Zimbabwe Central Bank Governor Gono Breaks Ranks With ZANU-PF on Indigenization

Sources in the central bank and in Zimbabwe’s largest black empowerment organization, the Affirmative Action Group, said Gono fears indigenization will discourage foreign investment when the country desperately needs it Gibbs Dube
Washington 19 March 2010

Reserve Bank of Zimbabwe Governor Gideon Gono has broken with President Robert Mugabe and ZANU-PF on the controversial indigenization program, calling it a "reckless" initiative championed by "vultures."
Sources in the central bank and the country's largest black empowerment organization, the Affirmative Action Group, said Gono fears the indigenization process will discourage foreign direct investment at a time when the country desperately needs it.

"The last six months have seen a flood of interest in the economy from both friends and foes and we must not disturb the momentum by being reckless, inconsistent and self-contradictory with our pronouncements or with what we say or do," Gono told the Financial Gazette, a Harare weekly newspaper. One source familiar with Gono's thinking on the issue said he had referred to some indigenization proponents as "vultures."

VOA was unable to reach Gono to seek confirmation of the views attributed to him by those sources.

The Indigenization and Economic Empowerment Act was passed into law in 2007, but implementing rules were only recently promulgated, sparking fears of an asset grab akin to the land reform program.

Responding to Gono's reported views, Affirmative Action Group President Supa Mandiwanzira told VOA Studio 7 reporter Gibbs Dube that the indigenization process is unstoppable despite the central banker's warning it will hurt the economy.

Mandiwanzira conceded Gono was acting “within his mandate of advising government on monetary policies and other issues." But he added, “We believe that indigenization has to happen now and that is not negotiable."

Gono's reported position on indigenization is somewhat surprising as he is seen as a hardliner in ZANU-PF and is politically close to President Mugabe, who has endorsed the indigenization drive. Gono has also been accused of mismanaging the Reserve Bank by funding operations of the former ZANU-PF government, leading to near-record hyperinflation

Zimbabwe cbank governor attacks planned company seizure

Thu Mar 18, 2010 12:23pm By Cris Chinaka
HARARE, March 18 (Reuters) - Zimbabwe's central bank governor on Thursday attacked as "reckless" a drive by President Robert Mugabe's party to force foreign-owned companies to cede majority shareholdings to local black businessmen.

Gideon Gono, a close ally of Mugabe whose position at the central bank is opposed by the president's rival Prime Minister Morgan Tsvangirai, said in a newspaper interview the move was scaring off investment badly needed to revive a battered economy trying to recover from a decades-long crisis.

In an unusually fierce attack on policy strongly backed by his benefactor, Gono told privately-owned weekly Financial Gazette newspaper that the black empowerment drive smacked of racism, and would hurt efforts by a power-sharing government formed by Mugabe and Tsvangirai a year ago to fix the economy.

"The last six months have seen a flood of interest in the economy from both friends and foes and we must not disturb the momentum by being reckless, inconsistent and self-contradictory with our pronouncements or with what we say or do," he said.

"You don't shoot yourself in the foot during a time of scarce capital availability and neither do you start any new wars before concluding battles of yesteryear," he said in reference to Mugabe's controversial seizures of white-owned commercial farms which critics say triggered Zimbabwe's economic collapse.

"While national calendars and sovereign debates must never be dictated by outsiders, it is an act of madness for a family to engage in domestic quarrels at a time when the whole village is up and about its business," he added.

Gono -- whose money-printing policies at the Reserve Bank of Zimbabwe between 2003 and 2008 is blamed for the world's worst hyper-inflationary crisis in the last 20 years -- said the empowerment drive had attracted unnecessary media attention of a people "trying to dispossess one another of this and that".

The central bank governor called for protection for foreign-owned banks like Barclays BAC.L, Standard Chartered (STAN.L), Central African Building Society owned by Old Mutual (OMLJ.J), and MBCA owned by South Africa's Nedbank (NEDJ.J), which he said were targets of "vulture-style" seizures by some cartels of black businessmen.


"The firm policy position of the Reserve Bank is that all existing foreign-owned banks must be left under the current parentage ownership to optimise on the capacity of domestic economy to penetrate international financial markets," he said.

"Our political leaders must take the lead in openly condemning what we see as self-centred approaches that are evolving under the guise of indigenisation and empowerment drive."

Gono said the central bank was ready to award new licences to blacks to run their own banks, and suggested Zimbabwe could pursue a programme of empowering historically disadvantaged blacks by giving them preference in government contracts while allowing some joint ventures with foreigners on a willing-seller-willing buyer basis.

Tsvangirai's Movement for Democratic Change (MDC) says it is trying to persuade Mugabe's ZANU-PF party to shelve the empowerment law, and Gono said he hoped current public consultations on the programme would also help the government on how to tackle the issue.

Asked whether investors were justified in their fears of Zimbabwe's black empowerment drive, he said: "Absolutely, those fears are justified in the sense that most of those to be affected came in as a result of the country calling on them to come in and invest in our landscape."