RESERVE Bank of Zimbabwe (RBZ) governor-designate, John Mangudya returns “home” on May 1 where it all began 28 years ago.
BY NDAMU SANDU
As Mangudya migrates from his modest office along Kwame Nkrumah Avenue to the plush one at RBZ, so is the enormity of the challenges on the horizon.
Unlike in 1986 when Mangudya joined the central bank as an economist, his work is cut out for him this time around as the apex bank is saddled with serious challenges even under the multicurrency regime.
The central bank’s roles are difficult to implement after the economy abandoned the local currency in 2009.
In a dollarised environment, the RBZ is incapable of doing its job fully because it has lost its ability to print money.
This means that it cannot influence money supply, which is the entire stock of currency and other liquid instruments in a country’s economy as of a particular time.
Unlike his predecessors, Mangudya’s signature won’t be on the currency after the country adopted the multi-currency regime in 2009.
Despite the setbacks, analysts say Mangudya has the pedigree to bring back confidence in the sector.
His mastery of the job — through qualifications and experience — will bring confidence and stability in the interbank market.
“Banks will lend to each other if there is certainty that instruments lodged as security will be honoured,” a banking executive said.
Independent economist, Moses Chundu said the overwhelming response from the market signals confidence in Mangudya’s ability to deal with the issues as he has a grasp of the laws governing the economy and banking.
Chundu said Mangudya’s success or failure at the helm would be determined on how he is going to relate with the state.
“If we say Zim Asset [Zimbabwe Agenda for Sustainable Socio-Economic Transformation] is the overarching policy, he must be given space to swim and not be hand-held,” he said.
“Ministers and Cabinet stay away. Allow him to interpret Zim Asset and craft his policies to what you have outlined.”
Mangudya’s experience was gained from RBZ, the African Export-Import Bank (Afreximbank) and CBZ. He has gained many important contacts during his career.
Chundu said government has to send the right signals to the international community that the governor has autonomy to build the necessary confidence.
“His efforts and contacts will come to nought if confidence is not there. At the end of the day, it’s not about Mangudya but Zimbabwe,” Chundu said.
Gilbert Muponda — who runs an economic, financial, business, research and advisory services firm — said the RBZ faced several challenges but these could be overcome by adopting modern and investor-friendly policies and giving the government proper financial advice and ideas.
“RBZ should focus on rebuilding trust and credibility plus generating goodwill which was eroded under past leadership,” he said.
“Additionally the new governor needs to adhere to the central bank’s core business such as banker to government and rebuild capacity as lender of last resort by aggressively pushing for revival of the interbank market and open foreign lines of credit for the local capital markets.”
Muponda said there was need for a traditional central bank which had credibility and respect and there was also need to reinforce that the central bank was now back on track.
“Now that the government has assumed RBZ’s debts, it’s a good starting point further enhanced by the Afreximbank interbank facilities which were revealed recently,” he said.
Mangudya is generally viewed as a down to earth banker untainted by the trappings of power as the head of the country’s biggest bank. At RBZ, Mangudya will meet his former lecturer at university, Daniel Ndlela. Ndlela is a board member at the central bank.
He will also meet his former colleague and now deputy governor, Charity Dhliwayo. Dhliwayo has seen it all at the central bank rising through the ranks to the post of deputy governor. She is a local moving encyclopedia in bank supervision.
The other deputy, Kupikile Mlambo has been an economics lecturer and worked at African Development Bank before joining RBZ in 2012. There are a host of experienced executives who will anchor this thrust at the central bank.
Chundu said Mangudya will have a critical mass to build around and “he needs to show that a new leadership has come and what he stands for”.
That way, Chundu said, he will attract back those that had left and make those that wanted to leave, stay put.