February 22, 2009 By Levi Mhaka © zimbabwemetro.com
As a citizen, it is public knowledge that the Reserve Bank of Zimbabwe (RBZ), Gideon Gono unilaterally appropriated foreign currency belonging to corporate account holders under the pretext of using for national needs and requirements. He did so after directing all banks to hand over the FCA to the central bank in early 2008.
From September 2008, he further generated foreign currency by way of charging license fees of up to US$250,000 for manufacturers, warehousing and trading businesses. The same licensed entities were levied by ‘surrendering’ 15% of their foreign currency gross earnings to the RBZ, while the tax authorities, ZIMRA, further collected 15% in valued added tax of such licensed entities. The licensing fee and RBZ surrender levy have been reduced.
Besides such prohibitive licensing fees that have now been scrapped, the new Finance Minister should proceed to scrap double taxation in which the RBZ is looting businesses’ hard earned forex by charging a levy of one’s foreign currency earnings.
We expect full results and early closure of the ongoing or intended forensic audit the finance minister is being said to be making or intends to make of the FCAs’ that Gono raided last year and all the foreign currency generated from license fees and levies. This can no be called a witch-hunt or hatchet job. It is called public accountability.
There could be enough foreign currency at the RBZ to pay civil servants. Without independent assessment, Gono cannot claim bankruptcy.
Relatedly, Gono has just picked up a public fight with politicians, specifically the Deputy Prime Minister, Arthur Mutambara and the Finance Minister, Tendai Biti. He did so through the State-owned Herald newspaper in a blistering story written by his personal acolyte and beneficiary of his patronage, the Herald Business Editor, Victoria Ruzvidzo. Another acolyte at yet another State-owned Sunday Mail, Munyaradzi Huni, regurgitated the remarks.
Without focusing much on the relational chemistry, or lack of it, between Gono and the new Deputy Prime Minister and the Minister of Finance, there is something suspicious about Gono’s public behaviour. He seems to have something to hide by adopting scare tactics that he previously used against politicians. Gono had become so drunk with unchecked power and influence that he made very arrogant statements to try to create an impression that his policies have worked very well in the past and were bound to be useful had it not been these unthinking new politicians.
A high powered Zimbabwean delegation consisting of the Prime Minister, Morgan Tsvangirai, Minister of Finance and Minister of Foreign Affairs, Simbarashe Mumbengegwi, took their begging bowl to South Africa, where they met South African President Kgalema Motlanthe and Finance Minister, Trevor Manuel. Gono’s absence on the delegation is a story by itself; especially after his poorly thought policies are being reversed. In any case the ones being reversed and the other ones requiring immediate attention were all beyond his mandate. They were all fiscal related.
Those calling for Biti and Gono to resolve their differences should realize that Gono is stuck in the pre-coalition government era, in which he was everything financial, powerful and influential. All ministers groveled in front of him and made bee lines to his office.
He had an express route and unfettered access to the President to seek a nod on anything he wanted to do even at the point of manipulating or lying to him. Gono undermined and destoyed counterbalancing factors, offices and institutions by whatever means necessary. The President relied ONLY on him for economic an financial advice and implementation on anything monetary and fiscal after Gono had destroyed possible independent assessment of such advice and implementation.
It should tell another big story that Mutambara has not been known to target particular individuals. He did so when he said that the monetary and fiscal measures by then Acting Minister of Finance, Patrick Chinamasa and Gono, respectively, would be up for a fundamental review not reversal, as others are now alleging. Why there should be no policy reviews when there are new ministries and the RBZ Act is explicit on that.
Gono should be very humble enough to go back to the basics of his office and institution. The CORE functions of the RBZ is the responsibility for the formulation and implementation of monetary policy in its pursuit of price stability and the RBZ is required in terms of the Reserve Bank Act (Chapter 22:15), to consult the Ministry of Finance during the creation of monetary policy to achieve the objective of price stability.
When Gono “took office in December 2003, (he) fundamentally changed the functions of the RBZ. Increasingly, the Reserve Bank usurped the fiscal operations of the Ministry of Finance. In addition, it assumed some of the functions of commercial banks in that it engaged in direct lending to the private sector in a very significant manner. The central bank exhibited ‘mission creep’ as it began to undertake private sector and public sector functions outside its domain that included, among others, agricultural activities, manufacturing and retail activities… As a result, the RBZ…acquired a conglomerate structure and hence failed to focus on its core business” - UNDP Comprehensive Economic Recovery in Zimbabwe: A Discussion Document (2008). (Highly recommended for the new Minister of Finance.)
Gono should now be humble enough to admit that many, if not all of his policies have not worked when he has been central bank governor, the de facto Prime Minister, Minister of Finance and all the related economic and resource ministries. It should register in his mind that there are new princes and methods in town.
Gone are the days he could publicly and inappropriately boast that President Robert Mugabe is his friend and can afford to join him for holiday in Malaysia. On the way to the Office of the President, he now has 2 Chitungwiza “road humps” – the Offices of Prime Minister and the Finance Minister. Even if he manipulates the President, the new day-to-day ‘manager’ of government business and finances is the Prime Minister and the Finance Minister, respectively. The President will now obviously request Gono to seek the audience and express consent of the Finance Minister on what he intends to do. The RBZ Act expects him to do so, yet he is using the media to fight Biti! Gono should not be seen to undermine that new political arrangement.
The Prime Minister and the Finance Minister can with pleasure expect Gono to be in the queue to be either at the two’s offices, something that no minister was able to do before the pre-coalition era.
With this in mind, Gono should adjust and reconcile himself with the new era. Public power is a drug and its holder should be held accountable, checked and counter-balanced. Gono was used to unilateral and absolute power and influence subordinative only to that of President whom he manipulated