Indiscipline rampant in the economy: Mangudya

The Reserve Bank of Zimbabwe (RBZ) has announced a number of measures to curtail the economic problems crippling the country. One of the headaches is to contain the foreign currency shortages and the mushrooming of forex dealers, who are said to be fuelling the cash crisis.

John Mangudya
John Mangudya

The RBZ has negotiated for an additional $300 million standby export finance facility, which will be made available once the initial$200 million is exhausted, to ensure that exporters continue to benefit from the export incentive scheme. NewsDay business reporter, Tarisai Mandizha (TM) interviewed RBZ governor, John Mangudya (JM) to get more insights on the bank’s plans to lure the informal sector.

TM: We understand that more than $5 billion is currently circulating in the informal sector, can you give us an update on the RBZ plan to formalise the informal sector?

JM: The Reserve Bank’s position and desire is that money should circulate within the economy. The informal sector is part of the Zimbabwean economy, which should integrate with the formal economy, where goods and services are produced. This means that money from the informal sector can be brought into the formal sector through selling in cash, thereby, tapping cash from the informal sector by the formal sector.

TM: There are those who believe that the informal market is fuelling foreign exchange challenges, what is your take?

JM: Money goes to the informal sector from the formal sector through banks and traders. It does not originate from the informal sector. But once in the informal sector, it does not come back to the formal sector. It is “spinned” in the informal sector by rent seekers. It is this malpractice that needs self-discipline by all citizens.

TM: We have seen the mushrooming of forex dealers in Harare of late, as RBZ what measures are you putting in place to stamp out black market forex trading?

JM: Apart from self-discipline the sustainable way of dealing with the parallel market of forex is to increase the supply of forex in the economy. This is why the bank is promoting exports so that the country can increase forex receipts. The bank is also arranging foreign exchange facilities of $600 million and $300 million to increase forex in the economy. The other sustainable way is to reduce government expenditure, which is the major source of demand for foreign currency within the economy. Thus, working both on the demand side and supply side is critical to move the economy forward. We need to work closer together.

TM: How far has the bank gone in its push to licence bureau de changes?

JM: Many applications have been received and are being processed.

TM: You reviewed the money allocated to carry outside Zimbabwe to $2 000, can you justify this move, given the current fight against illicit financial flows.

JM: The move is justified from the point of view that it minimises administrative work. Illicit financial flows are not caused by genuine travellers, but by forex dealers and rent seekers.

TM: What is RBZ doing to promote financial inclusion in the rural areas, where the majority of Zimbabwe’s population stay?

JM: The bank’s policy thrust is to promote a cash-lite or a less-cash society in Zimbabwe. Going digital is critical to preserve foreign exchange for foreign payments and to mitigate against cash queues at banks. It’s good for everyone in the economy and that’s the best practice. The rural areas are being catered for through the provision of appropriate infrastructure by service providers. Significant work is being put in this area.

TM: When can the market expect the $300 million bond note facility into circulation?

JM: The $300 million standby export finance facility will kick-in once the $200 million facility is exhausted, to ensure that exporters continue to benefit from the export incentive scheme. We want to have a seamless and flawless support for the exporters of goods and services. We believe in the export generation strategy for the well-being of the Zimbabwean economy.

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10 Comments

  1. These guys are clueless. Our beloved country is being run on a trial and error basis .How sad!

  2. just tell mangudya to announce expirery date for bond note and banks will be filled with bank notes of bond and cash will start to circulate

    1. He is part of the problem because he, rbz and treasury, and the president, are not willing to do what it takes to rein in the indiscipline. They don’t want to supervise, monitor, institute co-ordination and facilitation mechanisms where these are needed to ensure that all facets of the economy and the financial system work nicely in sink with each other.

  3. Yes. ZANU fuel every crisis going. And always have. The forex dealers are merely a symptom of the country’s political malaise.

  4. I thought the biggest headache in Zimbabwe is that old senile man who sometimes lives in Borrowdale Brooke and but most other times in Singapore!!

  5. Dr. Mangudya, you cannot use moral suasion on rent seekers. Just institute measures to make their activities unprofitable. Why in the whole world is Zimbabwe the only country that says its not viable to use its own currency?

  6. mgobhozi wezintabeni

    Hopeless,as long as the authorities continue to play the blame gains,this country won’t get anywhere.There won’t be any solution to the current problems unless the political leadership accept responsibility and play its role of creating a conducive environment that would stimulate unrestrained economic growth. All the country’s economic woes revolve around wrong and retrogressive political decisions.

  7. There is nothing patriotic in Zanu PF politics. They want the majority to be permanently mired n perpetual poverty, so that they remain desperate, confused and malleable. When people are insulted and humiliated daily by their supposed boss but still bath and wear ties tomorrow you start to wonder why they do so. When a party claiming to have “liberated” civilians does all in its power to stop the same people from freely choosing who will lead them as an individual or party you again wonder. Look at the amount of time wasted on stupidity vs productivity. in this country. It is clear we have a dysfunctional “govt” of people that appear “learned” but can hardly apply their “knowledge” to solve simple problems. The Zambians and Batswana can teach us very simple lessons in running an economy well. The former have strengthened their currency (1USD = ZK8) and the latter have administered finance from diamond mining to even lend money to the IMF.

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