Harare - Zimbabwe’s new central bank chief, John Mangudya, faces an arduous task restoring the bank’s status as lender of last resort and its oversight functions, as well as improving confidence in the country’s financial services sector.
He will succeed tough-talking former Reserve Bank of Zimbabwe governor Gideon Gono, for long seen as a close ally of President Robert Mugabe. Deputy governor Charity Dhliwayo will continue in her capacity as acting governor until Mangudya takes over at the beginning of May.
Gono, who had a tough approach, and clashed with fellow government officials who wanted to force through the takeover of 51 percent stakes in foreign-owned banks, is set to be appointed to the country’s senate amid growing reports, which have not been confirmed, that he could be appointed as the new finance minister.
In addition to maintaining the central bank’s traditional role as regulator of the banking industry in Zimbabwe – in which units of Standard Bank, Nedbank, Barclays, Standard Chartered and Ecobank have exposure – the new governor will be called on to revamp the bank’s oversight functions in a bid to restore public confidence in the banking system.
Zimbabwe, without its own currency since 2009, is using a multi-currency regime under which eight currencies – the rand, the Chinese yuan, the US and Australian dollars, the British pound, the Japanese yen, the Indian rupee and the Botswanan pula – are acceptable as legal tender.
Although it is unlikely that the Zimbabwean dollar will be reintroduced soon, Mangudya will have to work out modalities for its eventual reinstatement. The government reportedly wants the local currency revived in the next few years although economists say the economy is not yet ready for it.
“Tough challenges await him and he has to hit the ground running because the economy is worsening and the financial services sector is wobbly. The responsibility to map the way for reintroduction of the Zimbabwe dollar will also require his attention and guidance although it is unlikely soon,” independent Zimbabwe economist Moses Moyo said.
Experts say Mangudya’s banking experience will come in handy in his new task but cautioned that the central bank needs a new approach amid a mounting economic crisis.
Mangudya has been the chief executive of CBZ Holdings, which is one of the few stable local financial institutions, since April 2012.
“The trust and belief politicians have in him might be an impediment for him to be his own man,” Takunda Mugaga, an economist at Econometer Global Capital, said.
When his five-year term starts on May 1, Mangudya will already have a full plate, with Zimbabwe having restored the interbank market on Monday. He will have to provide guidance by striking a balance between banks’ quest for increased revenue from interest rates and bank charges and public perceptions that current bank fees are high.
Finance Minister Patrick Chinamasa signed a $100 million (R1.1 billion) facility with African Export-Import Bank (Afreximbank) at the weekend to facilitate the resumption of the interbank market.
Mugaga said Mangudya’s “appreciation of banking and economics is quite sound” and would help him balance his tasks at the central bank.
Other pressing obligations which he has to speedily address include restoring the bank’s lender of last resort function and strengthening its status as government banker.
“Any attempt to be tough on a particular bank might be interpreted as a settling of a vendetta even if no facts would substantiate it,” Mugaga said.
The central bank is also bracing for the reintroduction of government bonds and other treasury bills which economists say is a noble goal but has been badly timed owing to the country’s economic troubles.
Gono said Mangudya “will be equal to the task and challenges ahead” as central bank chief given his experience in Zimbabwe’s banking industry and his understanding of the country’s economy.
There is unconfirmed talk of a looming cabinet shuffle, with insiders saying Mugabe could axe Chinamasa although government officials have denied this.
Economists said Zimbabwe’s economy had worsened since Mugabe won elections in July last year and the economy had now sunk into deflation while investors were waiting on the sidelines, hoping for an improvement in the operating and legislative framework.
Mangudya has previously worked as an economist at the Reserve Bank of Zimbabwe.
He left the central bank in 1996 following his appointment as the southern Africa regional manager at Afreximbank.
He subsequently joined CBZ Holdings in 2000 as general manager for international banking and was later promoted to the post of chief executive of the country’s biggest banking group.