Failure is not an option Dr Mangudya, Sir! Dr Mangudya
Dr Mangudya

Dr Mangudya

Victoria Ruzvidzo Business Focus
Dr John Mangudya, the new Governor of the Reserve Bank of Zimbabwe, has always struck me as a sober banker and industrialist who knows his stuff and is very comfortable with his several portfolios.
His patriotism and desire to have things done in the right manner to the benefit of Zimbabwe, adds to his already rich list of attributes that have made him stand shoulders high above the rest in the banking sector.

Over the years, as a business journalist, I have had several opportunities to hear him speak at functions and to have one-on-one interviews with him. I have always been left wiser, richer and more hopeful that the challenges confronting the economy are surmountable.

He does not speak to flatter but he is one man who speaks his mind even if it means going against the grain of what everybody else in Government or in the private sector will be saying.

This is why when I read the story in our sister paper The Sunday Mail that President Mugabe had appointed him as the new central bank governor, I was not surprised at all. Since the debate started over who was to fill the big shoes left by former governor Dr Gideon Gono, I knew Dr Mangudya would be the man for the job.

Certainly his personal profile reads well. The educational qualifications, local and international banking exposure and other facets but what strikes me more is his persona and how it is so befitting he got the post.  He has captained CBZ Holdings well, the financial services group is performing well, with the commercial bank scoring highly in terms of deposits, market share and its balance sheet is solid. The group has remained standing despite the challenges in the economy over last the decade or so.

I also hear Dr Mangudya is a farmer of note. But we must hasten to add that all these accolades would come to nothing were he to come short in terms of delivery at the apex bank.

The last few years have demanded a central bank that is operating at its optimum in terms of supervising the financial sector, controlling money supply and keeping a watch on inflation but we all know that the bank has been undercapitalised for long and has not been the lender of last resort it is supposed to be.

We are all too aware the multiple currency system of transaction has usurped some of its power and a whole host of other challenges that have compromised its effectiveness.

This is a situation we believe is being rectified as a matter of urgency as promised by Finance Minister Patrick Chinamasa because the central bank needs to be firing from all cylinders to play its part in the economy.

Dr Mangudya knows that being an RBZ chief is not exactly a stroll in the park. It requires much presence and a commitment to hard work. The economy is facing immense challenges that himself and the team under him will need to confront. The greatest challenge of liquidity will demand that Dr Mangudya plays his game right by helping secure lines of credit while also motivating banks to play their part.

Money just has to circulate in the system. Of course we are using foreign currencies that he might not have much control over but he must ensure there is more circulating in the formal market than in the informal sector as is presently the case. Funds are required, not small amounts, but real money to oil the economy’s engine. The burden also lies with the Government banker to ensure funding is secured.

The Zimbabwe Agenda for Sustainable Socio-Economic Transformation requires US$27 billion for implementation over the next four years. Infrastructure alone requires US$14 billion according to research done by the African Development Bank and other financial institutions.

Government social services have also been found wanting due to inadequate resources, agriculture and other productive sectors of the economy are in dire need of funding. This alone will present enough headaches for Dr Mangudya but he will need to deal with these issues as he complements the fiscal policy.

A distant issue that he may need to keep on his desktop will be the re-introduction of the local currency when the APPROPRIATE time comes. Of course it will not happen soon but I am sure it may still be during his tenure, so he will need to apprise himself on issues pertaining to that.

One of the major functions of a central bank governor is to defend his currency so presently Dr Mangudya may not have the local currency to watch out for but he needs to master the art and prepare for times ahead. In the meantime a lot of foreign currency leakages have to be plugged.

Zimbabwe’s exports need to grow significantly to improve the country’s balance of payments position which has remained precarious over a long time. Too many imports are hurting the economy and externalising the few dollars that will have come into the country.

It is within Dr Mangudya’s purview to ensure he plays his cards well to entice the exporters into performing well while ensuring the country retains as much of the funds that come in as possible to fund economic activities and other needs.

We will certainly not run out of the issues that Dr Mangudya needs to handle with a spirit of excellence as he begins work at number 80 Samora Machel Avenue on May 1. Coincidentally it will be Workers’ Day. It’s a loaded one for the man.

However, let’s all hope that promises of recapitalisation of the institution will be followed through expeditiously because we will not expect the new governor to operate effectively in an undercapitalised institution.

The central bank has been a handicap for too long and the man at the helm can only do so much under the circumstances.
Government needs to proffer as much support as it can so its banker can safeguard its funds and the economy at large well.

Dr Mangudya should, however, not hide behind such issues but he should do the best that he can as things improve at the apex bank.
He is taking over from a man, Dr Gono, who departed from bookish economics during his tenure to proffer solutions to an economy that was burning.

Here was a man who did not fall short of ideas to rescue the economy at its most trying times although he has actually received a lot of flake for doing what he did to save the nation.

Many see him as Zimbabwe’s hero, others see him as the villain while yet others have been non-committal in their opinions.
But one thing I know for certain is we cannot take away from him the passion he has for the country and the energy he expended in ensuring the economy would not collapse.

However, Dr Gono would be the first to confess that the last few years of his tenure were as challenging as they come because of the huge debt that severely constrained operations and attendant challenges he had to deal with.

It would be remiss of me if I did not salute the current acting Governor Dr Charity Dhliwayo for a job well done. The woman, who has always struck me as quiet and reserved, has accounted for herself very well in the last few months she has been acting as governor.

Her January monetary policy, announced against the backdrop of a myriad of challenges, was crafted well and she was quite firm as she sought to deal with challenges afflicting the banking sector and the economy at large.

She has not bowed down to pressure from bankers over her directive that banks will need to consult the central bank first before changing interest rates following the expiry of a Memorandum of Understanding between the two parties signed last year.

She has also said she is not too worried about the few banks facing recapitalisation challenges because these account for a small percentage of the sector and will not affect the operations of others. She has steadied the RBZ ship with the aplomb of a veteran.

She has done us women very proud and we can only hope that her remaining days at the helm will be exciting. The good thing is she will still be with the central bank and will thus help Dr Mangudya navigate his way through.

Dr Mangudya sir, whatever the circumstances, whatever the challenges you may face, however you may wish to do things, for us failure is not an option. We expect solid performance from the man, nothing less.

In God I Trust!

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