Citizens In Panic Mode, Lack Of Confidence For The New Currency

By Shingirai Vambe

Zimbabwe citizens are in a perplexing mood following the stepping in of the new Reserve Bank of Zimbabwe (RBZ) Governor, John Mushayavanhu, who is expected to release the much-awaited current Monetary Policy Statement and launch of the new currency tomorrow, Friday, April 5 2024.

The former Governor, John Panonetsa Mangudya’s 5-year tenure came to an end in March and he was the one supposed to be issuing the Policy Statement, instead his was sent packing to pave way for the incumbent so as to allow a smooth transition as well as work on the hand-over take-over process.

There is confusion in the cockpit, the exchange rate against the US dollar at interbank and parallel market rate.

Through social media, majority started to withdraw their money from banks since Monday morning after different notes purported to be the currency to be introduced to the country this coming Friday as a measure to bring stability and manage the up speeding inflation rate, thus, causing panic and despondency.

Zimbabweans have lost confidence in their economy, a syndrome that has destroyed the banking sector. Experts and legislators earlier told the Post On Sunday Newspaper that politics and policy inconsistency has affected the economy, even when they change faces at the money house, there is lack of trust of the Governing party and the Government.

Who is John Mushayavanhu?

A holder a master’s degree in business administration and a PhD in business administration, in addition to other international academic qualifications.

Mushayavanhu was group chief executive officer at First Banking Corporation (FBC) Holdings Limited since 2011, which owns FBC Bank as its subsidiary. He joined FBC Holdings Limited in 1997 when it was First Banking Corporation Limited. He held several senior positions until 2004 when he was appointed deputy group chief executive of FBC Holdings Limited and managing director of FBC Bank.

FBC Holdings Limited has been linked to the ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) since its rebranding in 2004. Mushayavanhu and the Zimbabwe President, Emmerson D. Mnangagwa were business associates and worked together when Mnangagwa was ZANU-PF’s secretary for administration. One of the prominent deals they executed together was the acquisition of the $29.3m energy company Zuva Petroleum, through Mushayavanhu’s Wobble Investments, on behalf of the Joshi family, Mnangagwa’s close business allies.

The two also worked together in ZANU-PF’s business interests in Zimbabwe and during the D.R.Congo War of 1998 to 2000 in the Democratic Republic of Congo.

Thursday afternoon, he took the executive through his plans of bringing back the economy while showing them the gold reserves that the country has, said to be 1.1 tonnes. Treated with a pinch of salt, considering the quantity of gold and mining activities being carried out across the country with corrupt allegations of smuggling the precious mineral out of the country through scrupulous means, Diamonds included.

“I can confirm that we have 1.1 tonnes of gold and other precious minerals in the form of diamonds which if converted to gold will be equal to 0.4 tonnes of gold making a total of 1.5 tonnes of what we are holding,” said Mushayavanhu.

Economic analyst and scholar, Professor Gift Mugano said 2.6 tonnes of gold and US$100m equivalent to US$291.8m are a drop in the ocean.

“Here is the simple mathematics:

If we combined 1.1 tonnes of gold (local) and 1.5 tonnes of gold (offshore), we have 2.6 tonnes of gold.  If we use the price of gold per ounce of US$2294 as of yesterday, our 2.6 tonnes of gold give us an estimated value of US$191.8m.  Our total reserves are estimated at US$291.8million if we factor in the additional US$100 which has been announced by the RBZ”.

“This year, we are anticipating to import goods worths US$9 billion, that is, US$750 million per month.  Our reserves, 2.6 tonnes plus US$100 million it gives us US$291.8 million, which can only cover 11.7 days of the months if we are not exporting anything,” added Mugano.

“In short, our reserves are not enough to give us at least one month import cover.  Basic economic theory tells us that we must have at least six (6) months import cover to guarantee currency stability if all things are equal. This is a priori requirement,” he said.

Surprisingly, the Reserve Bank of Zimbabwe (RBZ) has summoned chief executives of key financial institutions, specifically banks, for a meeting tomorrow morning ahead of the launch of a new currency in a country inflation is being recorded by independent economist to be at 2260% while authorities say its at 55.3%, having the exchange rate at US$1: ZW40 000 in the parallel market and officially, is US$1: ZW22 447.5.

Bank chief executives will meet outgoing RBZ governor John Mangudya and his incoming successor John Mushayavanhu to discuss the process and modalities of introducing the structured currency tomorrow through a delayed monetary policy statement.

Former Norton Member of Parliament, Themba Mliswa told this publication that inconsistencies have killed the economy and lack of political will, to deal with issues of corruption will seriously affect growth and economic stability.

He said fix the politics first.

Bank CEOs who spoke to this publication on condition of anonymity said there isn’t much, national finance issues are centered around the national budget which gives guidance to management of funds by the RBZ, and already, the Minister of Finance and Economic Development, Prof Mthuli Ncube during the national budget presentation said, it was not his but he President’s approved budget.