Finance Ministry moves to ease fears over treasury head’s departure

South Africa’s Finance Ministry moved to allay concerns about the loss of key personnel at the National Treasury as it announced the pending departure of the department’s top official.

Dondo Mogajane, will step down in June after serving for more than two decades at the Treasury, including the past five years as director-general. His exit will follow that of at least five other high-profile staff members, all of whom regularly interacted with investors, and is a blow for Finance Minister Enoch Godongwana, who in February said he wanted Mogajane to stay on because he was focused on building stability at the department.

“The imminent filling of senior positions in the National Treasury will further strengthen the organisation,” the Finance Ministry said Thursday in a statement. “The National Treasury has a deep reserve of skilled officials with extensive experience who will continue to deliver on the service-delivery obligations of the department.”

The rand traded 0.5% weaker at R14.74 per dollar by 3:06 p.m. in Johannesburg.

Mogajane’s decision to leave the Treasury shouldn’t be taken “as anything other than what it is: the end of a contract, which he has elected not to renew,” said Gina Schoeman, an economist at Citibank South Africa. “You’ve got a relatively strong finance minister, coupled with strong deputy director-generals elsewhere, and in the context of a much better fiscal position it should be a relatively easy transition so long as they find someone effective and credible.”

The National Treasury administers state finances, with the Finance Ministry providing policy direction and oversight.

Mogajane, who will leave the Treasury on June 7 when his contract expires, said he plans to focus on private enterprises and won’t be joining any bank or government agency. “I’ve spoken with the minister and finally we’ve agreed that he’ll grant my wish not to renew my contract,” he said by phone earlier Thursday.

“It’s a very great shame to see Dondo leaving in June after just one term as director-general given his contribution to the National Treasury during the last five years and indeed in the battle against state capture before that,” said Peter Attard Montalto, head of capital markets research at Intellidex, using a local term to refer to graft. “He was skilled at the maneuvering of the National Treasury around the political and policy land mines in this period.”

Mogajane will form part of South Africa’s delegation to the International Monetary Fund and World Bank spring meetings in Washington later this month, he said. A process to recruit a successor has begun, according to the Finance Ministry.

The new director-general will take over as high commodity prices support the government’s efforts to rein in debt and reduce budget deficits, and after ratings companies Moody’s Investors Service and Fitch Ratings revised their outlooks on South Africa’s junk-rated debt to stable from negative.

Mogajane’s successor will be tasked with sticking to the government’s fiscal consolidation plans. The new director-general will also have to restore capacity at the Treasury and need to be a “master strategist on a range of challenges,” including social grants and infrastructure spending that the department will soon face, Montalto said.