Leadership & People
Mboweni Named Nampak Chair, Ending Government Career (Update2)
(Bloomberg) - Former South African central bank Governor Tito Mboweni was named chairman of Nampak Ltd., Africa’s second-biggest packaging maker, indicating he may not pursue a career in the government.
Mboweni will take over on June 1, outgoing Nampak chairman Trevor Evans said at the company’s annual general meeting in Johannesburg today. He joins a company that has reported two years of declining profit and a share price that has slid almost 10 percent since 2006 compared with a more than 45 percent surge in South Africa’s benchmark index.
Mboweni, 50, left the Reserve Bank in November after a decade at its helm, declining President Jacob Zuma’s offer to serve a third term. A former labor minister in Nelson Mandela’s first Cabinet in 1994, Mboweni was criticized by labor unions during his term at the central bank for keeping interest rates too high and stifling job creation.
“The appointment implies that he will not, anytime soon, have a senior role in government,” said Nic Borain, a political analyst in Cape Town whose clients include HSBC Holdings Plc. “He’s never been a mover and shaker within the ruling African National Congress. He’s paid his dues.”
Mboweni doesn’t currently hold a senior position in the ANC. He declined to be nominated as a lawmaker by the ANC in January last year to maintain the independence of the central bank while he was governor.
‘No Fool’
Net income at Nampak in the 12 months through September fell 60 percent to 204.8 million rand ($27.5 million) while borrowings rose 22 percent and its cash shrank by two thirds, the company said on Nov. 23. Nampak, which has seen five executives quit over the past year, has “underperformed” over the past decade, Chief Executive Officer Andrew Marshall said in the 2009 annual report.
“Tito knows that Nampak will do well next year,” David Couldridge, a Nampak shareholder and investment analyst at Element Investment Managers, said in an interview. “He’s no fool.”
Profit in this fiscal through September will match that reported last year, Evans said at the shareholders’ meeting today. The stock has five “sell” recommendations against two “hold” ratings.
“Nampak is coming off a low base,” Couldridge said. South Africa is recovering from its first recession in 17 years with the Chamber of Commerce and Industry saying on Jan. 7 it is “optimistic” the economy will register growth of 2 percent or more in 2010.
‘No Bonuses’
Evans, who served as Nampak Chairman for the past nine years, earned 1.1 million rand in fees in fiscal 2009, according to the annual report. Mboweni received compensation of 4.3 million rand in the year through March 2009, including retirement and medical aid contributions as well as “fringe benefits,” the central bank said in its annual report.
Former Nampak CEO John Bortolan, who left the company at the end of February last year, received a bonus that more than doubled to 2.2 million rand. For his seven months as CEO, Marshall was paid a bonus of 1.4 million rand and a total package of 6.7 million rand.
“These bonuses should have been held back,” Theo Botha, a Nampak shareholder, said today. Marshall had done what was expected of him “and then some,” Evans said.
The Congress of South African Trade Unions, which helped propel Zuma into office last year, criticized Mboweni for sticking to a policy of keeping inflation within a 3 percent to 6 percent target range. Cosatu General Secretary Zwelinzima Vavi said he “won’t shed any tears” after Zuma announced in July last year that Mboweni would leave the Reserve Bank.
Gill Marcus, a former deputy central bank governor, took over from Mboweni on Nov. 9. When he left office, Mboweni said he will not involve himself in anything linked to central banking for about a year as a “cooling off” period.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net; Nasreen Seria in Johannesburg at nseria@bloomberg.net
By Nasreen Seria and Renee Bonorchis
