one winner here, it is South Africa,” he said.
The successes this year of Godongwana and Kganyago, separately and in partnership, reveal some lessons for the rest of the government.
Godongwana is an effective minister because he has long and deep experience of internal party politics and the legislative process, as well as academic training and experience of the economy at work. He also can call on the expertise of professional civil servants.
Kganyago has shown that he understands the need to be accountable. At the same time, he has the courage to push for what he believes is right for the country. His independence of mind and action is protected by the structure of the Bank’s ownership and its stellar global reputation.
The contribution of Ramaphosa should not be overlooked. He finished the year strongly, after doing well to maintain his dignity when he was ambushed in the White House by US President Donald Trump.
Ramaphosa uses immobility and silence as tactics. Many in the ANC, accustomed for 30 years to untrammelled power, were frustrated with having to deal with the DA as a partner in the GNU. The DA was frustrated by what it saw as obstruction and disrespect by the ANC. In both cases Ramaphosa was largely unresponsive, and the GNU continues, gaining momentum simply by being in existence.
Ramaphosa is known to dither in making appointments. For instance, South Africa has been without an ambassador in the US for eight months. He has left it virtually to the last minute to hold hearings on the appointment of a new director of public prosecutions.
But in the case of the Bank, in March 2024 he moved smartly and unobtrusively to renew Kganyago’s appointment for a third term, starting that November. There was no opportunity for debate or controversy. And, having appointed Godongwana in 2021, he picked the right man and has given no sign of undermining him.
To use a cricket analogy: if Ramaphosa were a batsman, he would leave a lot of deliveries. If he really must play a ball, he will, but otherwise he reduces the risk of getting out. He might score slowly, but he stays at the wicket.
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