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New Reserve Bank of Zimbabwe Governor Dr John Panonetsa Mangudya begins his four-year term at the helm of the central bank today.

Dr Mangudya, who was appointed by the President in March, takes over from Dr Gideon Gono whose second term ended in November last year.

Deputy governor Dr Charity Dhliwayo had been acting since December.

The arrival of Dr Mangudya, who boasts of a wealth of experience in the banking sector, was welcomed by stakeholders in the financial services sector, the business community and the banking public.

He joins the RBZ from CBZ Holdings, where he was chief executive officer, at a time when Government has made plans to capitalise the central bank.

Contacted for comment on his new responsibilities, Dr Mangudya would only say: “I am still to test the waters.”

Dr Mangudya is expected to spearhead the central bank’s efforts to tame the liquidity crunch that is affecting the economy, especially the banking sector.

To unlock excess liquidity in some banks, Government intends to reintroduce the interbank market whose launch coincided with Dr Mangudya’s appointment.

Government has received a $100 million from the African Export and Import Bank to resuscitate the interbank facility.

The central bank has been issuing Treasury Bills to clear FCA and tobacco retention balances owed by the central bank. So far TBs worth more than $130 million have been issued to clear the FCA and tobacco retention balances. This is part of the steps towards cleaning the bank’s balance sheet.

Dr Mangudya’s appointment also comes at a time when the central bank is introducing a raft of measures to stem accumulation of non-performing loans in the banking sector, insider loans and management regulatory arbitrage.

The central bank is working closely with the ministry of Finance and Economic Development in reviewing the regulatory framework to also deal with the complex shareholding structures in some financial institutions where management of the institutions perform regulatory arbitrage.

Regulatory arbitrage is a practice whereby firms capitalise on loopholes in regulatory systems in order to circumvent unfavourable industry regulations.

The major elements of the proposed Banking Act amendments include criminal as well as civil liability for any shareholder, director and senior manager found to have acted negligently or fraudulently against their bank.

The amendments also cover fit and proper assessment framework and registration of bank holding companies.

The RBZ debt assumption Bill is expected to go through the parliamentary approval process soon. The Act would allow Government to assume the central bank’s $1,35 billion debt as part of cleaning the bank’s balance sheet.

Dr Mangudya, who resigned as the Industrial Development Corporation board chairman last month following his appointment to the central bank, has been instrumental in mobilising funds to support productive sectors.

CBZ has until recently been acting as the banker of last resort following the failure by the RBZ to perform those roles.

As a board member of Afreximbank Dr Mangudya is expected to bring to the central bank networks that may result in several lines of credit opening up for the country.

Source : The Herald