Mangudya rolls back Gono years

Source: Mangudya rolls back Gono years – The Standard June 19, 2016

Until the cash crisis began to bite, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya’s tenure had been associated with building bridges as he smoked the peace pipe with his constituency that had been brutally battered by his predecessor Gideon Gono.

BY OUR STAFF

When he was appointed to the helm of the RBZ in May 2014, Mangudya reached out to all stakeholders as he sought to come up with a winning formula to steer the economy out of the doldrums.

Enter the cash crisis!

On May 4 this year Mangudya announced that RBZ would introduce bond notes that would come in the form of a 5% export incentive to boost local production and all hell broke loose.

Stakeholders were not consulted before the announcement and consultations have only started now, more than a month later.

Analysts said he had adopted a knee-jerk reaction to cash shortages, especially after revising the measure that would have seen exporters getting 40% of their proceeds in South African rand.

As part of his broader consultation exercise, Mangudya has met church leaders as he seeks divine guidance to extricate the economy from the crisis.
In his last days at RBZ, Gono met church leaders; Ufic’s Emmanuel Makandiwa and Spirit Embassy’s founder Uebert Angel after the latter had gained fame for his “miracle money”.

The two governors’ knee-jerk reaction to crises has drawn parallels with critics arguing they were cut from the same cloth.

An economist told Standardbusiness that the tenures of Gono and Mangudya had an underlying principle they had to deal with—fighting fiscal indiscipline.

“In 2008 lack of fiscal discipline pushed hyperinflation and currently it has worsened the liquidity crisis. An example is the move by government to pay bonuses when it did not have the money. The principles of Gono and Mangudya are similar, even if the context is different,” he said.

The economist said it was clear Zimbabweans had lost trust in the central bank as evidenced by the resistance to the introduction of bond notes, which are seen as reviving the moribund Zimbabwean dollar.

“The way to restore trust is through a consultative process and what happened should have been avoided,” he said.

“Even if RBZ doesn’t bring back the Zimbabwean dollar, the economy has already suffered.

“In this context, characterised by a legacy of lack of trust, public policy needs to bridge that gap and it requires a lot of consultations that must be done properly.”

Economist John Robertson said while the 2008 and 2016 eras were different, both governors were acting on directives from government.

“I don’t think there is much comparison between the two, but they are given directives by the president and that’s why the senior people don’t see the need to consult because they are carrying out directives,” Robertson said.

Economist Tony Hawkins said while Mangudya was not trying to bring back the Zimbabwean dollar, he should have consulted before implementing the bond notes policy.
“I don’t think Mangudya is trying to bring back the Zimbabwe dollar but I also don’t think he knows what he is doing because he contradicted his statement [on bond notes] twice,” he said.

“So he is pretty much at a loss as to what to do and now he is trying to make corrections.”

“I think that was being shortsighted on his part and he tried to backtrack and review his statement that the bond notes were not to address cash shortages but an export incentive.”

He said Mangudya and Gono tackled different problems.

“Gono’s problems were of the Zimbabwean dollar and Mangudya’s is of the shortage of foreign currency, so the problems are different,” Hawkins said.

“However, there is a lot that needs to be done. RBZ has played this card and it has backfired.”

He said the move by government to put in place a 5% export incentive was a disguise of trying to address the cash shortages, because if government wanted to provide an incentive, it could have reduced the mining royalties and scrapped the tobacco levy.

COMMENTS

WORDPRESS: 3
  • comment-avatar
    Mazano Rewayi 6 years ago

    While the problems in Zim manifest as economic caused by policy inconsistency and a dysfunctional political system there is something sinister underlying this which we do not talk about often enough. Unilateralism (conversely dictatorship). The “king syndrome” is now very rife in Zim, across the board. No one wants to consult anybody as this is perceived as weakness. Standing rules are not even applied, since the “king” knows it all and “always acts in the best interests of their subjects”. The rush to be “doctors” is intended to buttress this cancer. Under this dispensation the boss is “all knowing” and the subjects need not worry let alone have a say. Discussion is forbidden and debate is taboo. We see this in government where every minster runs their ministry like their personal tuck shop. So long as they report to the big boss all is fine. We see it in all political parties, in church organisations, in football teams, in NGOs and companies, even in families. The “boss”makes all the decisions often, if not always, without comprehending the facts. Ever notice how many official meetings are held without minutes and only the chairperson speaks in the meeting – always outlining the “next steps” not the issues.
    But making too many decisions, with insufficient time to dwell on any one decision, without being challenged, without being informed, without adequate analysis inevitably results in poor decisions. This cancer in our society partly explains the increase in corruption and the paucity of the decisions being made. So it is not surprising if the RBZ governor only discussed with the boss, who probably gave him 15 minutes as he has “many pressing issues to attend to”, and dutifully announced the decision to the subjects. The governor is probably at a loss why there is an outcry over a decision made at the highest level. To expect him to come up with an explanation, let alone a solution, is expecting too much. Only the top guy can say something on this issue.

  • comment-avatar
    reader 6 years ago

    Easy to clear the problem, OPEN the border with RSA free flow of Goods and money and see how the economy grows.
    Free invites to RSA to come set up a BRANCH of your ALREADY registered business and come manufacture and trade here.

    infact why not open the borders to all SADC members FREE TRADE, Free Movement of money.

    However PEOPLE will still need to meet immigration regulations on length of stay etc.

  • comment-avatar

    When having to pay a fine imposed by the Zimbabwe Revenue Police Traffic section, don’t pay by cash – offer your plastic cards! That should put a dent in their thieving wheel.