Latest News Editor's Choice

Opinion / Columnist

Why Prof Mthuli Ncube and John Mangudya must resign

26 Feb 2020 at 09:19hrs | Views
In this dossier I am challenging the Finance Minister, Mr Mthuli Ncube, and his RBZ counterpart Mr Mangudya to resign with immediate effect citing their combined failure to fulfil their objectives and promises to the nation. I am challenging the two take responsibility for the disastrous results of their actions.

(I) Monetary Policy Statement Analysis

The major expectations that Zimbabweans had with the Monetary Policy Statement (MPS) that was aptly themed "FOCUSING ON PRICE AND EXCHANGE RATE STABILITY" presented by Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has been a horror story writ large. Expectations had been that the MPS would lead to the arresting of the deepening economic crisis characterized by price instability, meagre to non-existent disposable incomes and rapid depreciation of the Zimbabwean dollar. All this comes at a time when the local unit which was legislated into becoming sole tender on 24 June 2019 through Statutory Instrument 142 has lost as much as 1 000% of its value from February last year. The fallacy of an exchange rate of 1:1 between the RTGS$ or Bond Note and the US$ has now all but come full circle round as a Grand Heist of ordinary Zimbabweans' hard-earned savings, pensions and investor monies.

(ii) Failed Inflation Targeting

Hyperinflation had reared its ugly head again twice within a decade with no plausible solution in sight being proffered by the failed Barbican Bank Owner cum-Finance Minister Prof. Mthuli Ncube and his right-hand man at the Apex Bank, Dr. John Mangudya. The MPS talks of reducing the month on month inflation from the current 16,55% to less than 5% by the end of March is yet more pie in the sky experimentation by Mangudya, To take the RBZ Chief seriously especially with his record of "I will resign if the Bond Note fails" fame is akin to believing the prostitute who tells you they are a virgin. To go on and say that year on year inflation which is hovering at above 500% now will be reduced to 50% only leaves one to wander whether the RBZ Governor really stays in the same Zimbabwe as all of us or he is simply out of touch with reality to the point of being dismally incompetent, clueless and at best arrogant with an "I don't care attitude."

(iii) Forex Shortages

The introduction of the interbank rate for forex has not aided the debilitating hard currency shortages and companies are forced again to resort to the parallel market for their supply of forex. In addition, the interbank rate has failed to halt the parallel market, with the exchange rate ranging between ZW$25 to ZW$29 to the United States dollar, much higher than the official interbank market rate which is hovering around ZW$17 to the greenback. The more the currency weakens, the more incomes lose value for the greater bulk of Zimbabweans earning the local currency. This has resulted in the rise of the price of basic commodities beyond the reach of many and the erosion of disposable income.

(iv) Gold Deliveries Disappointment

The MPS (2020: 27) noted that the yesteryear economic savior has now also ground to a halt and the intensity of the gold sector collapse might be one of the last nails in the economic coffin of Zimbabwe,
"Gold deliveries to Fidelity Printers and Refiners (FPR) for the period January to 31 December 2019 were 27.66 tonnes, a decline of 17% from 33.29 tonnes recorded during the same period in 2018. The national gold target for 2019 was 35 tonnes. The decline is attributable to electricity challenges coupled with inadequate equipment for small scale miners to access deep gold reefs and gold leakages through smuggling."
The massive drop is no surprise especially with the outlawing the US$ in payments for gold deliveries as most of the precious metal is smuggled through Zimbabwe's porous borders which are currently manned by poorly remunerated officers who will turn a blind eye to the grand heist for a few greenbacks in their pockets. The current machete wars in the gold mining fields in Zimbabwe only make the trade murkier and darker and with the increased risk that artisanal miners are facing from rival politically connected MaShurugwi, one does not expect the makorokozas to hand their precious metals to Fidelity Printers for a pittance. With the drop in official deliveries, goes down the Zimbabwean economic into the abyss with no solution in sight from the country's power thirsty leadership

(V) Failed Austerity measures.

In his maiden budget after his appointment as Finance Minister, Mr Mthuli Ncube announced a string of austerity measures amid promises that they would soon lead to the complete rejuvenation of the economy. Among the measures were the fraudulent 2% tax on transactions and the 5% cut on senior civil servant salaries. Despite the public uproar at the introduction of the 2% tax Mthuli Ncube however hoodwinked the public through the parliament and kept the tax in place which has badly hurt mostly those at the lower level of society. Despite cutting the salaries of senior civil servants, it was always clear from the beginning that it was a ploy to hoodwink the public as the allowances of the same remained high and there was an increase in the government's profligate spending, for example the continued hiring of expensive jets by the president in direct contradiction to the austerity gospel he was preaching. Mthuli Ncube should be held accountable for fleecing off the poor to finance the spending of the elite at the top.

(VI) Currency manipulation

When both John Mangundya and Mthuli Ncube connived to do away with the multi-currency regime which had kept the economy in a stable condition, in favour of resurrecting the Zimbabwean dollar they willingly put the lives of citizens at risk. The switch to a mono-currency was chaotic and hurriedly done without considering the consequences to the nation at large or at least taking heed of the advice of economic experts who had forewarned of the risks associated with abolishing the stable multi currency system. By enacting Statutory Instrument 142 of 2019 they knowingly put back the country on the fasttrack to economic disorder. It is on record that the authorities even chose to act against the advice of the IMF as agreed on the Staff Monitoring Programme(SMP) which had reached an agreement on a number of set issues that had to be addressed before a new local currency could be introduced. Now that the local currency has proved to be a complete disaster, Mthuli Ncube and John Mangundya should be held accountable as they are guilty of force feeding the nation a local currency yet they knew that the modalities to support its stability were not yet in place. John Mangundya even promised to resign and walk away from the job if the local currency failed. The SMP process had safeguards to protect the country's vulnerable people who have now been left totally exposed. Moreover many people lost so much value on their savings in February 2019 when the RTGS dollar was formalised, effectively wiping value off peoples savings as the RTGS dollar could no longer be traded on the 1:1 ratio. That alone represented a grand theft of people's savings and nothing has been done to reimburse the victims. We demand answers from Mthuli Ncube and John Mangudya pertaining this critical issue.

(VII) Failure to deal with foreign currency trade on the black market.

In 2018 the RBZ Governor confirmed that they were aware of people who were manipulating the currency to destabilize the exchange rate. Mangundya even went on to promise that they would act decisively on the illicit dealings. What followed were announcements that accounts of certain people had been frozen but that was that. Since then there was no solid action taken by the Reserve Bank to plug the wild fluctuations in the exchange rate resulting from the illegal activity on the black market which proves our suspicions that the Reserve Bank itself is complicit in the whole chaos. Mangundya should be summoned before the court of law to explain why in his capacity and the powers vested in him as the Governor of the Reserve Bank of Zimbabwe, he has failed to act with authority to stamp out the chaotic currency deals. On the other hand the Reserve Bank has failed to guarantee smart circulation of cash in local currency. On many occasions large amounts of newly minted and printed cash has always found its way onto the streets first before the banks, and in the process banks have been severely incapacitated as they are unable to dispense cash for withdrawals. The nation deserves answers on why the Reserve Bank has chosen to watch from a distance while the chaos play out on the streets. If Mangundya is not complicit, then he is incompetent and in both scenarios he must resign immediately.  

(VIII) Refusal to pay workers salaries in foreign currency (Or the local equivalence of it there-of.)

Civil servants have for a longtime been at the receiving end of the the governments bad policies. The tranquility that had existed during the GNU era in which salaries were increasingly valuable has currently been distorted as the salaries have been decimated by the massive hyperinflation that has characterised Mthuli Ncube's era. The workers have been demanding that the government peg their salaries to the US dollar so that the purchasing power of their salaries remain consistent but the minister has remained resolute on not honouring those honest demands. As such Mthuli Ncube has directly plunged thousands of workers and breadwinners into the deep end of poverty as many of them now struggle to make ends meet. Mthuli Ncube has failed to deliver on his mandate, which is to safeguard the well-being of the nation's finances, and it is a wonder why he is still occupying the office in the face of such glaring failures. At current rates low level workers who earned an average US$475 are now earning around US$50. This should be classified as a crime against humanity, and Mthuli Ncube should resign from his position immediately.

(IX) Selective application of Statutory Instrument.

The Finance ministry should be hauled before a question and answer session as to why the Statutory Instrument 142 of 2019 which establishes the use of a mono-currency is now being violated by some elite organisations, yet Mthuli Ncube has remained silent on the issue. Several mines and recently Zuva Petroleum have been left to freely advertise and sell their products in American dollars, openly duplicating and rebelling against set laws. The Statutory Instrument has been openly breached by some "untouchable" players in the industry yet it still remains a crime for the rest. This is corruption at its best which brings the name of the government into bad light. The Minister and his RBZ counterpart should answer to this charge or resign forthwith as it is a clear sign that their policies have failed.

Overall, the MPS was a Big Yawn in a market whose companies are operating at 26% capacity utilization (CZI Manufacturing Sector Survey, 2019). Company closures that have become the order of the day with informalization running havoc in most major cities calls for a paradigm shift if this ZANU PF regime is to avoid a total break down of the economy, social services and overall livelihoods of the Zimbabwean populace.

I therefore  call upon my Zapu colleagues and Zimbabwe at large categorically demand the immediate resignation of these two from office citing their pathetic failures at dealing with the financial challenges facing the nation. Mthuli Ncube and John Mangundya have openly become compromised to be still in their positions they hold. They have turned themselves into enemies of the people by sabotaging all angles of progress, and impoverishing a significant portion of the population.


Join Zapu by buying a membership card today.

Power to the people!

Benard Conrad Magugu
Facebook @vukazapu
Instagram @vukazapu

Source - Magugu Benard, ZAPU NPC member (Midlands province)
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

Get latest news by email: