Zimbabwe central bank chief hits nail on the head- “the biggest currency is confidence”

Reserve Bank of Zimbabwe governor John Mangudya has hit the nail on the head by pointing out that Zimbabwe’s biggest problem is not its currency but lack of people’s confidence.

“So bad is the lack of confidence in this country that the first thing most Zimbabweans ask when they wake up is ‘rate nhasi riri pachii?,” he said.

Zimbabwe reintroduced its own currency about a fortnight ago, but it has been trashed by the citizens largely because they have no confidence in President Emmerson Mnangagwa’s administration.

“The biggest currency in any economy is confidence. The question is how do we regain confidence?” Mangudya asked.

Rwandan President Paul Kagame told Mnangagwa that the best way forward was to get the confidence of his people before trying to convince outsiders.

“Before you even convince anybody from outside so that they do not have wrong perceptions about you, convince your own people. Make sure they are with you,” Kagame said.

“Concentrate on making sure that your people are involved. They are benefitting. They can themselves push back on this story of wrong perception. That means this has to be built on tangible things.

“If the country is hungry, people have nothing to eat, they will tell people that they have nothing to eat. So when the outsiders are saying it, don’t go against them and say no why are you saying that my country is starving when actually people are starving they are starving. But if the outsiders say the people of Rwanda are starving when the people are saying we are not starving. I won’t have any fight with you. I will just ignore you.”

Mangudya said Zimbabwe would not be experiencing any foreign currency shortages if people had confidence in the government because it was receiving more foreign currency than it used.

“We receive about US$100 million from the diaspora and about US$230 million from exports, in total around US$330 million. Our imports normally are between US$200 million and US$320 million, so if there was efficient utilisation of our foreign currency there would be a match,” he said.

“But unfortunately due to the state of the economy, people tend to hold foreign currency as a store of value.”

Mangudya said last week, people changed US$7.9 million at the banks with the amounts steadily increasing from US$800 000 on Monday, US$1 million on Tuesday, US$1.7 million on Wednesday, US$2.9 million on Thursday and US$1.5 million on Friday.

Rates at the banks were much higher than those on the black-market but the black-market rates are said to have surged at the weekend which is a clear indication that the government is failing to put its foot down.

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