LAST week the Zimbabwe Independent hosted the Reserve Bank of Zimbabwe (RBZ) governor, John Mushayavanhu in Bulawayo where he unpacked the monetary policy measures announced on April 5.
Issues raised during the engagement included the need for the central bank and Treasury to instil trust in the new currency, Zimbabwe Gold (ZiG), whose notes and coins will start circulating on Tuesday.
Speaking about confidence building, Mushayavanhu said; “I think in the leaked memo that I sent to central bank staff, I also raised this issue. I said the market has lost confidence in us. It is us who must rebuild that confidence. The way we build that confidence is by walking the talk. You cannot, as I said, legislate for confidence. It is not possible. Even if you go around beating up people, they will still not be confident, unless you walk the talk”.
This point was reinforced by Bulawayo Mayor David Coltart, who offered a compelling analogy in his opening remarks, likening the confidence in ZiG to selecting an airline for travel.
“As we consider any currency of any country, what is the useful analogy to judge it by. I think the best analogy is to compare a currency to airlines,” he said.
“What is it about an airline, which encourages passengers to use that airline. Passengers will consider… what is its track record. Confidence in the fleet of the airline isn’t simply built by an airline being new….Confidence does not simply rely on the introduction of a new aircraft.
“The point I am making is that there are comparisons to be made between the confidence that resides in any airline and the confidence in any currency in any country. It comes down to a single word: Trust.
“The trust is not built overnight, it is something that takes years and decades to build in an airline. It cannot be imposed. It is something inherent. If you seek to impose trust, it will not work. Passengers will use another airline or bus or they may even walk.
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“The same applies to a currency. We need a domestic currency, no rational person denies that, but there has to be trust and it is not built overnight and it cannot be imposed.”
Based on this analogy, Mushayavanhu has an unenviable task to build trust in ZiG.
Trust-building measures from the RBZ and the government are the cornerstone of a successful currency. It is imperative that consistent policies are implemented to instil confidence in our financial system. Without trust, the stability of our currency remains precarious.
To the RBZ and the government, I urge continued efforts in fostering transparency, accountability, and effective communication. Clear and predictable monetary policies, coupled with responsible fiscal management, are essential for rebuilding confidence among investors, businesses, and the public.
Addressing underlying structural issues and promoting good governance will be instrumental in restoring faith in our economy.
Building confidence requires concerted efforts from all stakeholders — the government, the Reserve Bank of Zimbabwe, businesses, industries and citizens.
ZiG has already taken heavy knocks on the black market, depreciating to US$1:ZiG25 this week, after launching at US$1:ZiG13,56.
It was truly an honour to host the RBZ governor in Bulawayo, a place I truly cherish and also call home. My roots are intertwined with the National Railways of Zimbabwe, as my father once worked there for many decades, until his retirement, and memories of travelling on the trains during my childhood holidays evoke a sense of nostalgia.
As we look towards the future, the revitalisation of the NRZ and other sectors in the southern region are paramount for the return of the city to its former glory. We all want to see the City of kings and queens transform back to being an industrial hub.
Mushayavanhu should take into consideration concerns and advice voiced by business leaders, and be the listening governor, which he said he was.
Their frontline experience offers invaluable insights into the real-world implications of the new measures.
