Mystery over Mangudya's new contract'

The fate of Reserve Bank of Zimbabwe (RBZ) governor John Mangudya's stay in office remains a mystery after his first term lapsed on Tuesday amid indications that government is yet to extend his contract of employment.

Mangudya was appointed in 2014 succeeding Gideon Gono whose term was marked by record inflation, low foreign currency reserves and lack of confidence in the formal banking system.

Information gathered by Business Times shows that Mangudya is yet to sign a new contract of employment following the lapse of his new term.

"Unfortunately, I can't discuss the specifics of my contract as it hangs within the appointing authority which is the government of Zimbabwe. I just continue to work as usual and as my superiors have told me.

"All the announcements will be done by the employers and I don't know when and how…. Just watch the space and see how it goes," Mangudya said.

Questions sent to Finance minister Mthuli Ncube were not responded to and his phone went unanswered at the time of going to print.

Last November, Deputy Chief Secretary in the Office of the President and Cabinet (Presidential Communications) George Charamba said President Emmerson Mnangagwa would extend Mangudya's contract.

''The President is very clear on the Reserve Bank Governor's tenure and his performance. Not only is he there to stay but the President is about to renew his contract for a second tenure,'' Charamba said.

Under the RBZ Act, a central bank governor can only serve a maximum of two terms.
"Subject to subsection (3), the Governor and every Deputy Governor shall hold office for such period, not exceeding five years, as the President may fix on his appointment. Subject to subsection (3), upon the expiry of the term of office of the Governor or a Deputy Governor, the President, after consultation with the Minister, may re-appoint him or extend his term of office," reads the Act.

Last year, the return of Andrew Bvumbe who left his executive directorship with the World Bank sparked speculation that the special advisor to President Emmerson Mnangagwa on debt issues would take over the reins.

In 2009, government ditched the local unit for a basket of multiple currencies mainly dominated by the United States dollar.

Mangudya had a terrific start to his tenure after announcing the bank was going back to its core functions—banker to Government, administrator of the national payment system, regulator of financial institutions, manager of Exchange Control, supervisor of bank use
promotion and suppression of money laundering, lender of last resort and policy advisor to Government.

In 2015, Mangudya demonetised the Zimbabwean dollar which had been discarded after the economy embraced a multi-currency regime dominated by the United State dollar in 2009.

He introduced the bond note, a surrogate currency, under the US$200m export incentive facility backed by the African Export-Import Bank.
The bond note was pegged at 1:1 with the dollar. Experts at the time warned that the surrogate currency would drive away the greenback from the system. Mangudya removed the parity in February when he allowed the greenback to float. The bond note is now part of the RTGS dollar.

The prevailing foreign currency shortages have fuelled inflation, with annual inflation reaching 66,8 percent  in March, the first time it has reached such levels since 2009.

This has raised fears the economy would go back to the hyper-inflationary era of 2007-8. Mangudya is on record saying the demand for foreign currency is a sign of an expanding economy and an increase in production will generate more forex for the economy.