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Mernat Mafirakurewa Business Editor
RESERVE Bank of Zimbabwe Governor Dr John Mangudya says the country will overcome its economic challenges but that requires discipline, hard work, unity and remaining positive.In his acceptance statement following his appointment as Governor of the Central Bank by President Mugabe, Mangudya said while the country faces significant economic challenges, there is light at the end of the tunnel.
Dr Mangudya took over as RBZ boss on May 1, replacing Dr Gideon Gono.
He said lack of liquidity and its limited circulation remains the biggest immediate challenge that the Zimbabwe economy faces.
At the epicentre of this liquidity crunch, Mangudya said, was the country’s banking sector which has been operating without a formal interbank market and a lender of last resort since the introduction of the multiple currency system in 2009.
“The greatest panacea of our challenges is discipline. Discipline to utilise our resources efficiently. Discipline to know that we need to increase production before we increase consumption,” he said.
“Discipline to refrain from living beyond our means as this would bring greed and corruption. Discipline enough to find an equilibrium position or a point of harmony between the need to promote indigenisation and the need for foreign direct investment and the ability to synchronise the two. Discipline to know that we need to work very hard for this economy.”
Dr Mangudya said the RBZ would need to attend to the challenges and come up with solutions for the betterment of the economy and also arrange for funding to capitalise itself so that it could become the lender of last resort. “We need to have a transparent and responsible Central Bank. The Reserve Bank is also expected to promote a strong and stable financial system and to ensure that the multiple currency system is buttressed and maintained to restore and enhance confidence and credibility,” he said.
“The multiple currency system is sine qua non (absolutely needed) for turning around the fortunes of the economy. I have optimism to believe that we shall overcome our challenges. We need to remain positive and work together as a team. It shall come to pass.”
The past three years, Dr Mangudya said, had been challenging for the Zimbabwe economy and difficult for many Zimbabweans as people could not find jobs while companies could not pay each other as well as service their loans with banks.
He said tax revenues were going down and the tax base was narrowing.
“The economy is weaker and the financial system is depressed. We need to be courageous and skilful to manage the situation at hand.
“Whilst the Reserve Bank has no tools at the moment to influence the economy directly, I believe that its greatest strength rests on relationship management, policy advice and the ability to put in place national beneficial financial structures to increase liquidity and resuscitate the economy so as to unlock value in the economy and to work towards meeting some of the critical objectives enunciated in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation,” said Mangudya.
The RBZ boss said it was also critical that the relevant authorities and the productive sectors of the economy promote value addition and increase export earnings to enhance the level of liquidity in the economy.
He said the central bank would do its part.
Dr Mangudya said he felt highly honoured and humbled by the faith that the President and government had bestowed on him pledging to do his best to keep the trust by focusing on the great responsibilities that the economy expects from the RBZ.
“We need to serve Zimbabwe with great pride and dedication. We need to integrate Zimbabwe into the global arena. It will not be easy but we must do it,” he added.
Online Reporter
Londile Moyo