What Tendai Biti Intends To Do To Gideon Gono

"No More" - Tendai Biti's proposed amendments to the Rserve Bank of Zimbabwe Act are designed to ensure that the Bank does not revert to being a funder of lavish lifestyles for Zimbabwe's elite from ZANU PF. Gono is put in such a straight jacket by the revisions that he will effectively need the Minister's permission to so much as cough and sneeze.

Harare, Zimbabwe, 19 November 2009

I was rather surprised that even our most senior businesspeople in Zimbabwe are unaware of the details contained in the revision of the Reserve Bank Act, which Mugabe's ZANU PF has now said will never see the light of day.

Why so much noise, and what exactly is Tendai Biti trying to do with this amendment that has got ZANU PF knickers in a twist? Is it true what the party is saying, that the Act revision is targeted at an individual?

Here's the detail, then.

The focus of the amendments is on Section 6 of the RBZ Act, which will be amended to say that the Bank should only focus on Monetary Policy activities. The bank will be restricted to "regulating Zimbabwe's monetary system, achieving and maintaining stability of the Zimbabwe dollar, fostering liquidity, solvency and the proper functioning of Zimbabwe's financial system, supervising banking institutions, acting as banker and financial advisor to the State."

The part that currently gives Gono the power to "represent the interests of Zimbabwe in international or intergovernmental meetings, multilateral agencies and other organisations" has been curtailed and this will now only apply "in matters concerning monetary policy." 

It means Gono will now no longer be able to give directives to the IMF and World Bank regarding money disbursed to Zimbabwe, as he did earlier this year, before Biti stepped in and told Gono it was not his job to do this. The IMF agreed with Biti and wrote to Gono telling him they would only accept instructions from the Minister of Finance.

Section 7, which currently allows the Reserve Bank to open credits and issue guarantees will be removed.

This means Gono will no longer be able to negotiate for loans for the State with banking institutions such as Afreximbank, which he recently did and then boasted saying he had done all the work and all he wanted was now for Biti to ratify the obligation.

The RBZ powers to "grant loans and advances" will also be strictly limited to "intraday and overnight liquidity support for the RTGS (Electronic Transfer system) and only when surplus funds are available."

It means that Gono will no longer be able to give loans to State companies such as NetOne and Air Zimbabwe and others who have been running their companies into the ground and relying on the RBZ to give them money to pay salaries and even buy stationery!!

Section 7 (1) (h) currently provides for the RB to buy, sell or deal in precious metals and hold in safe custody for other persons gold, securities "or other".  (Remember those buckets of diamonds in the Reserve Bank vaults?)

This will now be limited strictly to  :what is required to fulfill international obligations." It means gold companies will now keep their own gold and the Reserve Bank will never have recourse to other people's wealth to finance the lives and lifestyles of Mugabe cronies.

Another sections (7.1.n) currently allows the Bank to borrow "principal and not agent of the State." This will now be amended so that the "Central Bank can only borrow as agent of the State, thus making it possible for such borrowings to be regulated by the State Loans and Guarantees Act."

Tendai Biti told parliament this will "ensure that debt contracted is reflected as a true Government debt and not RBZ debt, thereby eliminating distortions on the bank's balance sheet as is the position now."

In addition to the above, the current Section 8 of the Bill will be amended to make it illegal for Gono to accept "instructions to engage in non-core functions" of the Reserve Bank of Zimbabwe.

A new Monetary Policy Committee will also be put in place.

It is all these measures that ZANU PF is saying are not acceptable, only because it means that they will no longer be able to abuse the RBZ by getting money from it or using it to fund their lifestyles. 

Buckets of diamonds whose origins are murky will no longer be legally kept at the Reserve Bank of Zimbabwe. Gono will only be in charge of our currency when it comes back, and of the banking institutions in the country.