Sunday, January 4, 2009

Zimbabwe’s money man plans to keep on printing

From Los Angeles Times - January 1, 2009 By Robyn Dixon
Central bank chief Gideon Gono makes no apology for continuing to crank out money, which economists say fuels hyperinflation. Critics call him a megalomaniac with a vise-like grip on the economy.
Zimbabwe’s central bank chief seems to have a finger in every government ministry. No project goes ahead without his approval. No underling approaches without fear and trembling.
He makes no apologies for his furious money-printing, as the country, mired in disease and hunger, inflation beyond calculation and political crisis, keeps on spiraling downward. Extraordinary situations call for extraordinary measures, he says.
The 49-year-old former tea boy, target of Western economic sanctions and confidant of President Robert Mugabe has made more enemies in the ruling ZANU-PF party than any other senior member. And some people think he may be its weak link. But for now, it’s his obsession with photo ops and his autocratic control over government affairs that dominate.
One pro-ZANU-PF banker shudders while recalling Gono’s summons of top banking officials to his office in early December. It was a made-for-television ambush. As the cameras rolled, Gono berated the bankers for releasing new bank notes a day before their launch.
They weren’t even his employees, but he fired them anyway. On television. But Gono wasn’t done with them. The lobby was full of police waiting to arrest them when their elevator opened on the ground floor.
“I had to sleep on the floor in the cell,” the banker said, deeply shaken, two days after his release on bail. “I’ve never slept on the floor in my life. There was water dripping everywhere.” He spoke on condition of anonymity for fear of jeopardizing his trial.
As pressure on Gono has grown with the collapse of Zimbabwe’s economy, he has blamed banks, the stock exchange, black market currency dealers and insurance companies. As well as firing the bankers, he blacklisted 20 investment companies and froze their accounts.
As a survival tactic, it has worked. Despite the highest inflation rate on Earth, estimated by independent economists in at least quadrillions of percents, Mugabe recently reappointed Gono for another five-year term. It sparked as much outrage in the ZANU-PF as it did in the opposition.
“Not only is he destroying the country, he is destroying the party,” growled one senior ZANU-PF official.
Gono employs florid, indignant rhetoric and wears a large, flashy gold watch. When he strides into the bank at his usual breakneck pace in the morning, there’s a flurry of panic. A security guard who fails to open the door before Gono reaches it faces certain punishment and possible dismissal, according to one Reserve Bank manager. The manager, who like others interviewed for this story, is afraid of getting fired and spoke on condition of anonymity.
Gono usually works until midnight. Under his leadership, the Reserve Bank has taken on myriad tasks unrelated to central banking: buying government cars, supplying farm equipment and fertilizer, setting up and supplying “People’s Shops” to sell cheap goods, setting up foreign currency shops, supplying medicines to state hospitals, mobilizing rigs to drill bore holes for clean water in the cholera crisis and a biofuels project, to name a few.
“He’s now like the head of state. He’s reaching almost everything,” the manager said.
“People fall over each other to please him and some get hurt in the process, and he likes that. He likes that attention. He likes power,” said another Reserve Bank employee. “He’s very vindictive. He can hold a grudge for weeks.”
Like Mugabe, Gono blames Zimbabwe’s ills on Western sanctions. U.S. and European countries imposed bans on senior officials, preventing them from traveling to or doing business with the West. Gono is among those under sanctions.
The Times requested a phone interview with Gono but did not receive a response.
Rejecting what he calls “traditional” economics (like the principle that printing money endlessly causes runaway inflation), he contends that printing money is actually a form of “sanctions busting.”
“I must reiterate that I am going to print and print and sign the money until sanctions are removed and there is balance-of-payments support. It’s a commitment I am ready to be fired for because we need money for infrastructural development,” Gono said, quoted in the government-owned Herald on Oct. 1.
But the senior ZANU-PF official scoffs at that argument. “If the money was being provided to build hospitals, schools and roads, it might be sanctions busting. But it’s being used for conspicuous consumption. Everywhere you go there are Mercedeses.”
Gono’s own website,, gives a taste of the Reserve Bank governor’s ego, charting his course from tea boy and cleaner at a provincial brewery to becoming one of the most powerful men in the country.
But, a website run by activists, offers a sense of how loathed he is. It (and his enemies in ZANU-PF) accuse him of massive looting of state finances, claims he has denied.
The activists print anti-Gono fliers in English and Shona and target people standing in line at banks to withdraw money. They feature cartoons of Gono loading Reserve Bank money into the back of cars or gulping down feasts, usually with his foot on a child’s skeleton.
“IT’S YOUR MONEY — TAKE IT NOW!” screams one flier.
“IF GONO STAYS WE WILL ALL DIE!” bellows another.
“Gono is the weak link in the Mugabe regime because he’s become incredibly powerful and incredibly bloated, and he’s got very few friends in the system,” said one activist involved in the project, who spoke anonymously for fear of reprisals. “No ministry can get access to cash without going to Gono. He controls everything. He’s become this power-mad individual who’s loathed by the whole country.”
He said other members of the group regarded the GonoGoNow project as their most dangerous anti-regime activity. “They think Gono would kill over this,” said the activist.
Gono recently launched his book, “Zimbabwe’s Casino Economy,” dashed off in 60 days. In an economy where most U.S. dollar transactions are banned, his book is priced at $40.
Tony Hawkins, an independent Harare-based economist whose citation awarding Gono an MBA distinction is appended, these days describes Gono’s performance as “disastrous.”
“We’ve got to the point where his policy seems to be living from day to day and making sure there’s cash. There’s no policy, there’s no strategy, there’s no direction, there’s nothing,” said Hawkins.
But Gono sees himself as the country’s shepherd. Blaming him for the economy, he said, “is the worst form of diabolical nonsense and the highest form of intellectual naivete and dishonesty . . . only matched by a hyena trying to tell a flock of sheep that the worst enemy is their shepherd,” according to a report in the Herald on Sept. 30.
Before he went to the Reserve Bank, Gono had a reputation as a solid banker. In 2003, Hawkins warned Gono not to take the Reserve Bank job because it would destroy him.
Hawkins remembers: “He said, ‘No, I’m going to sort everything out.’ “

No comments:

Post a Comment