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THE new Reserve Bank of Zimbabw
e (RBZ) governor Gideon Gono has recently been unearthing a lot of dirt under the carpets of the country’s prominent financial institutions leaving senior officials scurrying for cover. In the process the governor has apparently ruffled some sacred feathers if this week’s press reports are anything to go by.
Gono, a banker himself, is mooting management changes and boardroom reshuffles as he tries to do what he promised the nation when he took office on December 1. He said then: “Failure is not an option.”
However, while the new governor tries to clean up the financial services sector to ensure Zimbabwe’s banking industry is squeaky clean, he seems to have overlooked the role the country’s parasitic parastatals are playing in promoting monetary disorder.
Public corporations have continued to milk the country’s fiscus undisturbed for 24 years courtesy of the tax-paying public.
Conservative estimates put the parastatal overdraft facility with government in the region of $700 billion.
Parastatals receive their allowances from the government in the form of a vote from parliament. This vote is very seldom scrutinised by honourable members unless of course some stink is raised — especially by reports in the press about a particular parastatal as was the case with the Zimbabwe Electricity Supply Authority (Zesa) and the problematic National Railways of Zimbabwe (NRZ).
The country’s parastatals came in for special mention by the Minister of Finance and Economic Development Herbert Murerwa in his 2004 national budget.
The minister told the nation that gone were the days when unbudgeted expenditures would be allowed by his ministry. He said unbudgeted expenditures would only be restricted to “national emergencies”.
“Ministries will be expected to live within their budget provisions,” Murerwa said.
We wonder whether this sentiment also applies to parastatals that have become accustomed to our funds for projects that are sometimes dumped mid-way.
Air Zimbabwe, for example, with a revolving door management, continues to chalk up billions in losses because of poor marketing and unrealiable service.
It was touted as a prospective cash cow due to an anticipated revival in tourism. However, it proved a chimera. Low tourist arrivals, uneconomic pricing as well as failure to adhere to schedules has affected the airline’s standing at home and abroad. This week it was suspended by IATA over a US$1,3 million debt.
The scandal-ridden National Oil Company of Zimbabwe (Noczim), another government headache, continues to reap where it does not sow. Confederation of Zimbabwe Industries (CZI) boss Antony Mandiwanza was probably correct when he called for its complete disbanding because, he argued, it was serving no useful purpose.
The Grain Marketing Board (GMB) also came under Murerwa’s spotlight as another parastatal that is dependent upon the hard-pressed taxpaying public. The GMB has understandably failed to carry out its mandate of selling maize and wheat to starving citizens at commercially viable prices.
Murerwa pointed out that the GMB, because of unviable pricing policies, had a huge debt and could not break even come what may.
Another problem is the cash-strapped NRZ which continues to provide a shoddy service to the travelling public.
Part of NRZ’s poor performance can be attributed to populist interventions.
Freedom trains were launched amid much pomp and fanfare ahead of the presidential poll. But many passengers feel the service provided leaves a lot to be desired.
Ever since the freedom trains were introduced, the NRZ has sunk deeper into the red, a classic case of political decisions undermining sound management.
Zupco is another major cause for concern. Zanu PF seems to think that the parastatal is an in-house concern yet it is a public transporter whose remuneration comes from taxpayers. We wonder exactly how much the ruling party owes cash-strapped Zupco, which is now unable to pay for luxury “Marcopolo” buses secured from South Africa, some of which have been repossessed.
Gono, in his endeavour to sort out the mess within the financial services sector, should also look into these parastatals that have had it too good for too long. After all, many are consumers or spenders of forex and do not feel constrained by price controls.
There is likely to be more dirt there than at many of the financial institutions which probably wonder why they have been singled out for investigation when nobody objected to their swashbuckling antics in the past. Why are the parastatals being protected when they are using — or is it abusing — our hard-earned funds?
When Noczim was investigated some years ago, it raised a temporary stink and heads began to roll. But the clean up was not sustained and the fuel procurer goes on losing money hand over fist when private companies could do the job of importing and distributing fuel much better.
Murerwa told Gono that a significant reduction in the growth of money supply was critical for containing inflation. Large quasi-fiscal requirements, mostly financed from inflationary bank sources, had immensely contributed to the prevailing runaway inflation.
State corporations that have become accustomed to borrowing from the markets and spending public funds instead of earning healthy profits — which thereby distort the macro-economic framework of the economy — also need to be thoroughly investigated by the RBZ boss in so far as their delinquency impacts on monetary policy, the foreign exchange rate and overall fiscal stability.
Sorting out these problem-children of Zanu PF’s command economy will not only benefit Gono’s cashflow at the central bank, it will also strengthen the nation that has been fed on by these leeches for far too long.