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WHEN Reserve Bank of Zimbabwe Governor Dr John Mangudya assumed office in May, there was an air of expectation that he would bring about instant results and stabilise the country’s ailing economy through a raft of monetary policy interventions. With a solid background in banking and a sober approach to business, Dr Mangudya was seen as a modern day Moses sent by the Lord to rescue the children of Israel from Egypt. But what economic watchers didn’t anticipate was that the new man at the RBZ is not a magician who can instantly wish away all the economic ills bedevilling Zimbabwe. The country’s economic challenges are multi-faceted and require the collective energies of all Zimbabweans to overcome.

We note that Dr Mangudya has so far gone about his business in a quiet but assured manner typical of bankers. He has shied away from grandstanding but has sought to bring the banking sector back to a sound footing through a cocktail of measures announced in his maiden monetary policy statement.

He is a realistic and pragmatic Governor as evidenced by his decision to retain the use of multi-currencies at a time when the country’s economy is still struggling and the RBZ is still to build enough gold reserves to support a local currency.

Dr Mangudya emphasised the need for increased production in agriculture and industry — two critical areas necessary for the revival of the economy.
This week the Governor was in Bulawayo at the invitation of captains of industry and commerce to discuss the monetary policy statement and tackle contentious issues around restoring the city as the industrial capital of the country.

After listening to their concerns, the RBZ boss noted that pumping money into “dead” firms was not a panacea to the problems affecting industry in Bulawayo and the country at large but prioritised financing of what he termed quick-winning firms that would in turn inject life into strategic sectors down the production chain was the way to go.

Dr Mangudya said a blanket funding system would not achieve the desired quick revival because some firms were beyond redemption. He said to resuscitate industry in Bulawayo, there was a need to look at how to transform our limitations as a nation into opportunities asking whether it was ideal to turn the city into a Special Economic Zone or not.

The Governor underscored the need to identify quick-winning companies not sectors because there were companies that were doing well within a cluster that is not doing well. “If you look at the clothing industry for example, the sector is doing well but there are other companies within that sector that are doing well. So let’s identify the good companies with a quick-win effect, which we can build on, expand and later replicate into a model to build the economy around,” Dr Mangudya said adding that pumping money into “dead” firms was not ideal at a time when Zimbabweans were expecting a quick revival of the economy and creation of jobs. “Let’s avoid businesses that have no cash flow. What do you want to achieve if you fund a distressed firm? We don’t want to create debt by using funds for experimentation. Don’t just think of fixing a plant for the sake of it. We want to be business”.

We agree with the RBZ Governor and urge industry to heed his wise counsel. It is not all gloom and doom in Bulawayo with some firms coming out of the woods at a time when everyone is crying about liquidity and cash crunch.

Companies such as National Blankets, United Refineries, G and D Shoes and Lobels are doing well despite the harsh operating environment.
Dr Mangudya’s quick-wins should be modelled around the turnaround strategies of these firms. In the clothing sector, Archer Clothing has rebounded and is on course to returning to full capacity utilisation after shareholders approved a takeover by Paramount Garments. So from the above examples, it is clear that funding is not the only solution to reviving industries. It should be accompanied by sound turnaround strategies.

Company executives should be seized with crafting bankable ideas to rescue their ailing firms instead of moaning about funding constraints. Without a solid turnaround strategy, it’s money down the drain.