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RBZ: How the mighty have fallen

FOR outsiders the Reserve Bank of Zimbabwe (RBZ)’s 120m high rise structure in central Harare would naturally symbolise the country’s financial-sector nerve centre.

But this intimidating building, which houses what was once Zimbabwe’s most powerful institution, has been reduced to a shell within a year of the formation of the coalition government and signifies the ills that plague the country’s once vibrant economy.

Economists argue that by abdicating its monetary policy role and embarking on quasi-fiscal operations, the central bank hastened the downfall of the economy, resulting in the collapse of the local currency and inflation reaching record levels of above 200 million percent.

RBZ workers’ changed lifestyles best epitomise the fall of an institution that used to fund virtually all facets of Zimbabwean life through uncontrolled printing of money, black market foreign currency dealings, and raiding the private foreign currency accounts of corporates and NGOs.

Take Goodson’s example. Goodson (not his real name) joined the central bank in August 2006 at the launch of Operation Sunrise, when the RBZ splashed on cars and hefty allowances for staffers involved in its currency changeover and re-denomination projects.

The 28-year-old University of Zimbabwe economics graduate bought property such as cars, housing stands and enjoyed a lavish lifestyle of hotels and fine food only dreamt of by his peers in the public and private sector who could hardly afford basics.
“I bought my first car just a few months after I joined the RBZ and this was something that made my peers envious,” he says with nostalgia. “We enjoyed the plentiful side of life when everyone else was burning with problems. We were like troops deployed in a war zone but kept away from the fire.”

Today Goodson earns a monthly allowance of US$100 and Zimbabwe dollar denominated salaries, forcing an acute lifestyle change as the Gideon Gono-built empire crumbles in response to the political and economic changes introduced since February last year.

Since the adoption of the multiple currency system and banishment of the RBZ’s involvement in quasi-fiscal activities, Goodson has been rendered idle. His office has become empty space, and Internet access has become a luxury – too costly for the once mighty central bank to afford.

Calls to the central bank landlines go unanswered for what appears to be ages, and when picked up, it is usually a lifeless and uninterested voice at the other end.
Sporadic supplies of meat punctuate the daily diet of cabbage and sadza at the RBZ canteen, according to workers’ accounts.

The website, a critical source of information, is down. Users cannot navigate beyond the RBZ home page.
Print publications which used to come on glossy paper, including cartoon combos used to illustrate and justify what critics described as reckless spending, have dried up.

This workplace misery, the once pampered workers say, has trailed them home, with some selling personal property such as electricity generators bought during the gravy train days.

Now scraping a living like other Zimbabweans, one of Goodson’s workmates says he is like the clichéd public servant who gets into the office, lights a cigarette and puts his jacket on the back of his chair before making a beeline for the nearest drinking hole.

“However, in our case we go to college as we are preparing for our future,” he says, insisting that he is not named to protect his career. “We all anticipate retrenchment and we want to make sure that we would be relevant when we leave this building. It is only a matter of time before we leave.”
He says most workers wanted to leave the central bank but “only after attractive retrenchment packages have been worked out. In the meantime we come to work just to get an update on what is happening.  Some people come three or four times each month.”

Most of the central bank officers who want to leave only joined the RBZ after  Gideon  Gono upon becoming governor in 2003, established extra departments to deal with his quasi-fiscal operations.

Even Gono himself is now alive to the fact that the empire he built from 2003 is crumbling with the new RBZ board, which he chairs, treating the issues affecting the central bank as urgent at its inaugural meeting.

“These issues included the need for the bank to deploy strategies to raise adequate funding for settlement of outstanding salaries to staff, as well as other contractual obligations that are not being met as a result of inadequate funding. As governor, I want to thank you all for remaining steadfast and committed in discharging your duties under very difficult circumstances due to limited financial resources,” said Gono in a memo to staff after the first board meeting last month.

Apart from failing to pay salaries, the central bank has failed to pay rent for operations outside Harare which has seen several of its properties being auctioned by creditors desperate to recover their money.

The RBZ owes gold miners upwards of US$30 million for gold advanced to Fidelity Printers, a central bank subsidiary which had a monopoly to buy the metal before the liberalisation of the sector last year.
Economist John Robertson said the central bank at that time usurped the powers of the Finance ministry which was then failing to raise money.

“RBZ then generated power for itself,” said Robertson.
He said the operations of the central bank could only be normalised once the country had its own currency backed by capital reserves, but added that “unfortunately government policies are not taking care of that”.

Finance minister, Tendai Biti, at the beginning of this month said the RBZ debt should be rescheduled and a Bill would soon be presented to parliament to rectify this.

Leonard Makombe

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