RBZ Governor, John Mangudya appeared before the Parliamentary Budget and Finance Committee. The Governor used the occasion to explain and clarify a number of issues that have a bearing on the economy. Here are some of the remarks made by Dr. Mangudya in his presentation.
On prices (inflation) increasing when money supply expands
The RBZ Governor attributed the increase in prices happening in Zimbabwe to non-monetary forces such as speculation, expectation, and currency manipulation, which he likened to demons and coronavirus.
There is a demon (in this country), its more like a coronavirus (that is causing price instability). You can’t touch it but you can feel it. So we need to trace it, contract tracing to know where it’s coming from.
On increasing cash supply and Zimbabweans not knowing how the financial system works
As articulated by Eddie Cross, the RBZ is only increasing cash supply but not the money supply. In his presentation before the Committee, Dr. Mangudya goes further in asserting that the RBZ will merely swap cash notes for electronic bank balances hence there’s no need for people to panic that the central bank is injecting more money into the economy.
What many people seem not to know according to the Governor is that the swapping of the news notes and elecetronic balances introduction of the new notes is meant to tame the black market because cash circulates at a slower pace than electronic money.
Zimbabwe is lost. People think that because there is now cash there’s going to be inflation or the US dollar to Zim dollar exchange rate is going to go up. It’s just because people (Zimbabweans) don’t understand. So I pray for Zimbabwe every morning. I pray for Zimbabwe each night. They don’t know what they are doing or what they are saying.
Ponzi Scheme and hating mobile money platforms
RBZ’s Governor also took time to explain how mobile money platforms like EcoCash are being used by moneychangers to carry out Ponzi schemes. He said moneychangers are making money through selling money on mobile money platforms.
He was on record saying that the recent closure of EcoCash Agent lines was not an act of hatred towards mobile money platforms but a way to sanitize the platforms.
Its not about use hating the mobile platforms but we want to exorcise the demon that has gone on that platform. It’s more like Sodom and Gomorrah.
We don’t hate any platform, not at all. But we are concerned about what’s happening on those platforms….
…..the whole pricing system in Zimbabwe changes (when the rate changes on the black market). So the best thing to do is to deal with that cancerous behaviour so that at the end of the day we can have chemotherapy on it.