It’s squeaky bum time for unsung Mangudya

By Guthrie Munyuki

Like many Manchester United fans around the world missing the good old days, I also regularly find myself reminiscing about the managerial prowess of Sir Alex Ferguson, whose inimitable success at one of the biggest clubs in the world has thus far proven difficult to match in the English Premier League.

This has been particularly so in recent weeks as Man United’s interim manager, Ole Gunnar Solskjær, has mercifully brought back some of the club’s attacking flair which had sadly been binned by Jose Mourinho — who deservedly got the sack last December for sucking the life out of this great team.

This has been particularly so in recent weeks as Man United’s interim manager, Ole Gunnar Solskjær, has mercifully brought back some of the club’s attacking flair which had sadly been binned by Jose Mourinho — who deservedly got the sack last December for sucking the life out of this great team.

Under Sir Alex, when the going got tough — and particularly in those dying, tight minutes of the game which the great Scot famously referred to as squeaky bum time — Manchester United would invariably rise to the occasion to dramatically snatch victory from the jaws of certain defeat.

Those distant years were an absolutely wonderful time to be a Man U fan. Just ask Liverpool, Man City, Chelsea and Arsenal fans who remember the pain that the Red Devils routinely inflicted on them then!

In our neck of the woods, it is not too far from the truth to say Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, has entered squeaky bum time as he battles to bring a semblance of sanity to the country’s troubled foreign exchange market, while keeping the galloping inflation under control at the same time.

This comes as the under pressure central bank governor is expected to announce his eagerly-awaited 2019 Monetary Policy Statement (MPS) soon — which could be sometime this week.

The task confronting the affable Mangudya in this regard is daunting and huge.

This is because the country’s key economic fundamentals have changed significantly for the worse since October last year, following the government’s unveiling of a cocktail of stabilisation measures which include the much-disliked two cents tax per every dollar transacted, and which have been blamed for worsening Zimbabwe’s economic fortunes.

Until then, Mangudya’s stop-gap financial instrument, the bond note, had held steady in the parallel foreign currency market — despite misgivings about it in some quarters, much of this misplaced and uninformed.

And then all hell broke loose when Finance minister Mthuli Ncube announced his new policy measures on October 1.

It didn’t help matters that prior to this, Ncube had repeatedly and ill-advisedly said that he would phase out the surrogate currency, which forms a tiny part of the country’s aggregate money supply that is overwhelmingly dominated by Real Time Gross Settlement (RTGS) funds — the real Achilles heel of Zimbabwe’s financial system.

As was to be expected, all this destabilised and inevitably led to a serious lack of confidence in the bond note, leading to its precipitous decline on the parallel market.

For those readers who may have forgotten this, the bond note was partly introduced to incentivise exporters, and it did initially aid this key endeavour — including gold and tobacco exports.

And by introducing the export incentive scheme at between five to 20%, depending on the sector, it was clear that the RBZ was then managing the disparity between the electronic dollars and nostro dollars — by providing an incentive to match the premiums of forex on the parallel market.

This saw, or at least coincided with exports growing by 26% in 2016, 30% in 2017 and 25% in 2018.

And then Ncube happened.

Since then (October 1 last year), things have changed for the worse, with the prices of goods and services in the country spiralling out of control and raising anew fears of another hype-rinflationary horror show as was witnessed a decade ago.

This is all why it is critically important that Mangudya comes up with a workable monetary solution when he presents his MPS, to lance the foreign exchange market.

But to do this, Mangudya will need a significant war chest to ensure that the inter-bank market won’t be undermined by the parallel market — which is not easy given that international creditors don’t currently want to do business with Zimbabwe.

To the uninitiated, the forex parallel market, like other markets, determines rates on the basis of supply and demand. Thus, and to discourage it from unduly manipulating rates, the supply of hard currency has to be adequate.

This is why it’s squeaky bum time for Mangudya as Zimbabwe awaits for him to pull a rabbit from the hat in these economically distressing times. Can he glean a winning trick from the one and only Sir Alex?

Only time will tell. DailyNews