Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu has announced a significant shift in the central bank's approach towards rebuilding confidence in the bank's policies, acknowledging some limitations in previous guidelines.
The central bank chief also revealed that the bank had also established a monetary policy implementation, monitoring, and evaluation steering committee to keep an eye on the impact of its policies.
"We are . . . aware that the market has lost confidence and trust in the credibility and impact of the central bank's policies over the years, and this calls for a focused re-orientation and change in the way we do things in pursuit of our statutory mandate," said Dr Mushayavanhu in a note to RBZ employees.
"To rebuild our credibility and relevance, we must acknowledge that this is not 'business as usual' and undertake personal transformation as well as develop a new 'RBZ brand' to win back public confidence in the central bank.
"It is expected of all of us to adjust to accept this 'paradigm shift' of a new work culture that will ingrain in us a responsibility to provide operational effectiveness and excellence."
Dr Mushayavanhu took over from Dr John Mangudya, who has been at the helm of the central bank since 2013 last month.
A fortnight ago, Dr Mushayavanhu announced his maiden monetary policy which largely focused on currency and exchange rate stability, financial sector stability, optimal money supply management, foreign exchange mobilisation and accumulation, and increased demand for the structured currency.
To achieve this, Dr Mushayavanhu said the RBZ's "change agenda" would focus on pushing for the comprehensive reorganisation and re-orientation of the bank's tasks, people, structures, systems, culture, decision-making, and policy-making processes to "successfully carry out our core commitments and obligations."
He said the appropriate "re-organisation" of the RBZ would be carried out in two phases. Dr Mushayavanhu said phase one had already started, focusing on corporate diagnostics.
The second phase would follow soon after the completion of the comprehensive and in-depth corporate diagnostics. Under phase one, the "new RBZ core strategic pillars framework" that informs the design and rebranding of the bank, guided by the fundamental remit of maintaining price stability, and restoring market confidence and trust will be communicated to management and staff in due course.
"As governor, I want to reassure all employees and re-affirm that phase two is a normal process of learning the bank's operational framework and should not be deemed to result in job losses or retrenchments.
"I will be requesting that each division prepare a comprehensive information memorandum to help in the diagnostic process for phase two. This will allow me as your governor to gain a solid understanding of the institution's people, systems, procedures, and culture."
He said the central bank programmes would be better packaged, resourced, and structured to fulfil its statutory purpose in the next five years (2024-2029).
The primary objectives of the "back-to-basics" agenda would be to regain lost market trust and prevent undue harm to the central bank's institutional credibility in policymaking.
Dr Mushayavanhu added that the central bank would strive to ensure that the information and data are of high quality and credibility; and are compiled and transmitted using best practices to avoid compromising the integrity of reporting to the market.
This was a critical element for ensuring the monetary policy monitoring and evaluation, internally and externally, is effective and of acceptable standards, he said.
To facilitate this, the RBZ has established a Monetary Policy Implementation, Monitoring and Evaluation Steering Committee (MPIMESCO) that would use the best practices to effectively monitor and evaluate the impact of the RBZ's policies.
"The Reserve Bank will strive to be an evidence-based institution -- trusted for data integrity and credibility. (The) MPIMESCO, which will establish itself as a reliable hub for data validation in support of policy formulation, impact monitoring, and review, will be the Reserve Bank's transparency mechanism for informing the public on the impact of policies.
"The conditions precedent of attaining policy effectiveness will include identifying and plugging leakages and restructuring the Reserve Bank's balance sheet from short-term pressures likely to undermine the efficacy of our policies going forward."
Between 2003 and 2008, Zimbabwe went through a hyperinflation era which peaked in 2008. The period saw prices skyrocketing.
As the currency became worthless in 2008, Zimbabwe stopped printing it and allowed foreign currencies, mainly the US dollar, to circulate. This brought some stability.
While relying on foreign currency helped, it was not a long-term solution. In 2016, Zimbabwe introduced bond notes and coins pegged to the US dollar. However, trust issues and a lack of foreign currency reserves led to their devaluation.
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In 2019, a new Zimbabwe dollar was introduced, but it has struggled with inflation again.
Pensioners, insurance policyholders, and many others suffered substantial losses due to the currency crises since 2008 and this has severely eroded public confidence.
"Over the next five years, our strategic intent of restoring credibility, confidence, and trust will be achieved by 'walking the talk' -- doing what we say we will do; doing the right things in the right manner the first time around; and ensuring that what we say will happen, so happens," stated Dr Mushayavanhu.
"We all need to reenergise and rebuild a new spirit of teamwork and cooperation and reconnect to serve the interests of the Reserve Bank and our country.
"Every one of us should be working for the attainment of the bank's mission and vision; cognisant that we are all here for the job and not about the individual. The Reserve Bank aspires to be the best employer in the financial sector to recognise your value and contribution for the Bank to attain its statutory objectives."
