By Hjoe Moono
Yesterday we spoke about the comedy of appointing a commercial branch manager as deputy governor in charge of operations at the Bank of Zambia (BOZ). Today we saw it fit that we reinforce this concern by stating, though briefly, the dangers of having such ill qualified individuals at the helm of central banking. No disrespect to them and their families whose salaries have risen exponentially overnight, but it’s important that we realise the danger to the economy beyond a well networked individual.
The PF’s targets to keep the rate of inflation consistently below 10 percent per annum and its performance is judged by the effectiveness of the monetary policy to help achieve the inflation target and maintain and create employment. This dual aim requires a serious understanding of macroeconomics that can never be found nor taught in any central banking course nor experience acquired from running a branch along Cairo Road. The USA, for their Federal Reserve Bank, have reserved, the role of Chairman for the Reserve Bank to eminent macroeconomists who have devoted their lives to understanding the economy. It is not a fluke that therefore when America sneezes we call catch a cold.
Despite continued calls for BOZ autonomy, the PF government has, like its predecessors, made sure that the BOZ remain de facto under the control of the Ministry of Finance and the monetary policy hostage to the fiscal requirements of the government. Now, more than ever, with huge fiscal deficits, I suspect it should make sense for the government to hold the BOZ even under heavy hostage to its fiscal requirements.
Intentionally or unintentionally, whether knowingly or indeed unknowingly, advised or not, the PF led government has now confused the qualifications of a central banker with those of a commercial banker. It has been appointing commercial bankers or persons with no macroeconomics background or policy experience as governors and deputy governors. A commercial banker cannot become an effective governor/deputy governor because he/she is trained in totally different skills. The skills required for central banking and those for commercial banking are like those of an aircraft engineer and a locomotive engineer. Yes, they are both ‘engineers’, but they engineer different engines so we should not confuse the two at all!
By tradition, and as a matter of necessity, the deputy governors used to be selected from among the senior career staff of the BOZ to ensure that an outside governor would have the services of his deputies with practical experience in central banking and institutional memory to provide historical perspective in the management of the BOZ. The PF-led government has broken this noble and effective tradition and appointed commercial bankers as deputy governors of the BOZ according to the government’s political preferences.
The PF-led government is thus making sure that the governors/deputy governors it is appointing are willing to remain under its control. Furthermore, they have to be weak and vulnerable enough to subordinate monetary policy to the financing requirements of the budget and the banking system subject to the interference of the Ministry of Finance.
In a time such as ours when we are faced with huge budget deficits and a falling exchange rate and slogans of Link 8000 and more mega infrastructure to hoodwink votes in 2016, the greatest recipe for economic governance failure is to have puppets at the central bank that will do as instructed without questioning the authorities.
We feel the recent appointments may breed such. A grave side effect of the appointment of governors without merit such as being done by PF is that the contribution of the BOZ in macroeconomic policy formulation and in handling the international financial institutions may be questioned heavily, and lead to low confidence in the way we govern our affairs.
A systematic degradation of the office of the governor and deputy governors may be very costly for the country. With a huge budget deficit and high domestic and international debt, we need to guard ourselves against the temptation of resorting to the old trick in the book of printing money, —- the one Uncle Bob next door resorted to when he appointed commercial bankers as central bank governors, or further borrowing.
Indeed, the present state of the BOZ may be deemed poor, but it will go down further if incompetent ‘yes mwami’ men and women are appointed as governors or the government shows an inability to differentiate between commercial and central banking and appoints and sustains other commercial bankers as governors and deputy governors. Unfortunately, it seems the government has already failed to differentiate between the two, and have already fallen prey to the economic governance gimmicks of appeasement and quick fixes.
But that said the BOZ needs to understand that it is a professional — not political — institution and that its governors have a statutory national responsibility without having a blind commitment to a particular government. At the same time, the political leadership of the country needs to understand that economic recovery and price stability will come with strengthening, not weakening, vital economic institutions like the BOZ. Recent appointments surely serve to weaken such important institutions.
What is needed at BOZ is a competent macroeconomist with appropriate experience in policymaking to be appointed as the governor and likewise deputy governors too, allowed to function professionally and then held accountable for the formulation and conduct of monetary policy to control inflation and promote private sector investment and economic growth in coordination with fiscal and exchange rate policies.
A submissive governor and an ineffective BOZ do not serve the national interests that even the PF have at their heart. Enough said, the real test of the PF-government will be beyond the qualifications, calibre and competence of the its governors at the bank—It will be their performance in controlling the volatility of the kwacha and keeping inflation at the government target level while promoting growth and employment.
Good article but lacks neutrality. google a paper by the International growth centre done by John Weeks and Oswald Mungule .
The article is simply stating the mistakes PF is making in appointing ill qualified personnel to run the highest banking institution in the land. I can not detect any bias at all. If there is any against who, and in favour of who? The UPND or MMD are not in power, and therefore can not play a major part in selecting a suitable governor.
This article simply offers brilliant advice the PF should consider and take seriously if they are turn their dwindling political fortunes around. People within PF and those outside are very worried about the weakening Kwacha. I believe you equally are concerned if not there must be something wrong with you.
@Wanzelu. you support anything anti- PF government. there is no point in answering you am sure you even blame PF when you havent taken a bath. Start talking sense then we can pick it up from there. This is not a you lose – I win situation we all want wats best for mother Zambia. Its easier to talk about the downfalls of someone like the people at BOZ since you do not have a full understanding of what goes on. Even PF thot the same before going into government. they thoT MMD wer not thinking enough , but no, some things are just beyond your control and when reality sinks others will cal you a lier becuase you talked from a point of ignorance.
Hjoe Moono, just apply for BOZ governor job than beating about the bush discrediting others.
Not under Sata the mad man!
Moono can do a better job after all.
This emanates from not having Educated Presidents?
Any washing machine engineers available?
nasla chemicals industries and nasla group company
Owner name.
Mr.nassir pardesi 0955278692
Mr.hanif pardesi 0966768696
Mr. Hameed pardesi 0950656667
this company owner and management very lie and cheater people
The are all busines is black
Just make make people foolish
The company so many people give problem
Contract finish then hold passport and salary
So many worker without salary send to country
Pleas tak care of this people
The current failures at BOZ must squarely be blamed on Sata the Chumbu Mushololwa and the very poor policy direction he has both instigated and endorsed. Investor confidence has eroded in the country. Simple and clear, Musholowa does not appreciate that the dollar is the global currency and wants to force the recognition of the kwacha by signing use statutory instruments.
I blame it on the Governor and his team.
The current failures at BOZ must squarely be blamed on Sata the Chumbu Mushololwa and the very poor policy direction he has both instigated and endorsed. Investor confidence has eroded in the country. Simple and clear, Musholowa does not appreciate that the dollar is the global currency and wants to force the recognition of the kwacha by signing useless statutory instruments.
First i laugh at people who compare USA with Zambia. I wonder which schools they went to because USA you are talking of 52 States and Zambia is one small country with a population of about 12 million people. Zambia is a country USA is like Africa. Thus, i do not see any thing completed in running the Zambian economy. Kaunda was a form two nad he managed. So what is so completed about running a Central Bank in a country like Zambia? Even someone who has done elementary Economics do manage. Everyone knows that copper is our major source of revenue and that Zambia import alot of goods hence it is exposed to external risks. Book worms have failed the nation and only practical people can revamp it.
Kaunda tanked the economy. Kaunda inherited an debt free economy with a per capita income of $1400, £1bn in reserves and copper production at 750 000 tones. When he was finally booted out in 1991, Zambia had a foreign debt of $7 bn, per capita income of $330, empty forex reserves and copper output at 230 000 tonnes per annum. If I may ask, which economy exactly did Kaunda ‘manage’?
By the way; it is 50 states that make up the USA not 52.
You dull fool Kaunda trashed our economy, in your right state of mind you saying Kaunda managed our economy. You need to get serious, this is the same cadre mentality killing our nation
Musonda iwe it is not that simple.
It is not the number of degrees that counts, you can have have as many degrees as they are on a thermometer and remain incompetent. The people at BOZ are simply incompetent. Uganda was once ruled by Professors led by Professor Lule and what happened?
@ Hjoe Moono – I think you need to be objective when you analyse issues. Your argument that a bank branch manager does not have the qualification to be a Bank of Zambia official is fallacious. I say so because you have not given any solid reason to be against such an appointment. Your argument is simply that they were branch managers – do you know their skills? What they have achieved?
Look our economy is in trouble right now, but a lot of economies are. That is just how economies work – there is no such a thing as a perfect economy not even in the USA. America a capitalist state, under the watchful eye of qualified people had banks closed, they bailed out companies as if they are communist states because their economy is in trouble.
So give people a chance to prove themselves…
Mr Moono is right.
Tht Position deserves someone who is a THINK-TANK and Deputed by someone who has been linked to the Institution for sometime coz he knows it Better than the Governor.
Even Caleb Fundanga was working abroad, but he was called to come & Help.
BUT THE CARDINAL POINT MR MOONO is trying to put is ” Not Education per se BUT CREDIBLITY & ABILITY” to turn things around-PASSION for the JOB but not NOT BELLY.
PF’s Policies can b acheived if they can LOOK INTO CERTAIN POSITIONS WITHOUT Party Tags.
if you do not understand basic economics do not comment, what is happening at BOZ is stupi.dity at its best.
Mr Moono, the writer of this article. If this is how you go about destroying people reputations then you better sit down and think twice. That man is over qualified for your information. He was the only General Manager in ZANACO, do you know why the new owners of ZANACO (Rabo Bank of Netherlands) never terminated his contract????????????. Do you know that the man you are talking about is a Fellow – Zambia institute of Bankers, Fellow – Institute of secretaries and administrators. Do you know what it takes to be a fellow? Don’t mislead our country. He has a masters in Banking and Finance from Manchester school of business which he obtained a long time ago. You mislead people to say he got it online. Get your facts before you open your mouth and run about like a headless chicken.
I agree with you 100%. Get facts or interview the person before writing ma rubish about someone you do not know. It shows the level of your thinking.
The author is a very frustrated UPEND carder. Blablablabla…. no substance. Just keep on celebrating Katuba and wait for another thrashing in 2016. This time you will commit suicide.
I am compelled to comment on your article Mr. Moono. It is so shocking that you are trying to portray that Ernest is not qualified for the appointment. Shame on you! Please get your facts right before publishing such stuff for public consumption and refrain from misleading the masses. Ernest is well qualified. He is a seasoned Banker and very competent. For your own information the man who has been appointed as Deputy Governor was not a Centre Manager , but a General Manager who could have even been a Director at Zanaco, all things being equal! If you get satisfaction by peddling lies and pulling others down, then you should examine your heart. Is it because Ernest is not from your home town or region? Please remember that God will judge your works.
Economies are complex systems and sub-systems. The Central Bank is only one such system. Stop singling the Central Bank out. Start looking at the global picture. Where colonial government failed, independence succeeded. Where UNIP failed, MMD succeeded. Where MMD failed, PF succeeded. After PF, another political party will carry on. Just wait for voters to speak. You will be shocked to find that PF is a formidable political machine doing a commendable job, especially in infrastructure development.
@G well said. I think our great late president Mwanawasa MHSRIP showed us the way. The trio he appointed – Caleb Fundanga, Felix Mutati & Ngandu Magande – to run our ‘financial’ sector at BOZ/Min of commerce/Min of Finance did show passion with patriotic desire to move Zambia out of the forex quagmire. These people are still alive. Why not swallow petty pride. Coupled with political hatred now and develop our beloved country!
who was born with experince? when ar they going to acquire the same experience? we have graduates who ar nt in employement bcz of lack of experince. whn wl u accord them a chance to do so? someone has a masters or phd and u hv a diploma and want to be appointed jst bcoz of experince. be fair! he has what it takes to be one.
@ Voice of wisdom. Well said and at that time the dollar came down as low as 3,000 old currency. That was a great team and we as a country desperately need such a team for our economy to survive. Surely dollar against our Kwacha is just going up no signs of it every dropping. God please help.
where is fundanga imwe?
@Mwila, no need to go tribal. Hjoe has a right to question that particular appointment. If Ernest has had all those qualifications you mention, how come he did not even make it as Head of department at Zanaco Head Office? To be a Director, you need to have been Head. Can you answer that? In any case, Hjoe has not necessarily singled out the new appointee, he said the PF gvt has broken the tradition of appointing deputy governors from among senior career staff at BOZ and are instead appointing commercial bankers. If you read the article properly, you will realise that the author is correct in his analysis. No need to go on a tangent, unless Ernest is your relative or you are simply protecting the forest.
foolish carders Moono is simply telling you, is you can’t have a psychologist operate on you not matter his qualifications, it won’t work, that’s recipe for disaster, almost like going to look for gems with someone with little or no experience you will come back with bricks, we need very qualified person at that position, that position affects
everyone, i hope the government starts listening,
Do you now wonder why the Kwacha is falling? PF is playing politics with our economy by appointing unqualified people to head Bank of Zambia. Indeed whereas a Governor can be a political appointee, a Deputy should always be a professional who has been in the bank for years. Right now all the three bank Governors are not qualified. The two Deputies (Kankasa and this new Deputy) and Gondwe are not qualified. Kankasa and Gondwe are lawyers (Yes, Gondwe is not an Economist) . Gondwe got the job because he is related to Sichinga (Both Tumbukas with Malawian connections). Sichinga is also Satas in-law. Kankasa is daughter to Chibesa Kankasa but is also a lawyer by profession. Of the top three at BOZ, none is a macroeconomist. This is why the kwacha has gone crazy.
The problem with PF is full of people with no brains, and with no values. It’s very, very difficult to debate such elements.
Good listening to both sides of the argument and recognising the pros and cons. Just to say that the effective operation of any institution should not depend on one person. Rather it should depend on the collective input of the senior management in the organisation as decisions on major issues or not the preserve of one person.
When Northern Rhodesia gained its independence as Zambia in 1964, it inherited a unique economy and social structure. Although Zambia’s mines had produced over a billion dollars of sales and profits for the mining companies outside the Copperbelt, there was little evidence of Zambia’s wealth. The vast majority of profits had been taken out of the country by Anglo-American and Roan Select Trust. Colonialism had done little to develop the economic infrastructure outside the commercial farming areas dominated by European farmers. For example, in the social area, in spite of the Zambia’s wealth by independence, with a population of nearly three million, less than a third of Zambia’s school age children completed primary (elementary) school.