HomeLettersWith such myopia goals are elusive

With such myopia goals are elusive

THIS is an open letter to Reserve Bank of Zimbabwe governor Gideon Gono.

Gono has been praised as the country’s number one turnaround strategist, and so he has em

braced that title with smiles. The major tenet of a strategist is to be able to “foresee long-term” effects. It has been the case everywhere, from the turnaround of Nissan to even the turnaround of completely rundown economies such as those of Uganda and Ghana.

How come then our number one turnaround strategist is so shortsighted? I read in your paper that interest rates have skyrocketed again. And I am sure it is because Gono wants to curtail the gains that were being enjoyed by investors on the Zimbabwe Stock Exchange (ZSE).

Does he not think that is being shortsighted? Does he not think that a few who were assuming the Zimbabwe risk on the ZSE were using borrowed money?

Does he not think that even if they take their funds to the money market, the funds will not get to the productive sector because no bank is drawing on BAs, and even the major lender, the RBZ which he captains, is withdrawing its productive sector funds because he fears to lose all the moneys lent to these institutions? Is this not being short-sighted?

So does Gono mean that the markets will be credible without a “yield curve”? How do you plan for the future with a yield curve that shifts everyday – today a normal yield curve, tomorrow an inverted yield curve?

Would we say our number one strategist has turned into a confusionist?

And then the wanton destruction of property on the pretext of “cleaning up the city” when we know the authorities are looking for foreign currency! My proposal to the governor is to stop trying to manage the economy at every micro-level.

The central bank is a macro institution and it should behave as such. I am of the view that in the long-term, we would be better off if we open up the market. Just wake up tomorrow and say anyone with foreign currency can sell it at any price to any financial institution of his/her choice.

The rate will go up to around $30 000:US$1 but I tell you the inflow impact, the release of the foreign currency being hoarded by the Chinese and the release of the foreign currency circulating at “World Bank” will push down the rate to around $12 000 per greenback in a few months. This will leave the economy much better off.

Then lastly, I want to highlight that the central bank exists because of the market players, and not the other way round. Well, at least that is the situation here where I am.

The RBZ should be a regulator and not a manager. You should give financial institutions room to be innovative, room to come up with new products – even those you may not understand – and room to make mistakes as long as they do not break any law.

You should not try to give building societies “asset allocation” schedules and close all asset management companies for a flimsy excuse possible.

Remember, almost everyone contravened the Exchange Controls Act, including yourself Mr Governor if we look at the Chris Kuruneri case.

I have to admit that the governor seems to have a strong will to turn around the economy, but as long as he seems to fight old vendettas, as long as he confuses the market for a small possible gain and as long as he tries to manage every micro aspect of the market, the long-term goals shall be difficult to attain.

Baba Zvaipa,


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