Gono’s statement on cash shortages betrays his attitude

By Tererai Karimakwenda
23 November, 2007

The state’s own newspaper The Herald has reported that the Reserve Bank Governor Gideon Gono said he was in no rush to address the cash crisis that has gripped the nation, and has ordered anyone ‘hoarding’ money to turn it in to the formal bank system or lose it. The RBZ chief is usually described as a ZANU-PF moderate who cares more for the people and country than other ruling party die-hards. But his statement this week betrays an attitude quite opposite to this.

The Herald quoted him as saying: “With immediate effect, all holders of excess cash must deposit the same back in the formal system in order to avoid serious and perilous losses when their hoarded loot turns into useless manure." Instead of addressing the issues central to why many people are staying away from the banks, Gono instead chose to intimidate them into submission.

University of Zimbabwe lecturer and political commentator Dr. John Makumbe views Gono’s statement as a classic sign of bad governance. He said: “There is no economic solution which will work unless the political crisis is sorted. And sorting out the political crisis means regime change.”

As we reported, Harare residents have been sleeping in bank queues because cash is running out due to the extremely high inflation. Our Harare correspondent reported that many soldiers and civil servants failed to get their salaries last week after banks totally ran out of cash. The Herald report admitted the RBZ had reduced daily cash allocations to the banks. It is therefore the responsibility of the Reserve Bank and Gono himself to fix this mess.

The severe shortages and extremely high cost of all basic commodities has required Zimbabweans to move around with large bundles of cash just in case they bump into some sugar, maize meal, cooking oil or bread. This is also contributing to the shortage of cash in the banks.

According to The Herald, Gono also announced that currency reforms had been deferred to a later date, perhaps next year. The report advised cash holders not to draw any comfort from this, warning that “Dr. Gono is one of too many surprises” and might introduce new currency sooner without much warning. Does this mean hundreds of thousands of people losing all their savings is what the doctor ordered?

Zimbabweans are simply responding to the situation that exists and trying to survive under these difficult conditions. Again it is the responsibility of the government to pursue policies that will resolve the crisis. And experts agree that until the broader political issues are dealt with, no economic genius, including Dr. Gono himself, can fix the economy.