On Wednesday 6 August 2008, the Star newspaper published a story by a an Irish journalist claiming that it had in possession a 50-page draft agreement between the three negotiating parties to the Zimbabwe political settlement.

The same article was published on the same day by its sister newspaper, The Independent of Britain. The newspapers fall under the same stable, the Dublin-based Independent News & Media plc (INM) owned by the Irishman, Sir Tony O’Reilly.

The draft document has since been dismissed as fake by both ZANU PF and the South African government.

What is telling about the so called draft agreement is a paragraph in the story that read: “In a move to appease the potential donors who needed to finance a massive rescue package for the economically crippled country a number of key ministries would be handed over to “independents” – skilled individuals outside of party structures but approved by the cabinet. It is anticipated that the Ministry of Finance and Investment would be one such portfolio that would reside independently of either party chief so as not to deter the expected and needed flow of money into the country during the transition, which will last for something in the region of two years.”

This can be read as someone trying to sneak as an ‘independent’. A person politically independent or neutral would be someone who is a professional not known to be a member of a political party nor holding a position in any institution associated with a political party.

For the past few months, Gono has been presenting himself through opinion-editorials in his newspaper, the Financial Gazette, and official statements as a person who is politically neutral and independent. By this he created an impression that he is failing in his job because of what he calls politically inspired sanctions and disagreements.

President Robert Mugabe and Gono have been at the forefront of publicly boasting of the capacity of being able to be bursting the same sanctions they are claiming to be hurting the generality of people. In the process there has been considerable self-enriching activities because there has been high levels of officially sanctioned leakages of foreign currency and externalization during the process of QFAs.

Zimbabwe has 4 forex rates in ascending order – interbank; cash; transfer (payment for forex by a ZW$ bank transfer) and offshore (payment for forex by a ZW$bank transfer and the forex supplier settles a foreign invoice directly).

Manufacturers and retailers have been pricing their goods and services using the transfer rate. The hyper-inflation we have in Zimbabwe has largely been driven by the money supply side for those buying forex on behalf of the RBZ.

Those monitoring the movement of forex rates, they will have realized that the ‘transfer’ rate has not moved since 22 July 2008, pegged at $800 billion (revalued at ZW$80).

The RBZ have a unit that gives highly trusted few people bags of cash to go into the street to buy forex. The same unit also transfers ZW$ money into other few and high trusted people’s bank accounts to buy forex by way of transfers. This is the money pushing exchange rates and since the signing of the July 21, 2008 Memorandum of Understanding (MoU) by the Zimbabwean political players, Gono was unsure where he will be in the new political dispensation.

This explains his subdued Monetary Policy Statement (MPS) which was simply nothing except the looping off of 10 zeros from the local currency. He pushed for the first time presence of President Mugabe for a show of his power and influence among political actors. Curiously this was not named ‘Sunrise III’.

On Friday, August 8, 2008, Gono massively released money to his runners (”vakadirirwa mari mumabag”, so goes the saying) and the transfer rate has just shot up to ZW$250 (ZW$2,5 trillion!) today on August 13, 2008 from ZW$80-85 (ZW$800 - 850 billion) because he is looting like a crazy man in the name of quasi-fiscal activities. He does not know what the future holds for him.

With so much money, the dealers are offering to pay as high as this rate because they are strict to buy, buy and buy. The rate had been constant since the signing of the political settlement on 21 July 2008.

Since manufacturers, traders and service providers price their goods and services at the ‘transfer rate’, consequently life will be worse off.

On January 31, 2007, he said, “the RBZ will, with immediate effect, bring to an end quasi-fiscal interventions and wishes to concentrate on core business activities. To achieve this objective, the RBZ is creating an appropriate structure to shepherd out the interventions by:
(a) Putting a cap and ring-fencing quasi-fiscal outlays and facilities;

(b) Focusing on collecting and administering the outstanding loans on behalf of the RBZ; and

(c) Providing ancillary technical and advisory services to borrowers/beneficiaries as provided for in the various RBZ frameworks establishing such facilities or as otherwise may be expedient.

“The RBZ will incorporate a special purpose vehicle to be called FISCORP (Pvt) Ltd, 100% owned by the Reserve Bank, whose primary object will be to step into the RBZ’s shoes for purposes of collecting and administering the outstanding loans. The RBZ and FISCORP will conclude the necessary instruments/arrangements to enable FISCORP to carry out its aforesaid mandate.

“To ensure effectiveness, financial institutions, development agencies and other

borrowers will be engaged as necessary to facilitate these arrangements. FISCORP will be structured in such a manner as to enable it to focus on the recovery and administration of, and the provision of ancillary services relating to, the Facilities.

“Whilst FISCORP will be a separate legal entity, it will remain an RBZ vehicle to all intents and purposes, and borrowers and beneficiaries, who shall remain legally bound under the Facilities, are expected to co-operate with FISCORP to ensure the smooth implementation of the objectives set out in this statement.

“FISCORP will operate within the parameters of the various frameworks and

instruments in place but with a clear mandate and authority to collect and recover the outstanding loans on behalf of the RBZ. FISCORP will be operational and in a position to assume the role envisaged with

effect fro 1st March 2007.”

He has not returned the RBZ to its core functions. Just like Homelink (Pvt) Ltd, the costs and benefits of the company called Fiscorp (Pvt) Ltd are anybody’s guess. He has not done so, instead he entrenched his role as the de facto “Minister of Finance” who could buy and pay for anything for the country, the ruling party, and national institutions (military, policy, judiciary, etc).

Preparing himself for the inevitable and intending to prune the RBZ of his source of manipulating financial power, he repeated this statement in his MPS presentation on July 31, 2008, “…it has become necessary that a more permanent financing vehicle be created to fill up the developmental financing gap arising from market failures. According, therefore, the Reserve Bank is working to transform Fiscorp (Pvt) Ltd into a dedicated financial intermediary” to develop financial packages and solutions to bridge developmental financial gaps created by market failure.

The Ministry of Finance (MoF) is a government ministry administers and regulates financial institutions and structures of the economy of a country. The ministry administers macro-economic policies and the national annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state.

Economic policy is now a responsibility of the Ministry of Economic Planning and Development.

The MoF has considerable control over other ministries as it is the one that sets expenditure limits. The amount of power this gives to an individual minister depends on his personal forcefulness, his status with his party and his relationship with the President.

Institutions that are administratively under the MoF are the

· RBZ,

· ZIMRA (taxes and customs),

· Central Statistical Office (CSO),

· National Economic Conduct Inspectorate (NECI),

· Comptroller and Auditor General (CAG),

· State Procurement Board (STB),

· Consolidated Revenue Fund,

· Registrar of Banks and Other Financial Institutions,

· Registrar of Insurance, Pension and Provident Funds,

· Registrar of Building Societies,

· Consolidated Revenue Fund,

· Central Computing Office (CCO),

· Salary Service Bureau (SSB).

· Securities Commission and the Zimbabwe Stock Exchange

The incumbent is also responsible for being the custodian and final authority of government investments in private and public enterprises.

Gono has the first option to remain the Reserve Bank of Zimbabwe (RBZ) Governor until his term expires in December 2008 and make himself available for his term renewal for the next five years. When this happens, he will have to operate within the confines of core business of a central bank and lose so much self-acquired political power and influence through quasi-fiscal activities (QFAs).

Secondly, he can maneuver to be in a political position and the only one available to secure his personal financial interests and continued overseeing of the RBZ is being a Minister of Finance

The third option is the least expected from a power hungry and politically ambitious person. He should take leave now pending his end of his term, humbly admitting that he has failed and there is not much he can do.

With these three options available for Gideon Gono, he has been endearing himself for the second option. Gono must just GO far way from the central bank and political power!