John Panonetsa Mangudya’s 10-year tenure as RBZ governor almost up, how did he do? – D grade

We’re almost there good people, John Panonetsa Mangudya’s tenure as governor of the Reserve Bank of Zimbabwe is almost up. Mangudya is set to leave his post at the end of April 2024.

Opinions are split on whether or not he did a good job in his ten-year reign. He gives himself a 6/7 out of 10, many economists agree with him. That sounds high for some of us laypeople but is probably fair.

I know, most of you guys would give him a zero but let’s see what these economists say he did right.

The politics

Before we get into that, we must first acknowledge how limited the central bank governor’s authority actually is.

The government in Zimbabwe, more specifically ZANU PF, calls the shots. You can have some wiggle room but by and large, governors take orders from politicians.

The central bank is not independent, at least not strongly.

Former governor Gideon Gono has always defended some of the questionable or downright terrible decisions he made saying he merely took instructions from his principal, Robert Mugabe. I’m sure no one doubts this.

You can bet that the same has been the case for Mangudya. It might be to a lower extent but there was still a limit to the decisions he could make.

So, we cannot ignore this reality when we evaluate these governors’ performance.

One could argue that the same could apply to Mthuli Ncube, an intellectual who seemed to know what he was doing before getting the Finance Minister job. Now, he is a shell of himself, presiding over an economy that’s marred by serious perennial problems he can’t seem to be able to tackle.

This all means the new RBZ governor, John Mushayavanhu has his work cut out for him.

Mangudya’s tenure

I think Mangudya regrets ever saying this,

If these policy measures fail, if the bond notes do not work out, I’m willing to resign…

He said that in 2016. He clearly believed he had an ace up his sleeve. When the bond notes failed, as most Zimbabweans thought, Mangudya did not resign. He maintained that they had been a success.

We did look at why he believed that here: Could It Be We Missed That Bond Notes Actually Served Their Purpose? You can also get more detailed reasons as to why bond notes failed here.

Unfortunately for Mangudya, we will remember him for these few things:

• removing us from the relatively stable (albeit deflationary) economy in the sweet multicurrency-but-no-local-currency days
• stealing our hard-earned USD using trickery – the bond notes peg of 1:1 caused irreparable damage. Not least the total severing of the little trust the public had in these institutions
• sneaking back a Zimdollar and taking us back to hyperinflation, you can call it chronic high inflation, potato-potato
• creating an unstable exchange rate, I believe we have the ill-advised 1:1 peg to thank for that
• balance of payments challenges and rising external debt

He did have his successes. The following is why some economists agree with a 6/7 rating:

• Stabilising the financial sector – there was a time when banks were folding every other day, taking public faith with them but Mangudya managed to help stop that. Personally, I think the con is that Mangudya was such a bankers’ banker that he prioritised the health of banks over the needs of the public, I was not a fan of the bank bailouts (ZAMCO) but you can’t take away the stability he presided over.
• Technology – Mangudya promoted the adoption of technology and initiatives like the RBZ Sandbox were good to see. Even beyond that program, Mangudya did promote fintechs. We could have done with better transparency on all that but still, good to see.
• Few scandals – corruption runs rampant in Zimbabwe and so it is good to see that there weren’t too many scandals at the RBZ during his tenure. I had low expectations, what can I say.

Central banker report cards

Global Finance has been publishing the Central Banker Report Cards for three decades. However, they have only graded Zimbabwean governors since 2019. So, only Mangudya has been graded and here is how he fared over the years:

2019 – D grade

Why a fail grade? Here are snippets of what they had to say about Mangudya and the RBZ:

• The RBZ raised its overnight lending rate by 20 percentage points on September 13 to an all-time high of 70% to curb the world’s highest infla­tion rate, estimated at between 300% and 570%
• The country’s statistics office does not release timely inflation data.
• A protracted cash shortage has worsened steadily since Mangudya was appointed…
• Since the February currency reform, the exchange rate has depreciated…

2020 – D grade

Global Finance said,

• Inflation soared in May to 785% amid shortages of fuel and foreign exchange
• The Zimbabwe dollar was pegged to the US dollar at a 1:1 ratio in January 2019, but it was later floated and is now worth 1.5 US cents
• Central bank governor John Mangudya blames the country’s continuing economic woes on a demon that can be felt but not seen

2021 – C grade

Global Finance said,

• …prudent monetary policy stance that has resulted in year-on-year inflation dropping from 837.5% in July 2020 to 50.2% in August 2021
• Growth is projected at 3.9% in 2021 by the World Bank and 6% by IMF
• …launched a regulatory sandbox framework to encourage innovations in the fintechs and further liberalised the operations of bureau de change

2022 – D+ grade

Global Finance said,

• …(RBZ) have their hands full dealing with hyperinflation, free-falling local currency, a chaotic forex market and a banking sector in which loan facilities are abused by business
• RBZ has resorted to extreme and sometimes unorthodox measures

There really were some unorthodox measures in 2022. I can’t believe we survived through this:

• rate hike from 80% to 200% to curb inflation and speculative borrowing
• introduction of a gold coin
• RBZ even went so far as to temporarily halt bank lending

2023 – D grade

Global Finance said,

• Trial and error continue to define John Mangudya’s tenure [truer words have never been spoken]
• Launching gold coins failed to tame the local currency crisis
•  RBZ now believes that gold-backed digital tokens are the solution
• …the Zimbabwe dollar is on the verge of collapse, having lost more than 80% of its value since the beginning of the year
• Mangudya faces regular political interference and is unable to curb the appetite for borrowing in President Emmerson Mnangagwa’s government.

That’s rough. In his whole second term, Mangudya got a passing grade, a C at that, in 2021.The rest were Ds with one of them a D+. Suffice it to say, Global Finance would not give him a 6/7 out of 10, more like a 3/4 out of 10 in line with the D he got.

This is more in line with what most Zimbabweans would give him, no more than a D.

On to other things

Mangudya already has a job lined up. He was appointed CEO of Mutapa Investment Fund, the country’s sovereign wealth fund, which used to simply be known as Sovereign Wealth Fund of Zimbabwe.

So, he will be in charge of some of our monies.

Also read:

• Zimbabwean banking industry: Shame, Shame, Shame!
• Mangudya says not enough USD in Zim to redollarise, Biti says that’s nonsense. On closer inspection, they agree.
• Dr Mangudya graded by the Central Banker Report Cards