Do not let us down Dr Governor!

19 Apr, 2024 - 00:04 0 Views
Do not let us down Dr Governor! The Governor Dr Mushayavanhu displays the new notes to be released on April 30

eBusiness Weekly

Walter Mandeya

Exactly 20 years ago I left the bank I worked for after a whirlwind episode as a senior risk manager just when banks were being shut down left, right and centre.

I aged about 20 years in a single year. I started work as a senior risk manager for the banking group almost at the same time a certain RBZ Governor was starting their term because I was replacing people who had been — ”summoned” — to work at the RBZ.

It was both an exciting and traumatising experience which led me to leave banking to focus on other areas. I was young and reckless in my personal life, but also reserved and conservative at work, a contradiction that a lot of people noted.

One of my best and worst days was when I was in Kariba on the lake pretending to be attempting to tiger fish, but really, just taking the opportunity to zoom up and down at top speed in the speed boat.

The Trust Bank guys in their larger fancier boat were showing off. We were in proximity shouting across at each other the usual my bank is better than yours — “insults” — we used to trade and enjoying the experience, when we simultaneously received the message that Trust Bank had been placed under curatorship.

Imagine, you are in the middle of the lake and you have no option but to let the news sink in and then process it.

Needless to say, life changing decisions were made on that lake on that day. The Trust Bank guys invited us onto their boat, they had decided, curatorship be damned!

They went onshore, ran up all their bills swiping away without regard and with their fully fuelled, fancy boat with a fully restocked bar we went back onto the lake for a night of thorough drinking, deep discussions, quiet contemplations, and of course venting about the then Governor and his policies.

Deep friendships were formed that day. Whatever else happens on Lake Kariba, stays on Lake Kariba, but in short, takadhakiswa zvedu.

Thank you Trust Bank. Going back to Harare was, however, a different matter, it was a much longer drive knowing that you could be next and being the senior risk guy you would definitely be the first fall guy should the proverbial things hit the fan.

This Monetary Policy Statement really feels like ‘deja vu’ which is pronounced “danger who” in my French accent. I am getting triggered by some of the discussions people are having around it.

It is important to understand that there are always real people on the other side of these policies and discussions. Pensioners and other elderly people, widows, orphans, the disabled, street kids, child headed households, those with chronic illnesses and the list of the vulnerable goes on.

People who have no capacity to understand finance, but who have to face the realities of these policies, including poor communication, lack of financial education, lack of protections and an all-round lack of care in the name of some greater economic good.

I survived the worst of the brutal early years of this particular Governor which induced banking crisis with a clear sense of the danger that was posed by the path we had embarked on.

I warned anyone who would listen and in the fullness of time I felt vindicated when several people came back to me and acknowledged that they had been blinded in one way or the other by the pace and promises of the Governor.

Needless to say I became something of a pseudo analyst, before completely embracing the calling and becoming a fully-fledged economic analyst with specific focus on Zimbabwe’s fiscal and monetary developments.

With hindsight and much study, I now have my theories about why things accelerated so quickly after he became RBZ Governor and why hyperinflation affected us so deeply.

I am now older, less reckless and hopefully wiser and I will keep them to myself and save them for whoever shares their best single malt or my memoirs if I ever get round to writing them. But then again, who would want to read about the misadventures of an overly ambitious, young man who grew up to be your average ordinary man on the street?

Enough about the “good old days”. The new RBZ Governor, Dr John Mushayavanhu deserves to be given a fair chance to implement his policies.

Even though there are similarities with my earlier mentioned traumatic experiences, there are also clear fundamental differences. We have had more than a decade of banking stability under the two former Governors, which was buttressed by the requirement for banks to increase their core capital while we were still dollarised.

We have a solid well integrated banking system with robust delivery platforms and institutionalised risk mitigation measures. (If any bank was naughty, my advice (and to be clear, this is not financial advice), get off your executive leather chairs and make an appointment to see the new Governor with a well thought through plan on how to correct your mistakes.)

Secondly, we have more than adequate reserves put at three times cover. The “new” local currency cannot and will not be the source of economic instability going forward, but rather, will actually spur growth as confidence builds up over time in its use for local transaction.

Lastly, each Governor has their management style and while I was at peace with the outgoing Governor’s style of silent effectiveness, slow and steady implementation with little to no rocking of the boat, this was the approach that was needed and it served us well for the season.

His approach to central banking actually needs to be studied as there were several gems sprinkled in his management of the institution.

While the new Governor’s approach triggers my traumas, I fully appreciate the personality differences to his predecessors and the context in which he had to present himself at his first Monetary Policy Statement presentation.

Personality traits are perhaps subtle, but very important differences exist and these set a tone at a level that speaks to people that goes beyond the technicalities of the job. Will he live up to his word and bring greater levels of transparency?

Well, the tea leaves are giving a great reading, but we need navigate the conversion from ZWL to ZiG first and it has started on a rocky note, pointing to some weaknesses in his armour, which need to be attended to with great attention for success in the long term.

However, as an institution, the RBZ has experience in currency change and there is going to be a rapid pace change as the new leadership and teams find their groove. As a hopelessly traumatised analyst, I cannot help but look at what could go wrong or what are the threats coming out of this Monetary Policy?

To start with, long term planning is important and it is a key component of success, but this has been something that had become difficult to do.

As promised, now that we have the structured currency and simplified frameworks for currency management, we now await the — “structured roadmap” — that will outline the path that will take us to the end of the multicurrency era in 2030 as proposed by Statutory Instrument 218 of 2030.

Knowing the path and milestones will help both institutions and individuals plan with longer term horizons giving them and the economy at large improved chances of success. Secondly, poorly coordinated communication. There is need for effective and coordinated communication from the RBZ and all State agencies and departments that play a role in the implementation of monetary policies.

The RBZ should craft a communications manual alongside the Monetary Policy that agencies like Zimra, IPEC, SECZ, NSSA can quickly refer to and provide guidance to players in their spheres of regulation.

Dissonance brings speculation and arbitrage which directly threaten the effectiveness of policy.

The RBZ also needs to directly communicate policy imperatives with the various economic actors at their level through well thought out written communication that has simpler vocabulary, graphics, diagrams and graphs, in addition to any other media engagement they might undertake.

Communication through the banks is usually too technical as the banks tend to focus on aspects that change the banking relationship with their customers.

Thirdly, is the timely provision of data to the market. The RBZ through the Monetary Policy has committed to providing certain data to the market like reserve money details, export retention stats, open market operation data, etc.

These commitments need to be followed through on to maintain transparency and avoid information arbitrage and its inherent dangers.

Were possible the bank should take time to explain the key concepts behind their data to those willing to listen. The robust discussions on the introduction of the structured currency give evidence to the wide audience that exists for these explainers.

Lastly, discipline. In as much as the RBZ has taken a stance to be hard on itself and others, there is need to maintain this posture and attend to matters arising with swift, impartial firmness and fairness.

How the RBZ will handle the problem actors is going to set the tone on how people behave, much more than the actual policy measures.

The road ahead is definitely unclear and many people’s hopes and fears have been dashed at the hands of previous Monetary Policy Statements with a good number of hardworking people falling behind in ways they can never recover from.

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