World Exclusive!
By Levi Mhaka
Published on February 2, 2007
FOR A total of two hours, from 9am to 11am, on Wednesday, January 31, 2007 the population of Zimbabwe listened as the governor of the Reserve Bank of Zimbabwe delivered his Monetary Policy Statement from the RBZ headquarters along Harare’s Samora Machel Avenue.
Traditionally, since he became central bank governor in 2003, Gono has delivered such speeches in the afternoon from 2pm.
On the same day, less than two hours after the end of the governor’s address, the Politburo, Zanu-PF’s supreme policy-making body was to meet at the party’s own headquarters along the same avenue to the direction of Bulawayo but eight streets away, from where Mr. Gono was speaking. While Gono usually finds joy in having politicians surround him at the RBZ building while delivering blistering and lecturing speeches, the Zimbabwe Independent of February 2, 2007, reported that the Acting President and other senior politicians sympathetic to her rise to the position of State President, boycotted the monetary statement. Gono is now viewed in political circles as a likely major beneficiary of the draft ZANU PF '2010 Resolution'.
There is heavy speculation that constitutional amendments will be made to enable him to be appointed to the position of Prime Minister, while Mugabe 'retires' in 2008 to become non-executive President until 2010.
Accordingly, instead of delivering his quarterly monetary policy statement, the governor delivered a scotching political speech describing the state of the economy or what one can call a 'National Economic Outlook' Statement. Gono has now effectively politicised the office of central bank governor. To politicise (or to play politics) is to engage in political intrigue, take advantage of a political situation or issue, resort to partisan politics, exploit a political system or political relationships; or to deal with people in an opportunistic, or manipulative way for personal and partisan political advancement.
Gono highlighted issues that we all know have been and are still happening in the economy. Above all, he dwelt on the naivety of public policies, which he, however, has been part to. His descriptive speech was a continuation of what the Minister of Finance, Dr. Herbert Murerwa, delivered on 30 November 2006.
For example, he is the one who appealed to the president in March 2006 to reverse a cabinet decision to allow ZESA to charge economic rates. He argued that such decision went against the grain of attempts to reduce inflation. He prevailed! Today ZESA has collapsed.
I make a humble submission that what Gono delivered was not really a monetary policy statement. The term "monetary policy" refers to the actions undertaken by a central bank, to influence the availability and cost of money and credit to help promote national economic goals.
According to www.wikipedia.com, a monetary policy is the process by which the central bank as the monetary authority, manages the money supply to achieve specific goals, such as constraining inflation, maintaining an exchange rate, achieving full employment or economic growth. Usually the goal of monetary policy is to accommodate economic growth in an environment of stable prices.
Monetary policy can involve changing certain interest rates, either directly or indirectly through open market operations, setting depository reserve requirements, acting as a last-resort lender, or trading in foreign exchange markets.
Monetary policy is generally referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy has the goal of raising interest rates to combat inflation, or cool an otherwise overheated economy.
A central bank has primary responsibility for the promotion of a sound and efficient financial and monetary system. Its ultimate goal is to promote and maintain a financial and monetary system that enables citizens, residents, corporate bodies and others to conduct their business and make financial decisions in the context of a financial system that is stable, reliable and efficient, using a currency that largely holds its value through time. This goal suggests a close inter-relationship between the promotion of price stability and financial stability.
In paragraphs 9.19-21 of Gono's 'National Economic Outlook' Statement, he pledged to "return to core functions of the central bank" (his own words). Is it not the expectation that he would return to the core functions of banking that has consumed considerable space in newspapers and on websites as he was advised that his political behaviour was highly inflationary? Is this not what the Minister of Finance said in his 2007 Budget speech, resulting in the President publicly rebuking him?
Against this background of what we expect of a central bank governor in terms of qualification and performance, does the incumbent, Gono, really measure up? Is he the right person for this tough job? Does he have enough exposure through experience, technical expertise and academic qualifications to function effectively as central bank governor?
Born 47 years ago, Gono completed his Grade 11 at Daramombe 'F2' School in 1976, in Chivhu. He obtained passes in seven subjects - Agriculture, Shona, Building, English, Environmental Studies, Science and Mathematics. The F2 system was created by the government of Ian Smith to divert African children away from the more academically challenging F1 system of education.
'F2' schools were vocational or practical junior secondary schools "that were introduced in 1966 for African children. These schools were supposed to have a strong ecological emphasis, to suit the interests of rural children and their communities, as well as providing semi-skilled labour for industry in urban areas and agriculture in rural areas...Teachers at junior secondary F2 schools had lower qualifications than teachers in senior F1 schools. These schools came to be viewed with contempt, and the value learners would attain in terms of career opportunities was seen as minimal. In most instances, they did not even lead to an apprenticeship, where students from senior secondary schools were given priority." - The organisation of qualifications in the Further Education and Training band: current thinking and possibilities:Umalusi discussion document (February 2003)
Reserve Bank insiders allege that his former headmaster at Daramombe, Mr. M. Zengeni, has since benefited through appointment to the position of Division Chief - Human Resources at the central bank.
In 1977, he had been appointed to his first job as a tea maker/office orderly at Natbrew.
The governor completed his 'O' Level studies by distance education in 1978 with passes in four subjects while already working, an indication of the hard life he survived.
From 1979 to 1980, he worked hard on his 'A' Levels, again through distance education and obtained passes in Accounting, Economics and English Law. He immediately became an accounts clerk at Natbrew.
From 1981 to 1986 he studied, once more through distance education, for the lowly rated Pitman Advanced Diploma in Bookkeeping and later acquired another uncompetitive Zimbabwe Association of Accounting Technicians (ZAAT).
He later acquired an Institute of Chartered Secretaries and Administrators (CIS) diploma in 1983.
Gono enrolled for a Masters in Business Administration (MBA) with the University of Zimbabwe (UZ) in July 1991 while he was General Manager, ZDB, with Managing Director, Rindai Jaravaza as his immediate boss. He completed the MBA in June 1994.
In February 1995 he became the Managing Director/CEO, of the Commercial Bank of Zimbabwe (CBZ) until November 2003.
At about the same time Ignatius Chombo, the Minister of Local Government and Public Works, and the man who brought Gono close to the president, was pulled out of an academic career as a senior lecturer at the UZ and appointed Provincial Governor and Resident Minister of Mashonaland West.
Gono rose into where he became by ONLY 3 factors:
- Patronizing senior politicians and bureaucrats through generously awarding of unsecured personal and business loans while at ZDB and CBZ;
- Identifying the closest politician to the President in Ignatius Chombo and patronise him heavily.
- As a beneficiary of the Buhera-Chivhu-Chikomba (BCC) Axis. This is the bastion of political power in Zimbabwe .
Luminaries include:
the former commander of the Zimbabwe Defence Forces, the kingmaker of Zimbabwean politics and the husband to the Joyce Mujuru (née Runaida Mugari), Retired General Solomon Mujuru; the First Lady, Grace Mugabe;
the presidential press secretary and permanent secretary in the Ministry of Information and Publicity, George Charamba;
the former Chief Secretary to the President and Cabinet from 1987 until April 2003, Charles Utete;
Airforce of Zimbabwe commander, Air Marshal Perrence Shiri, Perence Shiri;
the commander of the Zimbabwe Defence Forces, General Constantine Chiwenga;
the longest serving minister in post-independent Zimbabwe, Sydney Sekeramayi;
the former Information and Publicity Minister, the late Tichaona Jokonya;
former Defence Minister, Ernest Kadungure;
the former chairman of the Zimbabwe National War Veterans Association, the late Chenjerai Hunzvi;
chairman of the Air Zimbabwe and brother to the First Lady, Mike Bimha;
a former ambassador as a head of the permanent delegation of Zimbabwe to UNESCO and incumbent permanent secretary in the Ministry of Foreign Affairs Joey Bimha;
former permanent secretary in the Ministry of higher Education and Chairman of the Harare Commission, Elijah Chanakira.
From the look of his educational background, there is adequate proof that he comes from a very poor background because the parents did not afford his secondary education. Its still not known whether either or both of the parents are alive, nor his siblings.
When Chombo subsequently became Minister of Higher Education, he appointed Gono to the position of chairman of the UZ Council in 1997, reporting to the Minister and the UZ Chancellor, President Robert Mugabe. He later became Chairman of Zimbabwe Broadcasting Holdings, appointed by the Minister of Information and Publicity, Prof. Jonathan Moyo.
Gono was in and on his way up.
Six years later in December 2003 he became the Governor and Executive Chairman of the Board of the Reserve Bank of Zimbabwe.
He studied economics just at 'A' Level and CIS. He did not rise through the ranks as a banker neither did he obtain the premier banking qualification, the Institute of Banking (IOB) diploma. When he was appointed governor, various well-established traditions were broken: ·
- One has to have a reputable banking qualification, such as IOB;·
- One has to have an economics or banking related doctorate;·
- One has to have been a senior career banker, either in commercial/merchant or central banking.
We enjoyed a celebrity and flamboyant central bank governor who loved to see his face and words in the media. We enjoyed seeing a central bank governor "of the people" going on road shows all over the country in town halls. We had good funny in seeing "your governor" behave in a seemingly clownish manner.
Oh, yes we heard him live on radio and TV. Using public funds, we read this man's wise words in all newspapers unedited and sometimes he would print cartoon booklets and insert them in the newspapers. We interacted with this man in cyber space and pinched ourselves as where this man of the people was all this time. We blamed politics and politicians for not giving him a free rein in the exercise of his quasi-fiscal activities.
We got a governor who behaved like a new American president who replaces all Democratic-aligned senior staff, if he is Republican. Out went about 300 RBZ staffers through retrenchment, in comes over 3,000!
We pledged him all the support until got drunk with the power and media attention (which he pays for). We did not know he will become all ministers in one. We did not know that he was a hot air balloon. We compared this new man with the previous central bank governors whom we considered dry, aloof and insensitive to the needs of the ordinary people.
As a growing nation, we did not know that the position is highly conservative by nature demanding a lot of restraint in public interaction and publicity.
Although the appointment is made by the office of State President, who has political interests and considerations, the position of a central bank governor is not a political one like that of a government minister, nor should it be politicised. For purposes of public integrity and credibility, the incumbent is, therefore, expected to steer clear of politics and politicians.
But in Zimbabwe, we have a central bank governor who is politically charged, manipulative and who, despite half-hearted denials, obviously has an eye on political office. Speculation is rife that he plants stories in the State-owned newspapers about the risk of physical harm to both himself and his family. There have never been prosecutions following such dramatic events as the alleged arson on his farm, the hijacking of his 4x4, with his son inside. The newspapers concerned never interviewed the son, as would be expected of such a sensational story. They never followed up on the burning of the farm-house.
Considering him he was not different from a corporate lawyer or accountant in a banking environment. Working as a corporate executive in an engineering firm does not make one an engineer.
The tradition at the RBZ was that one joins in a junior capacity either as clerical banker and then acquires a banking qualification (IOB) or one joins as a graduate economist. They always avoided recruiting from banking institutions to avoid 'contamination' because the central bank and banking institutions it oversees are not peers. Therefore one would find a former central bank staffer joining a commercial/merchant bank at a senior level not the other way round. The number of people who have joined after Gono became the governor contrary to this tradition are too numerous to stomach.
By becoming the managing director of a commercial bank and, subsequently, the governor of a central bank, Gono clearly went beyond the career opportunities of a chartered secretary - corporate executive management, company secretary, consultative corporate services and registered public accountant in terms of the Public Accountants and Auditors Act.
Gono made attempts in redefining economics by using the term developmental economics, as compared to classical (or ‘bookish’ as the president wants to say). This way he attempted to fit into a job that he realized he was not qualified for. He had to deal with those whom he felt would challenge his approach in the banking sector.
An article in The Zimbabwe Times has argued that Gono carried out a hatchet job against all indigenous banks except those in which the government and ruling party had shareholding.
What propelled Gono right up to the pinnacle of the banking sector was his propensity for cultivating connections with the politicians whose confidence in him, so banking insiders say, was strengthened by his generosity in providing unsecured and non-performing loans, especially when he was the managing director of CBZ.
Gono has, by himself set the country on fire by issuing what he terms monetary policy statements, when they are economic public policy prescriptions. He has now admitted that he cannot achieve much all by himself. He requires a political buy-in. He has become a political player and is largely viewed in the context of the ongoing succession politics now consuming Zanu-PF.
In South Africa, monetary policy is set by the central bank’s Monetary Policy Committee (MPC), which comprises the South African Reserve Bank’s (SARB) governor, deputy governors, the chief economist and other senior officials and meets every six weeks.
Similarly, the Bank of England has a MPC which is made up of nine members – the Governor, the two Deputy Governors, the Bank's Chief Economist, the Executive Director for Markets Operations and four external members appointed directly by the Chancellor of the Exchequer (the equivalent of the Minister of Finance). The appointment of external members is designed to ensure that the MPC benefits from thinking and expertise in addition to that gained inside the Bank of England. Each member has one vote, with the Governor holding the casting vote in the event of a tie. Representatives from the Treasury can attend the meeting, but only in a non-voting capacity. See www.bankofengland.co.uk/monetarypolicy/overview.htm#public.
The formulation process of monetary policy at the Bank of England is found on www.bankofengland.co.uk/publications/quarterlybulletin/qb010403.pdf.
The timetable for a typical quarterly forecast round and the agenda for a typical pre-MPC meeting are well known.
The Central Bank of Brazil’s Monetary Policy Committee (COPOM) was put in place in June 1996. This Committee was established to give structure to the monetary policy decision-making process – and to help communication with the public.
In comparison, Gono has a coterie of advisors, some of them shadowy and others intellectually challenged. They include people such as Joseph Chinotimba, a municipal policeman who came into the limelight through his dubious role in spreading terror and mayhem in Zimbabwe’s countryside back in 2000, setting in motion the economic crisis that Gono is now trying, with little success, to grapple with. At the spur of a moment, he has habit of incorporating those who criticize him into so called ‘Advisory Board’.
It is time we expect a free rein from the Minister of Finance to address the economic challenges Zimbabwe is facing through economic policies while Mr. Gono is confined to the supposedly less dramatic position of a central banker until such a time the nation thinks he has done enough damage to the economy by playing political games.
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