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Let's confront challenges in a holistic manner
Gideon Gono, The Herald
April 11, 2008

http://www.herald.co.zw/inside.aspx?sectid=33045&cat=10

IN recent weeks, Reserve Bank of Zimbabwe Governor Dr Gideon Gono has come under fire from several quarters with some even suggesting that the central bank will be better run by foreigners. It is against this background that Herald Business Editor VICTORIA RUZVIDZO yesterday spoke to the RBZ chief during his visit to Bulawayo.

QUESTION: Comment on reports that Germans will soon take over the running of the RBZ?

Answer: It is unrealistic for you to expect me to comment on reports whose origin and/or authenticity we cannot ascertain in the first place but that as it may, for what it is worth, the Germans are well-known and highly regarded for their experience, tenacity and never-say-die attitude.

My first managing director in the financial sector at the Zimbabwe Development Bank in 1987 was a German fellow and workaholic called Eich, and it is quite flattering to realise that it is intended, by whoever authored the report that you are referring to, to look for two German experts to replace one Governor Gideon Gono!

Accolades can't get any better than that, can they?

But on a serious note, the complexities and challenges the country is facing go beyond the issue of personalities trying to replace Gideon Gono with a German, Brazilian, British or American without attending to the fundamental causes of our situation.

I said in one of my many Monetary Policy Statements (January 2007) that we can replace and change governors as many times as we want in this country, but unless we confront our challenges in a well sequenced, holistic manner, with boldness to tackle difficult and sometimes self-serving populist but unsustainable policies, such as the price of a tonne of wheat from GMB costing the equivalent of the retail price of six loaves of bread, or a tonne of GMB maize being priced the same as the cost of a dozen roasted cobs of green mealies from roadside vendors, those governor replacements will not yield the intended turnaround objectives.

Exchange Rate Management . . . The Reserve Bank of Zimbabwe, according to the laws of the Land, is only responsible for the pricing of the Zimbabwe dollar currency in the form of interest rates.

Exchange rates and other pricing policies are vested in the Ministry of Finance and other line ministries.

If the Minister announces, as he did in the Parliament last November, that the Exchange Rate shall be Z$30 000/1 USD, that is what the law says and we will implement it.

It was in the year 2000 that such a law was passed to give the Minister of Finance the power to determine the exchange rate and not the Reserve Bank.

This is first for the information of your readers and for the intended so-called German experts who have been told to come and deal with Governor Gono who is the "worst governor in living memory" as some would want to put it.

Q: To what extent has this affected you personally and the central bank as an institution?

A: It is not about me personally. However, as a central bank my team does not take note of or react to imaginary stories from hidden sources with hidden motives.

We deal only with real situations whenever they present themselves or arise. It is business as usual at the central bank.

Q: Do you see yourself out of the job any time soon?

A: It is common cause when my term is due to end and not a speculative matter at all.

Besides, and even my principals in Government know and acknowledge the fact that for Gideon Gono, it was never at the beginning, just as it is not now, and shall not be in the future, a question of looking for a job to be in this position, but it is about service to the nation first and foremost.

When my time is up or my principals deem it appropriate that I am "past-due" my useful service to the nation, there will be no arguments that militate against the next baton holder at this sacred national institution and as current Governor, I will render any support deemed necessary to that new incumbent.

It should never be about personalities at these national institutions, you know!

I entered the job market 31 years ago as a tea-maker/office messenger/cleaner and if need be, I will go back to making tea for the next governor!

Q: You have launched a number of programmes such as mechanisation, the medical sector skills retention programme etc which are scheduled to run up to 2010.

Is this a sign of confidence that you will still be in charge of the central bank then?

A: The Chinese have a saying emphasising the need for each generation to plant trees that will benefit not necessarily current but future generations.

Accordingly, programmes such as agricultural mechanisation, medical skills retention, bio-diesel and some such developmental programmes are being launched, not with specific persons or individual beneficiaries in mind but future generations.

I, therefore, do not have to be the incumbent Governor in charge of the central bank, as any progressive-minded person without blinkers will agree with me that future farming seasons will certainly benefit from the recapitalisation currently taking place and that some lives will actually be saved as a result of our experienced medical personnel remaining in the country instead of taking their skills outside our borders over some remuneration issues which can be solved by tailor-made skills retention schemes such as we have launched.

Inscribing a date such as Vision 2010 is merely a management tool to guide expectations by which significant progress in terms of programme implementation and benefits therefrom ought to be reviewed before embarking on another programme for the next decade.

It is neither tied to the World Cup Soccer event in South Africa nor my tenure as Governor of the Reserve Bank of Zimbabwe.

Q: When does your term of office expire?

A: It is public knowledge when Reserve Bank of Zimbabwe Governors are appointed and the length of their terms.

Why are you or anyone anxious about the exact date? Are you afraid that your application for the job could miss the deadline for submission to the Minister of Finance?

Q: Politics has taken centre stage in recent months and you seem caught in all this given accusations from the MDC. What is your comment?

A: Criticism is always healthy and welcome to this Governor and his team as long as it not laden with poisonous substances designed to achieve narrower political, sectoral or personal agendas far removed from national interests. We truly welcome criticisms from any quarter, in particular that which at the end of its course, offers suggestions to the actual or perceived shortcomings or proposals about how to address the situation.

In most cases, when we ask our critics to offer solutions, they rush to look for the grave-sites of departed 16th Century or pre-World War II economists for answers, which lack originality, relevance, context and awareness of the totality of our situation.

Naturally, all they find from those "graves" are skeletons and no flesh, loss of memory, incomprehensible language and different geographical settings quite foreign to the knowledge of the departed economists.

Incidentally, it is not true that it is the MDC alone which criticises the Governor.

The most dangerous of all critics, some with half-baked ideas, are also found in Zanu-PF and others in the Mavambo groupings, civil society and the business community.

At least with MDC one knows where the spears are coming from but with the rest, they smile at you during the day while plotting to destroy you at night. In all this, however, it has to be appreciated that when a nation is going through difficulties, the temptation in and among the populace is for everyone to want or aspire to be the President, to be the minister of this or that, to be the governor of the province or central bank, to be the pilot, farmer, miner and industrialist all at once.

Another characteristic to be observed when a nation is experiencing difficulties is the tendency for self-destruction, for brothers and sisters/neighbours to turn against each other in a wave of deep suspicion of one another.

The key to sanity under these circumstances is to remain focused and professional in whatever we do, which we are trying to be, under very difficult circumstances.

Q: When you officiated at the Security Mills cocktail on Wednesday evening, you said Zimbabweans should remain hopeful, with unity of purpose. On what should they base their hope?

Answer: Do we have a choice other than to hope for a better tomorrow and work hard to realise that vision? They say in strategy that a man or woman who has lost hope is as good as dead.

Zimbabwe is not dead and we should not allow it to die — hence my call for people to remain hopeful about a better future predicated on unity of purpose, hard work, discipline, political maturity among all our political parties and a sanctions-free environment for our economy. Hope is similar to a dream, a vision without which we are all dead.

Q: You mentioned in your January statement that the central bank had embarked on a spirited campaign to bring inflation down. Can you comment seeing for now that the figure is actually rising? What needs to be done, and by who, to stabilise the situation?

A: Zimbabweans need to appreciate and look at our inflation in a broader context of a country that is embedded in the complex dynamics of not only what is happening to our economy internally, but also what is happening to other economies externally — the global inflationary pressures being experienced in the US, UK, China, nearer home in South Africa and so forth as a result of oil prices, tensions in the Middle East, droughts and floods as well as the phenomenon of global warming the effects of which we are already beginning to experience in the form of altering agricultural seasons and less predictable weather patterns.

Of course, this does not explain our own 30-40 percent responsibility for the inflationary pressures arising from some well-meaning but inappropriate and unsustainable economic policies that need immediate correction alongside the removal of sanctions which I believe accounts for another 40 percent of our woes with the balance of the inflationary pressures stemming from some of our own self-destructive tendencies and behavioural aspects such as rampant indiscipline and corruption that need radical corrections as Zimbabweans if we are to see an improvement in the inflation outlook.

The above approximations of our inflationary pressure points by source should amply show that far from being the sole responsibility of Monetary Authorities to win the inflationary battle, it is the responsibility of all stakeholders, as I have ad-infinitum, pointed out in all my Monetary Policy pronouncements.

Fighting inflation will take national effort with a well-sequenced programme of action which holistically addresses all tributaries that lead into the inflationary dam.

Alongside the settlement of the political question, that is at its peak right now, and without whose amicable settlement there can never be a sustainable economic turnaround and stability, economic issues such as the revival of productivity throughout the economy require everyone to attend to them as part of our battle against inflation.

The importance of the Social Contract . . . First and foremost, the political question surrounding our recent harmonised elections require urgent addressing along the lines of what we proposed in January 2007 — the Social Contract where political players, just like business, labour and civil society, need to recognise the mutuality and inherent interdependence between them in the exercise of their relationships and commit to a philosophy of working together as Zimbabweans first and different players and individuals last.

Anything short of these virtues will compromise and delay our economic turnaround and, therefore, inflation reduction.

It is in the interest of us all as Zimbabweans to begin to realise that the only way we can move forward is to put aside extreme positions and self-destructive tendencies and differences in favour of working together for our own good as no one will deliver us from our problems — not Sadc, not the AU, not the UN, not the USA, UK or any other Western, Eastern, Southern or Northern power so long as we are not keen ourselves and on our own, to return the country to normalcy.

All external help, financial, material, diplomatic or technical, can only be given in support of our own initial steps to move forward.

Having addressed the political question in the context of our inflation battle, we also at the same time, must move to deal with certain fundamental economic issues of industrial capacitation, accelerated agricultural resource utilisation, discipline and productivity on the farms, boost exports through an export-led growth strategy that turns the whole country into an export processing zone, encourage tourists to spend more at our resorts, boost mining potential while at the same time promoting sustainable forms of empowerment of a broad-based black majority of our people across all sectors of the economy — with emphasis on "broad-based and sustainable empowerment programmes" and not just empowerment to a selected few.

The trickle-down effects of a revived agricultural sector . . . If we revive agriculture, which is the mainstay of our economy, there will be trickle-down effects on the rest of the economy — agro-based manufacturing sectors will be put in full swing, with jobs created, more cooking oil available (from soya beans, cotton seed, groundnuts etc), more bath and washing soaps (from oil seeds and tallow from animal fat), more bread, (from wheat), more milk, more mealie-meal and margarine, among other basic commodities, which will find their way back onto the supermarket shelves and formal markets at affordable prices.

This is the basic formula from this Governor for fighting the inflation dragon you refer to as getting out of hand and it is in line with the above formula that we have been trying to boost agricultural productivity through the Agricultural Sector Productivity Enhancement Facility (ASPEF) loans at subsidised interest rates, the Productive Sector Facility (PSF) and the Basic Commodities Supply-Side Intervention Facility (BACCOSSI) as well as the Agricultural Mechanisation Programme, which some would want to interpret in self-serving political terms.

When (not if) the programme succeeds, it does not benefit this party or that group of people or region, but the whole nation.

No doubt, and this I have said several times before, we need to uphold private property rights as investors and capital in general, whether local or foreign, is too shy to take residence where it is not assured of legal protection.

We need to intensify our investment drive so as to create more wealth as a shield to the citizens of Zimbabwe against unforeseen adverse circumstances such as sanctions and I hope that nobody dares argue about that.

The bottom line is that we need to crank up our production assets as a sure way to driving our inflation downwards and ensuring a sustainable supply and availability of basic goods and services on the ground and in formal markets.

Complementary to the above set of moves is the need for us as a country to re-engage the international community of players well-disposed to Zimbabwe while educating those not so well informed about the realities of our situation.

We need as part and parcel of our inflation fighting kit, everyone, as no country, not even the so called mighty ones, can survive long battles of isolation.

Alongside this re-engagement programme is the need to intensify efforts to have sanctions removed.

The sanctions issue, embargoes and other forms of economic sabotage directed at Zimbabwe require all political parties in Zimbabwe first and foremost to speak with one voice for their removal.

As the Reserve Bank Governor, I have on numerous occasions spoken out against these sanctions and deliberate actions of sabotage against our economy.

We have, beyond any shadow of doubt, quantified in the past, the damage inflicted upon the economy by these sanctions and NOBODY interested in the truth can credibly deny that sanctions — declared and undeclared — are hurting this economy and helping to drive inflation upwards.

If all these issues in their totality are addressed, this will put this economy on a sound footing and industry will begin to work 24/7 and inflation will come down while our standards of living improve, social services stabilise and everyone becomes happier.

From this exposé, it follows, therefore, that the battle against inflation cannot be left to the central bank alone but it is for everyone.

Q: You spoke passionately against renewed farm invasions at the Security Mills cocktail on Wednesday evening. What was your basis for concern?

A: As I pointed out, Zimbabwe has just received commendations and accolades for the peaceful manner under which the March 29 harmonised elections were conducted, including the peaceful atmosphere that prevailed in the run-up to these elections.

It would, therefore, be a tragedy of unimaginable proportions to have this impeccable record tarnished by misguided acts of a few.

In addition to that, any loss of life, or form of violence, provoked or unprovoked, is inimical to our economic turnaround efforts, so is the destruction of any property or interruption of the ongoing harvesting season as well as land preparation for the winter-wheat crop.

It is from these angles born out of the pain of realising how difficult and painful it is to mobilise foreign currency to import food in the event of any self-inflicted deficit that I appeal to the provoked, or provocators, to settle their disputes according to the laws of this land, and for our war veterans to exercise maximum restraint, as they seek to defend the nation's heritage.

Do not get me wrong, I am not for land reform reversal, neither do I support these misguided provocators.

All I am saying is that violence is not and should not have a place in our motherland we call Zimbabwe. As our Security Chiefs said recently, violence is counter-productive.

Q: On a lighter note, we hear you are a bookworm of sorts, which books are you reading now?

A: Well, your sources are accurate. I am currently reading two books which describe the life and work of one man from two different angles. One is entitled The Maestro: Greenspan's Fed and the American Boom, a New York Times bestseller by renowned journalist and author Bob Woodward who is heaping praise on former Fed Chairman Allan Greenspan in iconic terms. The other book is entitled Greenspan's Fraud: How Two Decades Of His (Greenspan's) Policies Have Undermined The Global Economy — also by a New York Times bestselling author, Ravi Batra, who is an Economics Professor at the Southern University in Dallas.

Batra does not have kind words for Greenspan whom, as the title reveals, the author is blaming for all the wrongs the world is experiencing.

At intellectual level, I derive amusement from reading such books with contradictory views about the same man which give me tremendous strength and insight into human beings and the art of handling criticisms, rejection, brickbats at the same time handling praise, reverence and iconic status in the hearts of others!

Food for thought and a wake-up call to those who think this Governor gets worked-up by criticism!

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