Eric Bloch Column

Results justified the means

By Eric Bloch

IN the days of carnivals and funfairs, an extremely popular sideshow was one where a pretty girl, and an angelically-looking young man, a clown, or some other individual, would b

e seated on a plank a metre or more above a large tank of water. The public would be invited to pay an amount which would accord them the right to throw three balls at a target mounted above the person seated on the plank and, if the thrower could successfully hit the target’s bulls-eye, the plank would automatically tilt, thrusting its occupant into a forceful plunge into the tank of water.

It was incomprehensible to many that so very many of the carnival visitors would gleefully part with their monies in order to try to inflict discomfort and embarrassment upon the plank-seated victim, but those willing to spend in order to have the dubious pleasure of forcing a drenching upon another, who had done them no ill, far outnumbered those who pondered the motivation for doing so.

The same holds good in Zimbabwe when it comes to economic issues, and the handling of those issues by the authorities. Whilst, admittedly, more often than not, the authorities have demonstrated a gross lack of will, and/or an immense inability, to address Zimbabwean economic ills and needs effectively, nevertheless, there are occasions when they do so.

Moreover, there are instances when their motivations and intentions are well-founded, but the results of their actions fail to meet expectations, either because they were ill-advised, and were not aware thereof, or because the efficacy of their actions was undermined and counteracted by ill-considered, destructive actions by others in authority.

However, as with the carnival and fun fair patrons, many in Zimbabwe gain so much Machiavellian glee and self-satisfaction from casting scathing criticism at the authorities, that they do so even when the measures taken were economically beneficial (even if only in certain targeted respects and not pertaining to the economy as a whole), and also when the measures are unsuccessful, or only partially successful, contrary to the expectations of the authorities.

They are vociferous in their castigation of those who promote or initiate the economic measures of which they disapprove, irrespective of the underlying reasons for those measures, and irrespective of the actual outcome of the implementation of those measures.

Of course, those outspoken critics do not only vent their ire against the authorities, but also against any who have the temerity to have views at variance to those of the critics or, even worse, who see fit to speak favourably of such authorities. They are dubbed to be duped praise-singers, or are alleged to be pursuing a self-centred hidden agenda (and that notwithstanding the number of times that they have been equally critical of, and outspoken against, the same authorities that they, on a particular occasion, commend. That such commentators may be striving to be balanced and equitable in their judgements, praising that which they perceive to be good, and condemning that which, in their view, is bad, is wholly disregarded).

This columnist has oft been the recipient of such allegations, and of pronounced condemnation, and will undoubtedly continue to be so. But that shall not deter me from criticising government, the Reserve Bank, or others, when such criticism appears to me to be merited, or from commenting favourably when, for right or for wrong, policies or actions appearing to be deserving thereof. As Zimbabwe now rarely has carnivals or funfairs whereat those who wish to can vent their spleen, recourse to letters to the editor remains available to them.

One of the greatest recipients of floods of criticism, since shortly after his appointment, is governor of the Reserve Bank, Gideon Gono.

When he was appointed, government created an overwhelming crisis of expectation, using its very extensive state-controlled media to herald him as the economic saviour, as the miracle-worker who would, almost single-handedly, reverse the economic devastation which, although not acknowledged, had been inflicted upon Zimbabwe by its government. The propaganda machine, and its intense trumpet-blowing, intentionally disregarded the incontrovertible fact that no central bank, and no governor of a central bank, can wholly assure a country’s economic wellbeing unless the state’s policies in general, and its fiscal policies in particular, are aligned with the monetary policies of the central bank.

Thus, there was no possibility that the RBZ, or its governor, could achieve an economic turnaround, unless contemporaneously with its policies and actions government would pursue compatible, effective policies (which, to date, has not been the case). Until government does so, at best the RBZ and its governor can strive to minimise and counter economic ills, endeavour to create an enabling environment, and to such extent as permitted to do so, to advise government, notwithstanding that, all too often, such advice goes unheeded.

The recent redenomination of Zimbabwe’s currrency was a case in point. Thanks to the cataclysmic governmental mismanagement of the economy since 1997, hyperinflation became endemic in Zimbabwe. The magnitude of that hyperinflation rendered the structure of Zimbabwe’s currency wholly unsuited to the economic environment.

Very few computer programmes in use in Zimbabwe could process transactions quantified in hundreds of millions, billions, or trillions, of dollars. The information technology (IT) environment was increasingly becoming operationally hampered and incapable of coping. In like manner, the cash registers in supermarkets could not process a normal trolley-load of groceries and household requirements, and no petrol pump metre could reflect the sale price of a tank-full of petrol (even when such petrol was rarely available). Desk calculators with capacities of less than 12 to 16 digits became virtually useless. In like manner, the handling of currency became almost unmanageable. A shopper undertaking a weekly visit to a supermarket, if not possessed of a high-value credit or cheque card, had to carry a sack full of bearer cheques and bank notes to be able to pay for the contents of a routine shopping list.

In turn, the supermarket either had to expend considerable amounts on note-counters, or allow an intense accumulation of customers in queues, whilst cashiers laboriously counted hundreds of notes tendered in payment by each customer. Security hazards intensified for shoppers carrying bags of money, for shopkeepers who had to hold in their premises, and transport to their banks, vast volumes of currency. Similarly, businesses and individuals faced intensified security hazards in withdrawing funds from banks and building societies.

All these, and other circumstances, stimulated commerce and industry in general, the IT industry and the finance sector in particular, and many of the populace, to urge RBZ to address the problems. That resulted in a decision to slash three zeros from Zimbabwe’s currency, as had been successfully done, in like circumstances, by Mocambique, Italy, Turkey, Bolivia, Serbia, Brazil, Argentina, Israel, and many others. The redenomination of currency became effective on August 1.

Inevitably, despite very intensive efforts to anticipate any and all problems, and to apply measures to prevent or minimise such problems, some would occur, and did occur, and especially so in rural areas and for those not active in the formalised financial sector.

But, a little more than a month later, commerce and industry is functioning with the newly-denominated currency far more effectively than it was able at the end of the life of the former currency. Most IT problems have been overcome, security problems have markedly reduced, and almost all the targeted objectives of the currency redenomination have been achieved.

However, with the exception of the commendations of the banking, IT, and commercial sectors, the RBZ and its governor have been widely and loudly criticised and condemned. Focus has been upon the transition difficulties, instead of upon needs and results, and in the case of those seeking to gain political mileage, upon the fact that the currency redenomination has done naught to stem inflation, create employment, stimulate investment, and to address a myriad other economic issues. That the redenomination was neither intended, or designed, to address such issues, and that other measures are needed to deal with them (and especially so of government), has been ignored, and the unjustified criticisms loudly voiced.

The RBZ and its governor do not, and cannot, do everything right, and Gono has demonstrated a ready and commendable willingness to acknowledge error, when error occurs but, were it not for the vigorous efforts driven by him to address those economic issues as he is able and empowered to do, the appalling state of the Zimbabwean economy would be even more abysmal.

The outcome of the currency redenomination exercise proves that the results justified the means, no matter what the critics may say.