RESERVE Bank of Zimbabwe governor Gideon Gono this week drew fury from opposition politicians and analysts who said his unorthodox monetary policy approa
ch was not the panacea to an economy ruined by corruption and speculative tendencies. They said Gono should deal decisively with protected members of President Robert Mugabe’s inner circle.
“We reject any attempts to create false hope, and buy more time for the Zimbabwean dictatorship,” said Arthur Mutambara, leader of an opposition MDC faction, about Gono’s monetary policy review on Monday.
“The statement should have clearly identified government incompetence, mismanagement, lack of economic vision and capacity as major causes of the economic crisis,” Mutambara said.
Critics said Gono’s declared war against corruption should start with ruling party and government bigwigs, largely believed to be the significant factor responsible for the six-year economic crisis.
“He’s making the right noises but the problem is that he still tackles the edges,” said Daniel Ndlela, an economic consultant, of Gono.
“Corruption is now part of the system. It is institutionalised within Zanu PF and dealing with black market dealers on the streets will not help,” Ndlela said, suggesting that sincere measures dealing with the scourge would start by investigating the super-rich members of the Zanu PF politburo and central committee, as well as those in Mugabe’s cabinet and government.
Gono, delivering a no-holds-barred mid-term monetary policy review on Monday, whose discourse many viewed as more political than economic, promised to cause pain to “speculators, underground market dealers and their associates”.
He singled out indiscipline, corruption and speculation as “the three vices…which have weighed us down”.
His tough remarks against corruption echo similar ones the previous week by President Mugabe and Finance minister Herbert Murerwa at the opening of parliament and fiscal policy review respectively.
Mugabe’s government has rarely acted on information implicating members of his government and party in corrupt activities, but has lately spoken critically against corruption by top members of his party.
Cynics say Mugabe relishes ensuring that his lieutenants know that he is aware of their corrupt activities and other misdemeanours to retain their absolute loyalty.
Gono has previously said he has names of top ruling party and government officials involved in shady deals but has refused to name them.
He asked for spiritual protection so that his team avoids becoming “physical, intellectual and emotional victims of the ruthless behaviours and tendencies of these speculators as they begin to taste medicine from hell and start burning from the inevitably necessary policies we are going to implement henceforth”.
Gono said gold was being pillaged, undermining the country’s efforts to earn foreign currency. Zanu PF chiefs continued to grab farms, disrupting agricultural production.
Mugabe said during a recent Zanu PF central committee meeting that he was aware that ministers were involved in illicit gold-smuggling activities. He has also spoken about corruption and incompetence by members of his cabinet.
Mugabe, who threatened to “cleanse” his party of corrupt members, told the central committee meeting last month: “Cases of members wanting to enrich themselves are increasing in number…some people are just being crookish in their activities.”
Gono has previously alleged that ruling party bigwigs and their cronies have abused an agricultural facility under which they received subsidised fuel by selling it at inflated prices on a thriving parallel market.
On Monday, he repeated his accusations against “highly connected people” and top politicians, saying they were undermining efforts for an economic turn-around.
While promising to take stern action against them, Gono’s measures were expected to skirt around the ruling party elite, targeting instead individuals playing a peripheral part in “underworld markets” to survive the hardships afflicting the economy.
Gono said measures to deal with corrupt elements in society would begin with the much-heralded currency reforms, under which government security agents and Zanu PF “youth” militia have started raiding shops and making house-to-house searches for cash believed to be stashed for speculative purposes.
Under the currency reforms, the central bank introduced, with effect from Tuesday, August 1, a new set of bearer cheques to replace the family of bearer cheques currently in circulation. The old bearer cheques will be phased out during a 21-day period ending on August 21, by which day all current bearer cheques and other forms of old currency will become obsolete and valueless.
The new family of bearer cheques will see three zeros from the old bearer cheques being taken off.
“The 21-days of change-over are the beginning of far-reaching transformations for our economy and beginning of trouble for economic saboteurs who have caused havoc to this economy through speculative and cash hoarding tendencies,” said Gono.
During the change-over period, individuals and corporates can only deposit a prescribed amount of old bearer cheques a day, beyond which they are compelled to produce proof of source of funds as well as Zimbabwe Revenue Authority (Zimra) clearance certification for tax payment on the transaction underpinning the cash.
The cash deposit thresholds have been set at $100 million for individuals, and $5 billion for corporate institutions.
Where the holder of cash cannot prove legitimate source of funds, the cash will be deposited into anti-money laundering bonds for a minimum of two years at no interest.
The owner of the cash will hold the bonds pending investigation and or clearance with Zimra, at which point the bonds will be redeemed at face value.
Where legitimacy is established after funds have been locked up in the bonds, interest at ruling treasury bill rates will be credited to the principal and redemption given.
Gono said there was $45 trillion in circulation, but only $10 trillion could be accounted for by the formal banking sector.
The remainder was in the market doing speculative business. Of that, $15 trillion was doing business in neighbouring countries, he said.