Mugabe blocks Gono from naming corrupt officials

By Tererai Karimakwenda
22 January, 2008

There are media reports that Robert Mugabe has blocked the parliamentary committee on Finance and Economic Development from questioning Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono about the country’s serious cash shortages. Gono had offered to name individuals who were hoarding money and engaging in illegal activities on the black market, including senior government and ruling party officials that he called “cash barons.” But according to reports Mugabe told the committee to wait until after the elections to conduct the hearing.

It is believed the move was meant to prevent an embarrassing situation for the ruling party, ahead of the elections scheduled for March. Zimbabweans will be electing a president as well as members of parliament and rural council representatives. Many of the “cash barons” on Gono’s list will be candidates for these posts and so it is clear why Mugabe has interfered.

The RBZ introduced larger denominations of bearers cheques and increased the maximum withdrawal limits last week. This has not produced the desired result of eliminating bank queues for individuals seeking to withdraw their money. Some banks have already reduced their withdrawal limits from the recent increase of Z$500 million set by the RBZ, to Z$200 million.

A Reuters report on Monday said Gono blamed the banks for the current cash shortages. He said: "Notwithstanding the high levels of cash stocks sitting at the Reserve Bank ready for dispatch into the market, some banking institutions have been engaging in imprudent and unethical practices which are creating artificial queues for cash."

Gono was implying that there are stacks of cash at the RBZ which the banks are not picking up. But economist John Robertson said he believes Fidelity Printers, who were hired to produce the new notes for the RBZ, did not succeed in completing the job on time, because of the continuing power cuts that are having a severe impact on businesses.

Robertson also blamed the Reserve Bank itself for the cash shortages. He said there is a “statutory reserve ratio” which requires banks to deposit 50% of all money received, back to the Reserve Bank. In other countries the ratio is only 12-15%. This leaves Zimbabwe’s banks without enough cash.
Ultimately the government has no long term solutions for the country’s economic woes. Unofficial estimates say inflation is 150,000%. At that rate it is impossible to print enough money to keep up. It is now urgent that the broader political crisis is resolved, before the economy can even begin to stabilise.