MNANGAGWA replaces John Mangudya with John Mushayavanhu a month earlier.

PRESIDENT Emmerson Mnangagwa was yesterday forced to retire Reserve Bank of Zimbabwe (RBZ) governor John Mangudya a month earlier to give his successor room to come up with fresh measures to stabilise the economy.

NewsDay understands that government wants Mangudya’s successor John Mushayavanhu to bring in new ideas to stem a raging economic chaos reminiscent of 2008.

Zimbabweans are grappling with the ever-rising cost of goods and services, while the local currency continues to tumble daily on the parallel market, with some service providers now rejecting it.

“It would not have made sense to allow Mangudya to release a Monetary Policy Statement (MPS) when he will be leaving office in a month’s time,” a source said last night.

“In addition, monetary authorities were under pressure to release the MPS after President Mnangagwa jumped the gun by announcing plans for a structured currency. The announcement caught everyone by surprise.”

The local currency, reintroduced in 2019, has been depreciating sharply amid calls for the redollarisation of the economy.

Mushayavanhu will present the much-awaited MPS next week as he hits the ground running, insiders said.

He will unpack the structured currency seen as a lasting solution to the challenges afflicting the local currency.

The Finance ministry yesterday hinted on new measures to buttress the local unit.

In a statement posted on the ministry’s X handle, Finance, Economic Development and Investment Promotion deputy minister Kudakwashe Mnangagwa cautioned Zimbabweans against disposing of the Zimdollar.

“We have been receiving enquiries about the surge in the exchange rate, which right now can be attributed to the anxiety and anticipation of the upcoming Monetary Policy Statement which is around the corner. If I were to irresponsibly give unsolicited advice, I would urge Zimbabweans with their hard-earned ZWL not to hedge against it,” Mnangagwa said.

“Government is committed to ensuring that there will be no loss of value through the introduction of the currency stabilisation measures.”

In a notice published in the Government Gazette yesterday, Finance, Economic Development and Investment Promotion minister Mthuli Ncube said: “It is hereby notified that His Excellency the President has, in terms of section 14 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] appointed John Mushayavanhu as the governor of the Reserve Bank of Zimbabwe for a period of five years beginning on March 28, 2024 and ending on March 27, 2029.”

Mnangagwa appointed Mushayavanhu as Mangudya’s successor in December.

He was supposed to assume office on May 1.

Mangudya’s term was due to end on April 30 after which he would have assumed a new role as Mutapa Investment Fund chief executive officer on May 1.

However, the veteran banker had commenced his new role earlier, necessitating the changes at RBZ, insiders said.

Mushayavanhu’s biggest task will be to stop the rapid depreciation of the Zimdollar, which has been on a free fall that has seen it depreciate by over 250% in just three months.

Last year, the local currency depreciated by over 700%.

Mushayavanhu is a respected banker who was at the helm of FBC Holdings Limited until the end of December.

Mangudya had been at the helm of RBZ since 2014.

Economists, however, remain cautious expressing concerns over government’s ability to deliver on its promises.

Harare-based economist Noah Ngirande said all forecasts for the country paint a picture of doom and gloom with no real prospects of a quick turnaround.

“Zimbabwe has a history of struggling to control inflation,” Ngirande said.

“The success of these new measures will depend on their implementation and the government’s commitment to long-term economic reforms.”

Government has previously introduced a raft of measures to stabilise the local currency without success.

In 2022, Zimbabwe introduced gold coins to mop excess local currency balances, blamed for fuelling the parallel market rate and leading to the rout of the Zimdollar by major currencies such as the United States dollar.

At the time, the Zimdollar was trading at US$1:ZWL$2 000 on the parallel market.

As of yesterday, the parallel market rate was over ZWL$30 000 to one US$1.

Currency depreciation has also led to an increase in prices with annual inflation racing to 55,3% in March from 47,62% in February.

Sources who attended the Zanu PF politburo meeting on Wednesday said runaway inflation was discussed extensively as the ruling party tried to find ways to deal with the weakening of local currency.

Mnangagwa said government was trying to find ways to stabilise the economy and prices.

“My government is determined to implement responsive interventions towards arresting speculative activities, inflation, price increases and stabilising the exchange rate,” he said.

“Equally important, our home-grown innovative solutions and hard honest work remain critical to increasing production and productivity in every sector.”

In 2008, hyperinflation in Zimbabwe peaked to an estimated 500 billion percent resulting in authorities dumping the local currency and adopting a multi-currency regime, a year later.

MNANGAGWA was forced yesterday to replace Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya with African Millionaire John Mushayavanhu a Banker and Entrepernuer

John Mushayavanhu -MBA -(UK),Diploma in Management -(UK),AIBZ
is a career banker, who has over 30 years experience in the Zimbabwe financial services sector, gained through the senior positions in corporate and retail banking he held with a local multinational bank.

He joined FBC Bank as an Executive Director in the Corporate Banking Division in October 1997.

After the establishment of FBC Holdings in 2004 he was appointed Managing Director of FBC Bank and Deputy Group Chief Executive.

John was appointed Group Chief Executive of FBC Holdings in June 2011.

He is past President of the Bankers Association of Zimbabwe and he sits on the Board of Turnall Holdings among others.

HOW JOHN Mushayavanhu bought Zuva Petroleum

FBC Holdings Ltd boss John Mushayavanhu says he bought a 51% equity stake in Zuva Petroleum through a 15-year US$29,325 million off-shore loan from Glencore.

In an interview, Mushayavanhu said he would start repaying the loan.

He acquired Masawara’s 73 former BP & Shell Marketing Services (BPSMS) assets through his investment vehicle, Woble.

According to documents seen by businessdigest, the loan was approved by the external loans coordinating committee on January 13 2014 at an interest rate of London Interbank Offered Rate (LIBOR) of 2,5% per annum.

The loan also has a penalty rate of 3% per annum. According to the same documents, the source of repayment would be from dividend income, and proceeds of any share buys backs.

Should Mushayavanhu fail to pay, the lender — Glencore — will realise the security.

Businessdigest also established that the regulatory approvals were granted on condition that in the event that the lender has to realise security, they will have to immediately sell the shares to an indigenous entity in line with the country’s indigenisation regulations.

Indigenisation laws compel foreign investors to sell controlling equity in their businesses to indigenous Zimbabweans to address historical wealth imbalances.

For instance, if Mushayavanhu were to default before any repayment is made, he would lose the company.
When asked if this was the ideal financing model, Mushayavanhu said: “The ideal situation is to pay cash for the shares and not resort to borrowing.

But show me someone who has US$29 million in cash in this country. Under the circumstances, we have no choice but to resort to borrowing in order to localise the Zuva business.

It will take 15 years to repay, but by then the business would be fully localised.

I don’t see any other option. I am surprised that people now view this borrowing as fronting when infact it is the only feasible way of localising the asset given the tight liquidity condition prevailing in our economy.”

Besides accusations of fronting, there was talk in the market that Mushayavanhu had borrowed this money from his bank, but he says he never got a cent from the bank.

“I am a seasoned banker and I know the impact of insider borrowing on the bank’s solvency and would never approach my bank for facilities no matter how small the request.

If anything, the bank stands to benefit from Zuva’s daily banking as Zuva is a cash business and does not borrow,” he said.

“Corporate governance structures at FBC are so robust that it would be virtually impossible for me to think of borrowing from the bank as such an application would never be approved by our board.

This is why FBC has remained a strong bank when others have fallen by the wayside.”

Mushayavanhu said the Zuva transaction was similar to how business tycoon Mutumwa Mawere acquired AA Mine in the 90s.

“This is the same structure Mawere used to acquire AA Mines way back in the nineties,” said Mushayavanhu.

But critics say he is fronting, a charge he denies.
Investigations revealed that Glencore has an interest in Alveir, which owns 49% of the Zuva business.

Under the deal, Glencore will be supplying product to Zuva through an off-take agreement or supply agreement, effectively giving them a captive market.

Market speculation had also linked this deal to Strauss logistics, but Mushayavanhu said the logistics and transport company had historically provided services to Zuva and will continue in that role.

“They have no shareholding interest in the Zuva business and are merely service provider. I don’t have shareholding in Strauss,” he said.

Masawara announced recently that the two parties had agreed to increase the price tag of the assets to US$29,3 million from the initial US$24,8 million.

Asked why the price had increased. Mushayavanhu said: “The price was subsequently increased to US$29,325 million due to delays in finalising the transaction.

I still consider it a viable purchase given the potential I see in the Zuva business.”

A National Indigenisation and Economic Empowerment Board report suggests Masawara never owned the Zuva shares in the first place, implying the London Stock Exchange listed firm was a front for Glencore, which funded the purchase.

“We certainly paid the purchase price to Masawara as the rightful owners of Zuva. So I don’t know how they could be fronting and receiving the money at the same time,” he said.

But others say a number of people had been eyeing the assets and could be seeking to present Mushayanhu as a front.

He spent a year seeking various regulatory approvals, prompting a US$4 million price increase.

Then Indigenisation minister Saviour Kasukuwere approved the Masawara/BP deal under the conditions that Masawara would dispose 10% equity stake to an employee share trust, dispose 50% of its retail sites to its dealers, sell shares to youths, women and the disabled and treat the leases of all dealers fairly.

The Youth Development, Indigenisation and Economic Empowerment ministry at one point gave Masawara plc a 14-day ultimatum to demonstrate that it had complied with indigenisation requirements that were pre-conditional to its acquisition of BP & Shell Marketing Services Zimbabwe.
source Online
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