By Garikai Chimuka
Reserve Bank of Zimbabwe Governor, Gideon Gono has put the nation in a high state of anxiety amidst speculation regarding the launch of a new “real” currency under the misnamed “Sunrise 2”, for its surely “Sunset ” big time in Zimbabwe. Debate has for the past weeks swirled around whether Gono is bluffing or serious. I believe that the current discourse should be focused on sending a clear message to Gono and his political “principals” that without immediate action in addressing the core and root political and structural issues bedeviling Zimbabwe today, his petty project is doomed and the current cash shortages and price madness are bound to persist.
Gono is widely quoted as having said,
“Last time we removed three zeroes and they are now back. This time we will remove one, two , three or four zeroes and they will never come back for good”
This is a huge illusion and the earlier Gono and his political masters avoid the proverbial ostrich mentality of burying their heads in sand and urgently focus on far reaching policy reform, they will never have anyone to blame as their burial by the economic implosion into the dustbins of history is now imminent and there for everyone to see.
Introducing a new currency in an economy where hyperinflation is galloping to stratospheric levels with indications that the rampaging monster has breached the 14000% mark and still rising sharply in the height of paralysis of analysis and policy kwashiorkor by Gono and the ZANU (PF) government is sheer madness. In fact by the time the so called currency hits the streets, it will be as useless as manure .Gono must start to prepare for the launch of another “Sunset 3 “ by February 2008, that is , if he and his masters are still there for it no longer needs a rocket scientist to clearly realize that a single spark will totally annihilate and bury Gono and the sunset party to the sewages of history given that they are now precariously hanging on to their positions without any viable and enduring clue on how to address the plethora of self inflicted problems bedeviling the economy
Governor Gono has been blaming ,”cash barons” and speculators and threatening to turn their money into useless “manure”. This is the height of crass naivety and hypocrisy for it is Gono and the Sunset party s policies that have created these problems that have turned our hardworking civil servants and professionals not mentioning industry workers into professional destitutes expending their mental and physical talent to get a reward of less than $US10 per month which is decreasing every hour.
The RBZ governor can not dream that money can come back into the official system for there is no longer any official system to talk about after his bosses hammered the final nail on the official/formal system through the reckless “ Operation Reduce Prices” How then does Gono expect the manufacturers, wholesalers and retailers to bank money when they are out of business? Shelves are empty and several businesses have closed shop and now the informal traders are the ones that are importing goods from neighboring countries especially cooking oil and soap of all things to keep the country going. They must be hailed for keeping the country afloat otherwise it could have ceased to be a going concern by now.Gono can not expect these honest and hardworking Zimbabweans to deposit their money into banks, when through his short sighted policies, they will not be able to withdraw it given the pathetic withdrawal thresholds that does not make any sense in this hyperinflationary environment. This simply increases the need for people to keep their cash for the huge transaction costs they have to make on a daily basis.Gono should have done better by not limiting the amount of withdrawal long back when people still had some little confidence in the national payment system.
Governor Gono must also cease to pass the buck and play to the gallery. He can not expect well meaning businessmen to act formally when the RBZ is now the biggest player in the forex black market which he and his NIPC sidekick, Goodwills Masimirembwa call illegal. It goes without saying that the sharp decline in the now worthless Zim dollar from January this year has been to a larger extend a result of RBZ forex buying sprees on the black market.Gono was offering ridiculously high prices for the RBZ does not earn but merely prints the Zim dollars and then sell the forex at ridiculously low prices to his bosses for their own insatiable personal aggrandsement thus ultimately punishing the hardworking tax payer who subsidizes the so called chefs. Surely, where under the sun has a central bank stooped so low to the extend of buying forex on the black market under the cover of darkness in a system stinking with corruption? If his sidekick, Masimirembwa demands receipts from all businessman, can Gono produce any receipts for forex bought in dark alleys at a price he does not know?
Gono must forget about personal enrichment and tell his principals to let market forces determine the price of goods and services including forex.He is on record as informing politicians to tell the people the truth that in a hyperinflationary environment , prices can not remain the same. He should sent the same message about forex so that banks can buy at market and sell at those rates not perpetuating opaque system so as to loot money from exporters and the taxpayers. A market driven exchange rate will eliminate unnecessary dealer margins of Gono ‘s boys he has now deployed in full force not least at the Roadpoart and Ximex mall, but at every street intersection in every town and growth points. A market forces driven forex market will also mean that Gono and his chefs will not profit from the easy arbitrage of buying forex at the pathetic 1: 30000 and then offload it instantly at the 1: 1500 000 killing the economy in the process.
Gono has been warned that his illegal quasi-fiscal actives where he is printing quadrillions of dollars without being answerable to anyone except his “principal” will be the economy’s waterloo. He has however been hiding under such nonsense like extraordinary circumstances” and “conviction” to justify his daylight hard looting of national coffers. He pretends that pumping money into the market will boost production. He is attempting to implement what economists term deficit financing. It can only work when the economy is facing short term rigidities of a cyclical nature. In a sinking economy like Zimbabwe where the supply side wheels are literally off, pumping money is a sure way of stoking the inflationary flames for the structural challenges facing the economy are not promotive of production. How does pumping trillions of Zim dollars under fancy names like Barcossi, Plarp, ASPERF etc boost supply side when what industry needs is forex to buy imported inputs? How can production be boosted when all the basics like fuel and electricity are non-existant?Speculators will simply do the rational and take the unsolicited manna from heaven and invest it into the stock, property and forex market without any concomitant supply side response. He has thus initiated a vicious speculative cycle that is sure to consume him sooner rather than later!
This is the same fallacy with the much hyped , “mother of all farming seasons” which by all indications has suffered a still birth. How can you put a subsidized fuel facility in an environment of massive shortages? The fuel meant for farming is flooding the black market at obscene prices relative to its peanut price thus there is no incentive for the recipients to farm when they can make an instant killing. How does distributing ploughs and scorthcats to malnourished and starving rural folk increase production when there is no draught power which has been decimated by his master’s chaotic policies? Does he expect the rural folk to literally harness themselves and pull the ploughs? Its a foregone conclusion that the much publicized “mother of all farming seasons” will be the “mother of all farming disasters” since the turn of the millennium.
Thus given the above, as soon as Gono launches the “real” currency under Sunset 2, it will be a matter of hours before it floods the black market for it is the real and only market in town. Instead of making himself a fool by saying the zeroes will not come back, he must plainly tell his “principals” to abandon their corrupt self serving policies. In fact, he can do himself and the country a lot of good next time when the organizers of the circus called “ million man march” come to collect their undeserved dirty trillions from his office that they would do themselves, the nation and the unborn generations good by marching for the long overdue departure of his boss from State House as a patriotic matter of saving Zimbabwe from the archives of a failed state.
Garikai Agenda Chimuka writes from the Netherlands and can be contacted at email@example.com