Wednesday, May 22, 2024

Comedy of Errors at Bank of Zambia: Meaningless Appointments

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Bank of Zambia
Bank of Zambia

By Hjoe Moono

The world over, central banks perform three main functions. First, they formulate and conduct monetary policy with the objective of keeping monetary expansion and inflation under control, and guiding bank credit to productive activities so as to aid economic growth. Second, they are responsible for regulating commercial banks and non-banks financial institutions. Thirdly they are supposed to manage the exchange rate so as to ensure relative stability as well as maintain domestic level price stability.

Zambia’s central bank, the Bank of Zambia (BOZ) has a mission statement that reads:

*”The mission of the Bank of Zambia is to achieve and maintain price and financial systems stability for balanced macroeconomic development”.*

Clearly this fits well in performing the main functions of prudential and effective central banking. Those three functions feed into the crucial roles in the financial and economic management of the country. As monetary and exchange rate policies play an important role in macroeconomic management of the country, and a well-functioning banking system is almost a prerequisite for smooth economic development, the future of the economy is vitally linked with the effectiveness and efficiency of the Bank of Zambia. Over the years, in recognition of its importance, the BOZ had been strengthened through professional appointments of its governors and boards of directors and from its internal restructuring which saw an increase in the number of highly trained employees in most, if not all divisions and departments.

However, since September 2011, we have seen some regressive legislative measures and decisions taken on considerations of expediency, and, at times, lack of sound leadership. These have inhibited the BOZ from playing its role effectively. Firstly, we saw the retirement of Dr. Caleb Fundanga (PhD-Economics, Konstanz University, Germany), who, with his combination of Dr. Denny Kalyalya (PhD-Economics, University of Massachusetts, USA) as Deputy Governor for Operations and Dr. Tukiya Kankasa Mabula (PhD-Law, University of London, England), showed us how effective Central Banking should be conducted, and indeed, prizes came Zambia’s way for prudential monetary policy conduct and outstanding central banking.

For six months after the firing of Dr. Fundanga after September 2011, the BOZ had no Governor. A caretaker governor, Dr. Bwalya Ngandu (PhD. Psychology, University of Birmingham, England) was appointed. We voiced concerns not against Dr. Ngandu-he is a fine academic, rare Rhodes Scholar– but against his suitability for the role. We argued that though educated well, his education was not in line with the requirements of central banking and as such, he was the wrong candidate for the Governor role nor even deputy governor in charge of operations.

However, all went on as usual, and then came the appointment and subsequent ratification by Parliament of Dr. Michael Gondwe, he too, a fine academic with a PhD in Law and experience in regional lending. With that, the entire trio in charge of monetary policy formulation, implementation and general economic welfare was composed of people that did not have any training in what they were charged with doing. It was here that the comedy in central banking begun.

If the recent continued depreciation of the kwacha and depletion of reserves, inconsistencies in statutory instruments is anything to go by as an evaluation of the performance of BOZ since 2011 then we can safely say that BOZ under PF has been inefficient, and therefore reflects inefficiencies on those charged with economic governance of our country. We feel that, with all due respect, unfortunately, at this critical moment, the incumbent Governor does not possess the necessary qualities to lead BOZ in the right direction. Coupled with the current Minister of Finance, we feel the economic team in the PF is unable to grasp the long-run implications of the current economic situation and the inadequacies of its ad hoc policy patchwork.

But then, to add insult to economic governance injury, we hear the PF government has appointed an ill qualified individual to take on the role of Deputy Governor-Operations after sending Dr. Ngandu to mainstream government as permanent secretary. Again, let us ask ourselves, can we effectively run economic governance institutions like a cheap labour factory where anyone can do anything the boss says? What happened to professionalism at BOZ in just a few years of the PF? While we may have had concerns over the appointment of Dr. Bwalya Ngandu, his experience with the Development Bank of Zambia where he served as Director was a good source of comfort.

But if it is true that on Monday 10th March 2014, a new deputy governor who just completed an online masters degree (details to be confirmed) and was until his appointment a Centre Manager in one of the small branches of the Zambia National Commercial Bank/Rabo Bank along Cairo Road in Lusaka’s Northend, then it is a shame to the appointing authority, who, as stipulated in the BOZ act is the president. However, in all this, where are the presidential advisors? Where is the Minister of Finance to advise? Who is even proposing these names for the president? Has the country suddenly run short of well qualified economists to run the central bank? Was the PF government not prepared with good enough a team for such important roles before its assertion to power? Hasn’t the government, over the last three years noted many well trained and experienced economists that can function well at the central bank? Is there more to this appointment than meets the eye?

I think Zimbabwe next door is a clear example to learn from when ill qualified people are appointed to central banking just because they may have some political connections with the ruling elite. With an already poorly performing kwacha, I am wondering what the value addition will be in bring a former branch manager to run the core business of central banking. I liken this to elevating, without experience and qualifications, a mere magistrate to deputy chief justice before one can even qualify to be an advocate of the high court of Zambia. The recent development has clearly created hindrances in career development of the professional staff already at BOZ.

We have no problems with appointments at all. What is important is that they are not illogically appointed. There must be value addition to the functions of the BOZ from such appointments. In such tough times when our economy is on the blink of failure, with the kwacha soon to hit the historic $1=K6, surely such comedy appointments could be reserved for later when we need a good laugh.

We had hoped, and propose that while the governor has to be ratified by parliament, in the case of deputy governors, their appointment should be taken away from the president and handed over to the board of directors of the BOZ to minimise the interference of the president’s office in the effective functioning of the BOZ. Furthermore, deputy governors should be appointed from within the career stream of the BOZ.

This will both strengthen the input of institutional memory in high level decisions and to assure a career prospect to the professional BOZ staff. In fact, that was the practice prior to September 2011for a long time in the BOZ that has lately been ignored leading to demoralisation of the career staff and undermining experience gained in central banking.

The mid-level professional staff is the backbone of any effective organisation. For this reason, the BOZ also needs to pay more attention to the professional staff from within and avoid the practice of large scale outside entry at senior levels. With a pool of well qualified and dedicated economists at BOZ, outside sourcing of skills which are already in-house demoralises the career staff and reduces the promise of career progression and skill development in the long run.

Given the need for better understanding of the audacity of BOZ tasks, every governor should feel the need for a strong team of economists under the leadership of a qualified and experienced deputy governor in charge of operations to develop policy conclusions based on solid economic analysis and research. The new appointee lacks such skills, and should not have been even thought of as a candidate in the light of this, never!

That said, world over, historically, economic weakening has occurred due to systematic economic mismanagement by opportunistic and insincere leaderships that indulged in widespread insincerity which thrives in weak institutions and thus breed corruption.

The weakening of institutions such as BOZ should not be entertained, we will all pay the price of mismanagement, whether PF or not. If the new appointment it aimed at serving the interests of Zambians let us note that a mere change of faces will not change the situation. There has to be a drastic change in the purpose of, and approach to, governance.

If the PF government begins to look for quick fixes and wastes time on easy solutions it will run out of time.

*There are no easy solutions, no quick fixes and no magic wands. Those who think in those terms are living in a fool’s paradise. The PF government should learn from history and not repeat it. Slogans should be replaced by deep thinking and mere politicking by statesmanship. This is an opportunity to regain the confidence of the people: save us from you!*

In the matter of the exchange rate, the BOZ has been reacting to the developments in the market rather than controlling them. The president went further to say:

Demand and Supply is Working! That the market is at play.

Our government has surrendered its responsibilities of economic governance to some deity called ‘Free-market’ who doesn’t even exist! There has been no attempt to integrate the exchange rate policy with the fiscal and monetary policies. That our foreign exchange reserves have rapidly been depleted, we are yet to see the trick to restore economic order.

Perhaps in conclusion, a warning is in order here. There are some ever-present opportunistic and self-serving economists who would claim that they know better than most others and pronounce that those who are giving warning signals about the economy such as we are doing are wrong. These have been seen in the corridors of power before and represent a group that is always hungry for appearance on television and in newspaper columns and to attract the attention of those in power, thereby offering themselves to “serve” the country.

Some may be in government already. The PF should be cautious of such. There is no magic wand to save the economy from the looming crisis, and only a determined government that undertakes structural economic reforms will bring some hope of economic recovery, and there is an opportunity for the PF to do this and more.

It is also the responsibility of the aspiring political leadership to make the ordinary people aware of the deep-rooted economic problems and their difficult solutions and not to take them for a ride with false promises as before. We are all affected

59 COMMENTS

  1. I have said it before and I say it again. The Bank Governor, Dr Gondwe, The Deputy, Dr. Kankasa, the former Deputy Dr. Nkandu and now this new guy are all not qualified to head BoZ. Dr.Fundanga and his tear were stellar.

    • OBATALA. The economy can not be fixed by some economist seating at BOZ doing mathematics or whatever it is they do. The economy will only be fixed by Engineers and other workers out there doing real work! You can bring in even the best economist in the world but results will not be very different if Zambian workers don’t produce. Its like having Sir Alex Ferguson coaching monze swallows or chawama united and expect them to beat Barcelona.

    • The article is too long, nonetheless, it’s clear that H.E. MCS may be under a little bit too much family pressure and I appeal to the First lady to take it easy on him and allow him to seek counsel on where to find professionals (like me) to do these jobs.

      God bless her relatives and yes we’re happy for them and their GRZ jobs but as FTJ used to say…. “COME ON GUYYYYYZZZZ…….”

    • Obatala you misunderstand the important role of the C Bank in the nation. Like in any organism, all subsystems must work well and in concert. Mucking with boz has f*cked up zambia. For your mechanical mind to understand, imagine ripping out timing chain from an engine and hoping that your Bugatti Veron will function. Zambia is “mis firing” badly.

    • baboon ya wama ko! This relic from the past is not even fit to be called a Neanderthal nor homo erectus. No sir, this one never evolved, it is primitive to the core and thrives in mediocrity and confusion.

      – Ngulu ta utoya.

    • The Engineer,
      Ozzi Ozzi Ozzi! Oi Oi Oi!
      The PF government is just a group of cheese eating monkey surrender converts of Zambia’s economic prosperity. If Zambians don’t act to remove these cadres tribal click, I’m afraid, the country is shamble destined to collapse. There ears are full of slugged wax ,not even a blower or a vacuum cleaner can cleanse them.
      Zambia, kaya che mweh!

    • the warning was given in good time. It was simple listening to PF, they had no economic agenda for the country then and they do not have one today. i hope people can access the financial report performance produced by MoF for 2012. This govt under performed in every area than with regards to HIV/AIDS National Program.

    • Baboons maybe better off and have a strategy; this PF government with its leadership is way below that. They want to get involved in everything with no plan just to showcase their one Man show nonsense. They are killing our country causing more damage to the struggling economy. BOZ management is useless they cannot regulate anything nor they would contribute to the Economic growth. We need leadership in that Country. Enough with dull baboons running institutions like BOZ, NAPSA etc. Shame on SATA and his Clowns

  2. Consequences of putting an erratic lunatic at the political apex of the country. When Sata dies in office or is forced out by force, this jungle called Ukwa Muchinga Bisa ewo tukoca ko amalasha!

  3. Fire all Directors at BOZ including the Governor and deputies. Balyafye indalama for nothing. Their pay is well above in the sky but cannot manage the Kwacha. What are they therefore? Fire them all. Twanaka nabo bamambala.

  4. Here is how we gonna fix this: take a local coach to manage Chipolopolo, and bring an expatriate to run Zambia. Issues of bread and butter need serious people not ngwalala. We are so meticulous in scrutinizing soccer (emotions) coaches, yet so casual when picking our leaders – this can be catastrophic. Could it be that politicians do blindfold us with lies and paralyze our faculties?

    • Iwe Mushondo, RB is very educated, he has not 1 but 2 masters and the economy was doing fine during his rule, he would never put a bank manage in the position of deputy bank governor.

      RB is way much better than Sata in all aspects!

  5. Micheal Chilufya can not be a baboon.In my own wisdom,he has performed just fine.Off course there is more to be done,and don’t forget that he is also human who can error.Give him chance to work

  6. Zambians deserve what they are getting because of their lack of depth or analysis when choosing leaders. Even the choice of Levy who turned out to be a good leader was an accident, an accident created by Chiluba’s miscalculation. In voting Levy people were voting for Chiluba, another witless moron who destroyed Zambia’s democracy. Granted Mazoka won that election but we know that those who gave Levy votes are the same that gave Sata votes and that is Bembas (let’s not beat about the bush here). Bembas have become an albatross hanging around this nation’s neck. Now in Idi Amin style Sata is appointing clerks to be governors. You are yet to see the worst, witless Zambians.

    • Tribal statements will never correct mistakes.Be Mature and accept every tribe and one day your leader instructing you to insult everyone may find the grace of the Lord to LEAD this beautiful country.

  7. The monkeys in state house have matured into “baboons”. Ati I can run the country better than RB. Nomba ba Zambia mwashala muli mwamoneni. Ukwa at work. I hate this maroon!!!

    • @KAPASO

      We CAN change that! This IDI0T has broken the LAW so many times he can be IMPEACHED.

      Or we can have elections.

      Or we can go the Egypt or Ukraine way. But for sure it can be done. As Obama said —

      YES, WE CAN!

  8. Read what BoZ Act requires and understand what is a Phd(theory). The nation to develop requires practical people. Before you write something investigate and appreciate the qualifications abd experience of the people you are talking about.
    Book worms have failed hence the need for practical people to drive the economy.
    Kaunda was a form two and most of his Ministers had humble education but they performed wonders which we are enjoying even today. Book worms are just full of meetings after meetings and arguing without solving problems.

    • Are you talking about the same Kaunda and the likes of Chikwanda who bequeathed us what was at the time the biggest per capita debt in the world which we failed to pay back and had to be forgiven for when at independence we were wealthier than countries such as Malaysia and South Korea?

    • @Mphendula Kayaula

      Thank You! Please tell this M0R0N the facts, he is obviously an ignoramus unaware of our history when he says “they performed wonders “.

      The FACT is that KK took a rich country and turned Zambians into beggars with his dictatorship. When he was kicked out of office, Zambia was close to where Zimbabwe is now.

      Njalamimba Musonda is an IDI0T!

    • Iwee before I insult you what did ChiKaunda DO apart from causing shortages? Isnt he the one in a big way responsible for the mess we are in?

  9. Thanx for the OVERVIEW. We need “THINK TANKS” to run main INSTITUTIONS like BOZ.
    Sata has got wrong advisors.

    Loans everywhere.

    • Which think tanks, give us examples. The problem with you people, you just yup without giving us an alternative. who do you want to be at BOZ?

  10. Those who still support our alleged President and accord him praise for what he is yet to achieve despite the all too obvious lack of candor, direction and zeal to move us forward leaves me jaw flat on the floor.

    Guys, these people have failed and not even 20 years will allow them to achieve anything. This country is at its knees!

    • None of you minions has answered my questions as follows: Which think tanks, give us examples. who do you want to be at BOZ or Plot 1?

    • @DIVA

      Good question! You are on the right track!

      But understand that all this chaos and confusion is emanating from one source, and that is the current inhabitant of plot one! THAT is the REAL problem. WE elected a liar, cheat and a FRAUD. To the highest office in the land!

      Until that disaster is fixed, none of these others can be rectified, and the cause of that disaster is an inadequate CONSTITUTION!

      That is why the CONSTITUTION is the most important item on the agenda.

      After that we kick this baboon out of his personal hospital in State House.

  11. Much as Dr Caleb Fundanga was educated,he became a puppet of MMD government.He was not making decisions in line with his intellectual acumen.Most of the decisions he was making were based on towing the line of the powers that be at that time.That rendered him frivorous at Bank of Zambia.If the current bank of Zambia fails,we are better off bringing the best from out there.What has killed Bank of Zambia is appointments of appeasement.This culture of appointment based on nepotism and appeasement has killed a lot of credible institutions.

  12. Diva you have low self esteem, you too can become President, do use the computer to call people names, it’s not anyone’s job to offer solutions, just like you can’t fly a plane and expect passengers to offer you alternatives, you should already have know how to fly.

  13. It is not right to personalize national issues. The right thing is to focus on fundamentals. In dealing with fundamentals, a complete picture historically is essential. If you mean well, then provide a complete list of ALL Governors of BOZ from inception to-date. Then the reader will judge whether academic qualification was the basis of failure or success in the governorship. The graphics must continue in response to changes. However, you can not take away achievements at short term such as infrastructure because these will deliver stability, growth and employment in medium and long term. A nation without a railway line is a fantasy.

    • I concur with you.This economy will need concerted effort from each one of us.As long as there is no production in the economy,the kwacha will continue nosediving to other major currencies.Stability in the economy can only be realised through productive sector like agriculture and manufacturing.Bank of Zambia is just there for economic policy formulation and implementation.It is a pipedream to expect Bank of Zambia to bring in stability in the economy in the absence of production.

  14. BOZ has trained alot of ECONOMISTS IN CHINA , most of them UP to Phd economics, and they grdauated and back working at BOZ i dont see their names anywhere closer to DIRECTORS ? whats up ? A chinese trained PhD is better compared to western world trained , the chinese are so good at FIXING the economy no much talking and writing but Action

    • My friend, Chinese education for foreigners it useless. I can assure you! There is nothing these Chinese are doing in educating Africans. They just want to make a name ati they are training Africans in the name of bilateral relations. Otherwise, their education system does not suit Zambia’s economy.

    • My friend if a chinese trained PhD is better compared to western world trained, why do chinese people send thousands of their students every year to train in western universities? Ask anyone in a good school in the U.S or Europe and they will tell you how many chinese are in their school, especially in Business and Engineering programs.

  15. The problem with Zambians is that we are simply too simplistic with everything, the first thing is that we should acknowledge that we have a problem with our currency. The next thing is which step should we take as we have a nation to develop either grz or opposition. No opposition wants to inherit the nation in 2016 which will be ay its lowlest. Calling the head of state names does not help solve the problem of the country which you want to take over in 2016.

    • He says in his article that he hears they have appointed an ill qualified person. So this buffOOn is reacting on hear say?

  16. Well articulated article, fairly long, but the points are valid and very much in line with many issues raised earlier about the importance of having the right people in these sensitive positions. You can mess around with political appointments for Ministers BUT you don’t mess around with appointments linked to Monetary Policy, especially in a time of currency crisis being experienced right now. It is being too simple minded and suicidal for an economy as fragile as ours.

  17. It is comedy of errors if it is not me appointed. If I am not appointed then it is corruption, they are not qualified they just don’t know what they are doing. The writer of this article is a wishful thinker who thinks that if his person was at state house he could have been appointed “George Chellah”. The article is so long and personal may not inspire some people. Try another

  18. The economy of China has developed because of serious investment in science and technology backed by sound economical and monetary policies. It is for this reason that we should seriously prioritize investing in science and technology (not paying hefty salaries to the social scientists at BOZ). That is not to say there role is not critical. Unfortunately we waste our energy and resources on silly things like teaching children in local languages when the proponents of such policies are sending there children to international pri schools and abroad for high school/college.
    Sustainable development does not come by chance or flight. We have to plan prudently with a long term vision. Unfortunately right now we seem to be looking for short fixes so that we can impress the the ignorant voters

  19. Can someone summarize for us the CV for the new deputy Bank of Zambia? This is a serious Senior position in whatever country, therefore the background of the holder of such an office should not be a mystery. It should be brought to the public domain for scrutiny and to provide motivation to some of us young professionals.

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