Gono Must Be Prosecuted for Shady Procurement Deals

By Levi Mhaka

Published on November 24, 2006

On 27th October 2006, the Zimbabwe Independent newspaper published my letter entitled "Dangers of (Mr. Gideon) Gono's Excessive Powers". In the letter, I highlighted the national political and economic risks that are imminent because of the Reserve Bank of Zimbabwe (RBZ) Governor's unbridled and unconstrained powers.

The media must be commended for its sterling job to expose what was potentially disastrous to maize production and generally the agricultural sector in Zimbabwe .

The latest issue on the procurement of fertilizer invites one to make a closer scrutiny by going back to basics because Gono has become a tetherless kite.

Instead of responding by providing a narration of the process, in his 11th November 2006 press statement, Mr. (not ‘Dr.’) Gono went into an overdrive of denials and criminalization of the media that exposed the scandal behind the fertilizer deal. He made expressions of arrogance.

If he had stuck to basics of his job, he will not liable for prosecution as yet. Basics mean refocusing on the central role of a central bank vis that of the finance, industry and other economic ministries in a shrinking economy.

The central bank is characterized as having three roles: (1) the issuing bank; (2) the banks' bank; (3) the government's bank and (4) promote and maintain financial stability through the regulation and supervision of the banking (NOT the financial) sector, by assisting in the development and operation of an efficient payments mechanism, and by maintaining confidence in the currency.

According to the RBZ website "The purpose of the Reserve Bank Act is to confer and impose functions on the Reserve Bank of Zimbabwe; to provide for its management; to regulate the issue of banknotes and coins; to provide for matters connected with banking, currencies, and monetary policy; to provide for the supervision of banking institutions; to authorize the provision of information to foreign regulatory authorities; and to provide for matters connected with or incidental to those provisions."

The first role provides for the central bank to create a stable and stabilize the currency system by acting as the sole issuer and controller of the currency, and through this, to lay the foundation for sustainable economic development. This enables people to use money confidently.
To achieve a stable currency system, two requirements must be satisfied: (a), the value of the currency must be stabilized, i.e., price stability must be maintained; and (b), circulation of money and the functioning of the mechanisms through which monetary transactions are processed, i.e. the settlement and financial systems, must be stable and efficient. The central bank's two major objectives of maintaining price stability and ensuring financial system stability.
The mission of the central bank, therefore, is to fulfill these two requirements in order to preserve the soundness of the currency, and to thereby provide a solid foundation for sustainable economic growth and for an improved standard of living.
To achieve price stability, it manages the monetary aggregates in the economy and interest rates. This is the essence of monetary policy. Is the Zimbabwe currency system stable and are people using the currency confidently? The answer is NO to both questions. There is so much flip flop in the monetary system. Inflation is galloping! Our currency has become very useless (mamvemve) since Mr. Gono took over the Governor. On a quarterly basis, he has been doing exactly what made Simba Makoni lose his job as the Finance Minister.
These functions constitute the bulk of the Bank’s activities, and they involve the licensing of commercial banks and other deposit-taking institutions, continuous monitoring of their solvency and liquidity, daily processing of cheques and other means of payment used in the hundreds of thousands of financial transactions that occur each day, and designing, printing and minting as well as distributing good quality bank notes and coin to the public.
Coming back to the fertilizer issue, when the Governor justifies the actions that belong to the fiscal domain in the name of saving a house that is on fire, he means he is far much better to work as the combined minister of finance, industry and agriculture. He is charging the State President (the CEO) for managerial incompetence, dereliction of duty, negligence and failure to supervise his ministers (operational managers) that are at the centre of economic interventions - Herbert Murerwa, Obert Mpofu and Joseph Made.
This is the first country to have a central bank governor whose activities usurp (wrongly termed ‘overlapping with’) those of ministries, never mind that he either informs them or not before he releases such statements. Probably it is because he is neither a central nor an ordinary banker by profession. He only studied economics as a subject when he was doing CIS! Beyond that he holds an MBA, qualifying him to be a high profile corporate executive not banker.
He expressed views that he is against monopolies and oligopolies. The RBZ's involvement in the importation of fertilizer distorts the local businesses' competitiveness and viability. Furthermore, how does he account for State-owned monopolies and oligopolies that are so inefficiently run that he has been pouring money?
The task of government is not to regulate the economy through spending and creating , but to ensure that industry and commerce strives and grows.
In his inaugural speech in August 1999, Tito Mboweni, the South African Reserve Bank Governor, clearly stated his position: "It is hardly surprising that people sometimes hope that the Reserve Bank will take action to stimulate economic growth by printing money. Some people think that as a former cabinet minister, my appointment heralds the start of a cheap money era in the Bank. I must say it here, loud and clear, they are wrong." We have a ‘cheap money’ era in Zimbabwe !
Mboweni holds a BA degree in economics and political science and an MA degree in Developmental Economics. In 2001, the University of Natal awarded him the degree of Doctor of Economics. Today he does not refer to himself as ‘Dr.’ Mboweni. He was appointed the Governor Professor Extraordinary in Economics by the University of Stellenbosch for the period 1 April 2002 to 31 March 2005. Today he does not refer to himself as ‘Professor’ Mboweni.
In life, modesty implies a personal dislike to draw attention and publicity to oneself and personal possessions. It is a deliberate, a cultivated humility and physical shyness as opposed to a wish to exhibit oneself and show off. A truly modesty person makes nonsense of pomposity and arrogance. One is expected not to flaunt success yet a lot of it is by sheer luck. The opposite is being ostentatious i.e. things being done or said intended to attract notice or attention/publicity. We have a Governor who is ostentatious, very stubborn and an eye for a political office.
On 17th September 2006, the RBZ Governor ‘donated’ 304 vehicles to various ministries as well as 20 million litres of diesel to government’s militarized farming venture, Operation Maguta. A public body ‘donating’!
Through his good office, Zimbabwe has also imported maize, wheat, fuel, military hardware and agricultural equipment. Similarly through his good office, can he inform the nation if all these were acquired within the specifications of the Tender and Procurement Act of 1999 and the Procurement Regulations of 2002.
We have a Governor, who wants to divert attention by creating a fictitious story that there are ‘chefs’ who wish to grab the agricultural equipment recently acquired by RBZ. The real scandal is not the allocation of such equipment. How was it acquired in the first instance?
RBZ is a public institution (statutory body) covered by the Tender and Procurement Act and the Procurement Regulations. The State Procurement Board (STB) is empowered to investigate the unprocedural acquisition by public bodies? The STB can direct a public institution to suspend any form of procurement if procedures were not followed or if it was circumvented? It looks like the same authorities are heavily compromised because the Governor has extended favours to their ministries and statutory bodies by printing money.
The functions of State Procurement Board are provided for under Section 5. Section 5.1 (c) stipulates that “to initiate investigations in terms of section 46 (Investigations by State Procurement Board) and take action pursuant thereon in terms of section 47 (Procedure on Completion of investigation). Section 46.2 provides that if the State Procurement Board considers that such an investigation is necessary or desirable for the purpose of preventing, investigating or detecting a contravention of the Tendering and Procurement Act or any other law, the Board may appoint a person to conduct an investigation into any matter related to the conduct of any procurement proceedings by a procuring entity or the conclusion or operation of any procurement contract.
Much of the corruption in Zimbabwe has been possible because of flouting of procurement regulations. As we get choked in all these, we have a Ministry of Finance and its supposedly elite but obscure unit, the National Economic Conduct Inspectorate (NECI), Ministry of Policy Implementation, Ministry of Anti-Corruption, the Anti-Corruption Commission, the State Procurement Board, Attorney General’s Office and the ZRP’s CID Serious Fraud Unit. These institutions are busy duplication each other!
If Mr. Gono cannot be prosecuted for such shady procurement deals, who will? From the state president, vice presidents, ministries and statutory bodies, there is a gold rush to get easy and cheap funding for anything by the Governor. If you are a senior government and ruling party official and you are a farmer, you simply direct yourself to Samora Machel Avenue in Harare for the RBZ Governor's office. Such funding defies ordinary economics and accountability. Who will then put pressure to have him prosecuted if all such influential people are compromised?