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Gono succumbs to Zanu PF pressure
Shame Makoshori, The Zimbabwe Independent
January 26, 2007

http://www.theindependent.co.zw/viewinfo.cfm?linkid=11&id=9902&siteid=1

RESERVE Bank of Zimbabwe governor Gideon Gono — apparently succumbing to pressure from Zanu PF critics — is in the process of setting up a committee to advise the central bank on the appropriate exchange rate, the Zimbabwe Independent has heard.

Sources this week said the office of the governor had shortlisted professionals, business executives and politicians for possible appointment to the foreign currency management committee.

The sources said possible candidates for the committee included Media and Information Commission chair Dr Tafataona Mahoso who has of late launched attacks on the central bank and other advocates of devaluation.

Another one is former Finance minister Dr Simba Makoni whose quest to devalue the local currency in 2002 was resisted by President Mugabe who described proponents of devaluation as "economic saboteurs".

There would also be representation from business groupings such as the Confederation of Zimbabwe Industries, the Zimbabwe National Chamber of Commerce and exporters and farmers. The shortlist, sources say, will be presented to the Office of the President for approval prior to its announcement.

Gono has faced criticism over his foreign currency management system by his principals in Zanu PF and government.

The committee could be unveiled when Gono presents his monetary policy review statement later this month.

Formation of the foreign currency management committee comes after Zanu PF indicated at its annual conference in Goromonzi in December that it was slowly losing confidence in the continued handling of foreign currency by the RBZ alone.

The party’s economic affairs committee proposed the establishment of a foreign currency management committee to oversee the allocation of hard currency.

The Independent understands that the committee will also play a leading role in determining the exchange rate.

Zanu PF economic affairs secretary Richard Hove said his committee was concerned with the influx of flashy cars on Zimbabwe’s roads when industry was battling to access foreign currency for raw materials and spares procurement.Hundreds of companies have folded in Zimbabwe since 2000 due to foreign currency scarcity.

Hove argued that this was a sign of poor prioratisation that should be corrected if other stakeholders played a proactive role in the distribution of the critical resource.

"The little foreign currency coming in, how is it managed? There should be a committee and the RBZ should not intervene in some issues," Hove said.

Despite widespread protests that the exchange rate was no longer viable, Gono has kept the Zimbabwe dollar at $250 to the greenback since January 2006.

Manufacturers say the realistic exchange rate must be around $750 to the US dollar.

Analysts say the problem with foreign currency committees was that they put stringent measures on exchange rate movements.

Meanwhile, former Zimbabwe National Chamber of Commerce (ZNCC) president Luxton Zembe said the committee will only add value to the economy if experts with foreign currency management experience are appointed to run it.

Zembe suggested that the experts be independent in their thinking, objective, truthful and capable of giving proper advice to the RBZ.

He suggested as potential committee members former RBZ governor Leonard Tsumba, former Delta Beverages CEO Enoch Chiura, the ZNCC, CZI and the Zimbabwe Council for Tourism. He however said RBZ governor Gono must not chair it.

"You cannot have a person who is being advised chairing the committee," Zembe said.

"South Africa has a similar body but (South African central bank governor Tito) Mboweni takes what the body says, he listens to what the members of the body say," said Zembe.

He said Zimbabwe’s committee must be autonomous in the allocation and prioritisation of foreign currency. Without that it will suffer the fate of many advisory bodies that have turned into white elephants.

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