Gono: saying it as it is!
By Eric Bloch
OF the innumerable causes of the monumental destruction of the Zimbabwean economy, and of the consequential widespread hardships, poverty and misery, one of the most pronounced has been the almost never-endi
ng inability of the authorities in general, and of the government in particular, to recognise realities.
And, when recognition of any realities becomes unavoidable, the invariable strategy has been to deny culpability, and to attribute responsibility and blame to others, no matter how devoid of credibility that attribution may be.
It was, therefore, like a breath of fresh air when the governor of the Reserve Bank, Dr Gideon Gono, in his 2005 third quarter monetary policy statement, demonstrated a very considerable awareness of the ills that confront Zimbabwe.
At this stage, I am very aware that my foremost critic, who falsely alleges that I am Gono’s apologist, will cynically contend that I am again pursuing that task. Bearing in mind how often I have also differed with Gono — both publicly and privately — puts the lie to that unfounded contention, although Gono is big enough to welcome reasoned contrary viewpoints. But I do not deny that I was most impressed with Gono’s very frank and outspoken summation of much that afflicts Zimbabwe, and his very evident determination to do whatsoever he is able to transform the economy.
In presenting his statement, Gono noted that it came “at a time when Zimbabweans from all walks of life, especially workers in both urban and rural areas, pensioners, the unemployed and our rural folk are grappling to make ends meet due to escalating costs on a daily basis”.
He noted further that the statement also came “at a time when employers are also having to make the difficult choices between staying in business or getting out, exporting or not exporting, to retrench or not to retrench, among other challengers”, and at a time “when our farmers are faced with the dilemma as to which crop to plant, where to get their inputs from, at what price and what to expect at the end of the season. New and small enterprises are facing up to the choice of whether or not to borrow to stay afloat, miners are facing viability and expansion challenges.
“Hospitals are in need of drugs, commuters, transporters and motorists are looking for fuel daily, while all households, industrial commercial concerns look to Zesa to assure them of uninterrupted supply of electricity. Our creditors of yesteryear want their money now, while new suppliers demand cash upfront for new supplies. Government services need support, especially in the area of foreign currency, while the monthly take-home salaries of civil servants across the board, now represents pocket money for children going to school.”
Whilst not all embracive of the massive distress that is the Zimbabwean economy today, and of the immense suffering of so many, those introductory remarks were certainly a recounting of many of the very sad and tragic characteristics of Zimbabwe. And Gono then demonstrated his determination that Zimbabwe should not give up, but should vigorously pursue change, no matter how difficult achieving that change may be.
He posed six questions. The first three were:
* Is the situation correctable?
* Is there any reason to wake up in the morning and hope for a better day? and
* Do Zimbabweans have what it takes to wean themselves out of these challenges?
To these questions, he responded with a very categoric “Yes”.
In contrast, his other three questions were:
* Are we dead and buried yet?
* Is giving up on the fight an option for any Zimbabwean in the trenches of farming, mining, tourism, industry, banking, commerce civil service, teaching, nursing or any other trench? And
* Is getting at each other’s throats the answer?”
To each of these questions he gave an equally categoric and absolute “No”.
After this dynamic commencement to his monetary policy statement, Gono unhesitatingly quantified many of the economic ills. He did not mince his words, including a very critical recognition that after a substantive lowering in money supply growth in 2004, it has been on an upward trend in 2005, with consequential inflationary repercussions. In particular, he was clearly concerned that credit to government grew in 2005 by 1 037,7%, and to public enterprises by 660,6% in contrast to private sector credit growth being 99,9%.
He addressed the very disconcerting and unforeseen upsurge in inflation. The year-on-year inflation rate had fallen from an all-time high of 623,8% in January 2004 to 123,7% in March, only to surge upwards thereafter to 359,8% in September.
Hopefully he will prove right in his projection that annual inflation is “expected to reach levels of 280 to 300% by December, and of between 50 and 80% by December, 2006”.
Undoubtedly, he will strive very intensively to achieve these projections, but there is very little prospect thereof, unless he can bring government on side. If it does not pursue policies which are aligned with, and complementary to, the monetary polices, then no matter what else, Gono’s predictions cannot materialise.
In particular, government has to spend less, and that which it spends, it must do so constructively and productively. It must genuinely contain corruption, without fear or favour; it must stop talking about agricultural recovery, but must make it happen; it must strive to restore Zimbabwe’s international image (a pre-requisite to tourism industry recovery, trade and investment, development and humanitarian aid, and much more). It must acknowledge problems timeously, and address them positively instead of merely seeking to deflect blame.
However, even if government does miraculously transform itself, much of such transformation will only address the inflation crisis well into 2006 and 2007. By now, it is almost too late to save much of the 2005/6 agricultural season.
With only sufficient lands prepared, seed-beds established, and plantings for a tobacco crop of 55 to 60 million kg. It is too late to achieve government’s far-fetched projection of 100 to 120 million kg. With inadequate, and non-inflation indexed, pre-planting prices, and non-timeous availability of many inputs, there is no possibility of achieving targeted maize yields, and in 2006 Zimbabwe will again be reduced to desperate recourse to food importation.
With many new farmers finding it more profitable to sell their preferentially-allocated fuel, how will they till their fields, spread their fertiliser (if it becomes available in time) and spray their insecticides (also subject to availability), let alone harvest any crops?
Hopefully, Gono’s projections will materialise, but it seems more probable that annual inflation in December will exceed 500%, and in December 2006 will be above 250%, but near-single digit inflation is attainable in the second-half of 2007, if monetary and fiscal policies are synchronised and cohesive, and cognisant of economic needs, instead of political objectives.
Gono had the courage, in his statement, to identify much that government must do. This included a call for requisite agricultural prices, for effective land tenure, and a halt to land invasions, disturbances and property destruction.
He also called for “unreserved assurance to the international investor community of utmost security of their assets”, inclusive of “stringent laws that protect private property”.
In that context he made “a passionate call to government to have a rethink on the policy stance on Bilateral Investment Promotion and Protection Agreements (BIPPAs)”, and for an effective fight against corruption.
Much of Gono’s statement encompassed many of the views and presentations of diverse elements of the private sector, and much of it could not have been welcomed by government, being strongly at odds (even if diplomatically worded) with many of government’s actions and inactions.
Inevitably, some of the private sector will voice criticisms of Gono and his statement, especially those who were filled with preconceptions before even hearing the statement. But it has been very noticeable, over the last week, how many businessmen who were ready “to throw in the towel” prior to the statement, now perceive a glimmer of hope, albeit that the struggle ahead will still be long and arduous.