– He might have PhD from a dubious institution – but you really can’t help feeling a bit sorry for Zimbabwe’s beleaguered bank chief John Mangudya.
His defence of Zimbabwe’s almost-definitely-doomed bond notes is beginning to verge on the hysterical.
He’ll resign if they don’t work out, he vowed this week, according to the official Chronicle newspaper.
On Thursday he confirmed the new notes – apparently printed in Germany, according to some reports – would be in place at the end of October. Seventy-five million worth of them will be in circulation by the end of the year, Mangudya said.
Magically, that’s just when President Robert Mugabe’s government will need more cash, seeing as cabinet has just rejected Mangudya’s boss Patrick Chinamasa’s proposal to suspend the payment of bonuses to civil servants. Analysts have pointed out that since the payment of civil servants’ salaries eats up 97% of Zimbabwe’s incomings, there will be little space to fund bonus payments.
Oh but wait: that was before bond notes.
Like bank chief Gideon Gono before him, Mangudya actually has very little space to manoeuvre.
Trust and confidence
Gono invoked God whenever he made a monetary policy statement in the pre-2008 bearer cheque era (though at least one analyst wondered which God he served).
Bearer cheques, those now-collector-item pieces of paper that had to be printed in ever bigger denominations and carried around in wads, are for many Zimbabweans just another word for bond notes. And Mangudya, with his blind insistence on the rightness of his course, is starting to look more and more Gono-esque.
Granted, he makes a little less reference to the Almighty. Thursday’s mid-term monetary policy statement was prefaced with an appeal to “Walk the Talk to Restore Trust and Confidence”. There’s a little bit more self-determination in Mangudya’s Zimbabwe-view then.
But the similarities are glaring.
During Thursday’s statement Mangudya reaffirmed an official project to get Zimbabweans living in the diaspora to send their money back through official channels. Those who do will get a bonus of between 2.5 and 5 percent, he said.
Gono, who stepped down as reserve bank chief in 2013, set up his Homelink programme in 2005. At first it too was an attempt to get Diasporans to remit their cash through official channels (at one point locals were paid out for the relatives’ gifts in Zimbabwe dollars). It also involved persuading diasporans to invest in housing back in Zimbabwe. Even that part had only limited take-up and the company was eventually flogged off to a South African firm in 2014.
Time will tell
Mangudya also displays some of Gono’s punitive tactics.
Gono was behind the closure of up to 16 money transfer agencies. He tried to force businessmen to reduce prices, at one point sending in police. Mangudya has also been trying to force local firms to bank their money, threatening them with huge penalties if they don’t. That’s despite the fact that once you bank your cash, it’s very hard to withdraw it.
The perception is that neither Gono nor Mangudya would or will demand the same kind of tightening up from Mugabe or his government. Nor has either of them really dared suggest that mismanagement or corruption in high places could be the real source of Zimbabwe’s repeated economic crises.
In 2008, Gono penned a book entitled “Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges.” (It’ll cost you 34 US on Amazon and it’s never been reviewed).
Maybe Mangudya will argue Zimbabwe’s current challenges are extraordinary too.
Time will tell. But sadly, Zimbabweans will have to go through the bond note era first.
And that dubious PhD in Business Administration? It’s from Washington International University.
Google it.
