Zimbabwe: Gono's Advice Falling On Deaf Ears

Source from:  Financial Gazette (Harare) 1 November 2008 11/10/2008

RESERVE Bank of Zimbabwe (RBZ) governor, Gideon Gono, must be a thoroughly disappointed man. Gono has been prophetic from the day he walked into Number 80 Samora Machel Avenue in November 2003 to shepherd a financial sector that was showing signs of losing its sense of direction because of indiscipline, which was rampant at the time. In his many pieces of advice to the nation, given time without number, the RBZ governor warned of the dangers that lay ahead if there was no total shift in the manner Zimbabweans attended to the business of their country. And just as the sun rises from the east and sets in the west, his prediction was spot on. While the last assessment of the financial sector, which is Gono's forte, produced a clean bill of health after the industry was certified as "safe and sound," the same cannot be said of the rest of the economy, lurching from one crisis to the other, all because no one ever bothered to take up the governor's advice. A case in point was Gono's passionate plea for ZANU-PF and the Movement for Democratic Change (MDC) to agree on a political pact to bind them before, during and after the March 29 elections. In making that suggestion, Gono had been alarmed by the extensive damage the endless political squabbles had caused on the country's economy ever since the disputed 2000 general elections. But against Gono's advice, the parties plunged headlong into the synchronised polls, without anything on paper to act as insurance, while regulating their behaviour and conduct thereafter. The result has been there for all to see. The political tug-of-war between the main political parties has continued at a huge cost to the country's battered economy with no end in sight. On Saturday, Gono took time to share his disappointment with the rural folk far from the hustle and bustle of the capital city. He took time to explain to scores of small scale farmers who had gathered in Karoi for the Saltlakes Tobacco Grower of the Year Awards, what has gone wrong with the Zimbabwean economy. To ensure that they were on the same page, Gono, who was the guest of honour at the inaugural awards ceremony put together by Temba Mliswa, the Saltlakes chief executive officer, chose to deliver his speech in the vernacular, Shona language. He bemoaned the lack of cohesion in politics as one of the major factors contributing to the economic meltdown. After the signing of the delicate power-sharing agreement on September 15, Gono said the Zimbabwe dollar gained by 50 percent, indicating a strong correlation between the resolution of the political crisis and efforts aimed at reviving the country's economy. The local unit has suffered serious drubbing after ZANU-PF and the two MDC formations hit another deadlock over the allocation of ministries. The impasse is still to be resolved. "We can't right the economy without dealing with sanctions. The implementation of the agreement should not be delayed a day longer. Political parties should lobby for the removal of sanctions," said the RBZ governor. Gono said agriculture, which constitutes 25 percent of the economy and 35 percent of exports, should underpin economic recovery efforts. "When agriculture sneezes, the entire economy catches a cold," he said. Many people might have wondered why substantial resources have not been invested in agriculture to shorten its recovery cycle and ensure Zimbabwe retains its breadbasket status if there was that realisation in government. On its part, the RBZ has extended cheaper loans to farmers through the Agriculture Sector Productivity Enhancement Facility; farm implements through the Farm Mechanis-ation Programme and has been scrounging for the scarce foreign currency in order to bring into the country agricultural inputs requ-ired to bridge the deficit in local supplies. But the central bank's efforts have met with some impediments, which Gono explai-ned on Saturday. He said the biggest drawback has been the sanctions imposed on the country by largely the United States and the European Union against President Robert Mugabe's government. While government critics say the "targeted sanctions" were only hurting a few of President Mugabe's associates, Gono argued at the weekend that they were denying the country any form of assistance from outside. Whereas Zimb-abwe used aid and line of credit facilities secured from multilateral financial institutions to bridge its budget deficit, that avenue was blocked bec-ause of the sanctions, said Gono. Consequently, foreign currency inflows have dried up, resulting in the country failing to import drugs, fuel and other essential products needed to sustain the economy. Gono said the poor performance in agriculture has been compounded by high-levels of indiscipline among farmers who are accessing cheap inputs such as diesel, fertiliser and seed only to divert these onto the illegal parallel market for quick returns. As a result, there are huge swathes of land lying idle because of the abuse of inputs. "Going forward, we want to support small scale farmers, because commercial farmers have been a huge disappointment," said the RBZ boss who pledged US$500,000 to help acquire Compound S fertilizer for contract farmers under Saltlakes Tobacco. In reference to the cash crisis, Gono said a Germany company that used to supply Fidelity Printers with the paper used to print banknotes had terminated the contract prematurely because of the sanctions, while spares and paper meant for the ageing printing press were also seized. Gono said corruption, particularly involving people in high offices, was yet another endemic destroying the country's economy. He bemoaned the country's failure to organise mining activities in Manicaland where close to US$1,2 billion is being lost every month through illegal diamond mining at Chiadzwa. "The Governor cannot do it alone...it needs everyone to do it. We now need prayers," he said. Coming to the tobacco farmers, particularly the Tobacco Industry and Marketing Board, which has been clamouring for a market-linked exchange rate to make the golden leaf viable, Gono said benchmarking the exchange rate against parallel market rates would not solve the problem. "More than the exchange rate, we need discipline in the economy, we need to go back to basics, we need to deal with corruption and encourage people to work instead of engaging in speculative practices," he said. Enditem