Sun sets on Gono’s plans?
WHEN we warned Reserve Bank governor Gideon Gono that his efforts to right the economy needed commitment from political leaders, we were right. Since his appointment as governor at the end of 2003, we have warned Gono to temper his exuber
ance with caution because there are other forces likely to undermine his recovery programme.
Gono is waking up to this fact. His monetary policy statement delivered yesterday raises two important issues. It admits failures of his monetary policy pronouncements and he indicted all key players in the economy, especially government, for indiscipline and lack of commitment. He was quick to use drought as a cover for our woes but he now knows who the real culprits are.
Gono spoke of indiscipline, unbridled economic selfishness, corruption, lack of accountability, bureaucratic sloth, and policy inconsistencies by government as ills bedevilling the economy.
He also spoke of disunity among political and corporate leaders as another factor which still “colours purple the waters that are otherwise supposed to be clear”.
Inflation targets will not be met. He was forced to revise his numbers from 25-35% to 50%-80% by year-end.
Productive Sector Facility funds dished out to save ailing companies and spur growth in the productive sector did not revive industry. Agricultural targets are way off the mark. Gono blames this on drought although his statement reveals serious planning deficiencies in the ministry of Agriculture where Joseph Made has been a monumental failure.
To his credit, Gono goes to the heart of the problem when he says major policy initiatives have not been followed through. He attacked populist rhetoric on agricultural output, the hallmark of Made’s reign at Ngungunyana Building. He chided chefs who discouraged people from repaying loans and those who looted farm equipment.
He has proposed an agricultural recovery plan — Command Agriculture — in which farmers will still benefit from state largesse but are told what crops to grow and the price government will buy them for. In this he recognises the importance of good commodity pricing, that suppliers of seed, chemicals and fertiliser should get a fair deal. He said only competent farmers should be allowed on the land.
The agro recovery plan has a huge bias towards irrigation because RBZ studies have revealed a systematic decline in annual rainfall figures. The government must complete ongoing dam projects and ensure irrigation infrastructure is developed or rehabilitated on farms.
He has slashed interest rates for agricultural loans to 20%. This is a huge subsidy on agriculture and he makes no apologies for it. If the United States is doing it, it will not be a crime to do it here, he says. Because of this benevolence he is putting his neck on the block. He will now take a greater interest and control in farming.
It is a grand plan which we believe should have come from Made. It’s not and if the plan is implemented there is no doubt about who will be in charge of agriculture. Gono and not Made! RIP Joseph.
He has slashed rates for loans to exporters to 5%. He has promised cheaper money to industry. There is also money for housing -— $1 trillion in all.
Gono spoke strongly against devaluing the dollar. It is tantamount to giving in to economic saboteurs, he believes but the sectoral incentive for diasporans is indeed devaluation. Dishing out cheap money to industry is a form of admission that the currency is not worth much. There is no need to sell worthless currency to business for a huge price. It is better to produce goods that can bring in proper currency that can be used to import petrol, electricity, maize and medicines. This is an optimistic plan that can go wrong as long as chefs are first in the queue for cheap money which they will not account for.
But as he rightly pointed out in his statement, there is still too much indiscipline in both government and the private sector. What is required for his plan to work is co-operation from government and other stakeholders. He cannot run government lest he step on sensitive toes. President Mugabe has to sort out the politics.
Curiously, in his grand plan Gono makes no mention of the “Look East” mantra where Mugabe believes salvation will come from.
Gono is looking inside and to the IMF and the World Bank. He has even proposed measures to deal with zhing-zhongs. Will he get cooperation if he is not looking at the rising sun? Will this be the sunset of his plan?