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Central Bank in control of situation - interview with Reserve Bank Governor Gideon Gono
The Herald (Zimbabwe)
December 29, 2007

Visit the index of articles on currency reform - Sunrise II

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THE cash shortage that began two months ago continued unabated throughout Christmas while the incessant rains in most parts of the country and flooding in others affected the currency changeover programme under Operation Sunrise 2. It is against this background that Herald Business Editor Victoria Ruzvidzo sought to establish the contingency plans that the central bank Governor Dr Gideon Gono has, given these circumstances. In a wide-ranging interview yesterday, the RBZ chief opened up on his thoughts and strategies.

Question: What measures do you have in mind to mitigate any unintended losses due to floods and the incessant rains now that the December 31 deadline is near?

Answer: I just want the nation to know that currency changeover or Operation Sunrise 2 is a man-made operation. In other words, it has been crafted by man to achieve certain intended results. By the same token, unlike natural disasters for which man can do very little about, Operation Sunrise 2 is not a disaster operation and accordingly we will put in place, at the appropriate time, mitigatory measures to deal with any natural, unforeseen disasters such as those you are referring to.

We remain in control of the situation and your central bank has never been short of any adaptive strategies to whatever circumstances confronting us. We will not act in fear neither will we fear to act in any manner we deem appropriate for the circumstances.

Q: There have been long queues at most, if not all the banks across the country. Could this be a reflection of the central bank's failure to provide local currency or could there be other reasons?

A: Naturally the period under review has heightened people's awareness and attention to the intricacies of commerce and the importance of various forms of intermediating such transactions in the economy. There is no doubt that the queues of the last few months have shown the extent to which our economy has drifted into the informal sector and which informal sector is predominated by cash transactions.

The cash shortages that we see are a mere symptom of much deeper and greater fundamental misalignments in our economy than the ability or inability of the central bank to provide adequate cash.

The kind of queues you see out there for local currency have been the kind of queues that I live with everyday in the area of foreign currency demand only that you do not see them physically. The local currency queues are no different from the Governor's ordinary day-to-day foreign currency demands for industry, for electricity, for fertilizer, for fuel, for Members of the House of Assembly, for Members of the Senate, for Air Zimbabwe, for the National Railways of Zimbabwe, for seed, for maize, for wheat, for industrial spare parts, for debt servicing and other operational requirements for this economy.

These are not noticed by the public but I live with them everyday and it's not because of the RBZ's inability to provide foreign currency in as much as it is not the inability of the central bank to provide local currency to the queues that we see out there.

We are back to economic fundamentals which we must tackle head on without any hesitation, fear or delay. It's about sanctions whose debilitating effects on the economy and on the ordinary lives of our people must be a matter for which we must all speak with one voice as Zimbabweans to see that these sanctions are lifted. It's about the productivity of our people whether talking about mines, agriculture, manufacturing, tourism, parastatals, local authorities and every form of economic activity in the country. We must raise the bar of productivity to underpin our commercial transactions.

It's also about economic and pricing distortions, which we must deal with decisively. It's about economic patriotism. It's about discipline. It's about building a corrupt-free economy. It's about international relations. So don't take a simplistic view of the queues and simplistically place 100 percent responsibility on the central bank or the Governor, however easily tempting or fashionable it might be.

This is the moment for every Zimbabwean in the queue or not in the queue to think seriously about how we can all work together honestly, courageously and uprightly to better our economy in the year to come. That's my interpretation of the cash queue. In the absence of a disciplined approach to our economic affairs, to corruption, hard work and economic patriotism, the winter of discontent with cash queues will not go away.

However, coming back to the simplistic way of dealing with the cash queues which is what I believe every ordinary Zimbabwean is preoccupied with, the situation will and should improve from January 1 onwards on the back of what one can call a cocktail of mitigatory, offensive, defensive, proactive and realistic package of cash normalisation and injection measures which may take many by surprise but whether taken by surprise or not, the resultant effect of these measures, taken without fear or favour, will be to improve the cash situation. How that would be done . . . leave that to the Governor.

Q: Have you extended the December 31 deadline by which the $200 000 bearer cheque will cease to be legal tender as widely rumoured?

A: Let's cross the bridge when we get there. What would give you the impression that it has been extended?

Q: What are the banking arrangements then as the deadline draws nearer?

A: Today is going to be a normal banking day like any other and banks should open for normal transactions up to midday as they normally do but extend the opening hours to 6pm for deposit-taking from both individuals and corporates. On Sunday we have directed that the banks operate for deposit-taking only so that last-minute genuine depositors are not disadvantaged.

Monday is a normal business day while on New Year's day the banks should close and re-open for normal business from January 2 onwards. That's why I said things should return to normalcy.

Q: What has been your experience and findings to date with respect to Sunrise 2?

A: As was the case with Sunrise 1, a report will be released with interesting revelations and patterns of cash hoarding and the manner in which that cash has been brought back but I do not want to pre-empt that report.

Q: What is your comment on the cash baron caught last week with $10 billion worth of the new $500 000 bearer cheques?

A: Commenting on that matter while it's before the courts would be what they term sub judice, save to highlight the fact that the 100 colleagues that the lady (Dorothy Primrose Mutekede) refers to as her partners in crime goes to prove the fact that the issue of indiscipline in the economy is rampant and widespread by her own admission. We do have a bit to say about it at some stage.

We now have a databank in the central bank of who the major cash movers are. Some who move with personalised cars, some who go out misrepresenting themselves and some who will stop at nothing to beat the systems. I am pleased to say that over the last year or so we have been using all forms of manner and methods to get that information and we get enriched everyday by members of the public who have information of what is happening across many sectors of our economy.

Our Financial Intelligence Investigation, Evaluation and Security Division of the bank, which we set up in terms of the Bank Use Promotion and Suppression of Money Laundering Act Chapter 22:24, has really been at work.

Q: Are members of the public aware of the Act and what it entails and what measures have you taken to educate them in this respect?

A: It's a pity that most people venture into business without acquainting themselves with various laws and regulations that pertain to their areas of operation, especially the provision of this Act. While it's not our duty to educate the public about the laws of this country, and indeed they say ignorance of the law is no excuse, you do have a valid point about the need for us to disseminate some of these laws to the general public and even to interpret and translate them in local languages.

It's a challenge I will take up with my Minister of Finance to see what can be done.

Q: Going back to the cash baron case, Mr Jonathan Kadzura, named as having allegedly given the money to the woman, sits on the Reserve Bank advisory board, how do you view this?

A: The advisory board to which captains of industry and commerce, prominent economists, permanent secretaries, bankers and other distinguished members of society belonged, fell away in January 2006 at the start of NEDPP
(National Economic Development Priority Programme) and we always amuse ourselves when we hear comments to the effect that prominent person A or prominent person B is an advisor to the Governor.

Well, the Governor is accessible to all the 12 million Zimbabweans and it's these 12 million who constitute my advisory board including you as business editor. I get advice and information from so many editors through your various columns.

Q: In some quarters you have been labelled as the biggest saboteur in the economy and that the Reserve Bank is a major player in the foreign currency parallel market. How do you respond to this?

A: Some accusations are made against the central bank, its Governor and his team by people who are genuinely ignorant of how we are constituted, under which laws we operate as well as what flexibility the central bank has.

I am not at liberty to disclose what sanctions-busting strategies or tactics we are using to balance the twin objectives of sustaining this economy in terms of its day-to-day needs as well as ensuring that our exporters and other generators of foreign currency remain viable.

So these gymnastics belong to my memoirs but in silence we take every blow and every accusation that comes our way whether it's to do with too much rain, floods, too much sunshine, lack of fertilizer, fuel, drugs or the arrest of people. If we adopt the habit of responding to every criticism levelled against us we would not accomplish anything. Let me give you this quotation by Theodore Roosevelt:

"It's not the critic who counts, not the man who points out how the strong man stumbled and where the doer of deeds could have done better.

The credit or blame belongs to the man who is actually in the arena; whose face is marred by dust, sweat and blood; who strives valiantly, who errs and comes short again and again; who knows the great enthusiasm, the great devotion and spends himself in a worthy cause; who at best, knows in the end the triumph of high achievement and who, at worst, if he fails, at least fails while daring greatly; so that his or her place shall never be with those cold and timid souls who know neither victory nor defeat."

And in our case failure is not an option. We will struggle, we will sweat, we will be criticised, we will be blamed, but our sights are on victory, on the successful turnaround of the economy.

Q: Are you planning to take the traditional end-of-year break to recharge for next year so to speak?

A: Not before the conclusion of Sunrise 2. Throughout the period from December 20, my teams have been in rural areas, in the provinces, in the districts and the villages interacting with people, including on Christmas and Boxing Days. What kind of a leader would I be to them, who goes on holiday while they are out there in the bush.

I have been taking care of the Sunrise 2 operational command centre here at the head office to which all teams throughout the country report back at the end of each day. So it would have been inappropriate for me to do otherwise.

In Shona they say simba mukaka unosinina. During the lactation period even if a child sucks milk from his or her mother that milk will never dry up. After a short while the baby can feed again.

But more importantly, my team at the Reserve Bank has taken its daily physical exercise programmes as a way of life and, therefore, the level of our resilience and fitness we believe, remains unmatched in the market.

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