Friends of Zimbabwe Coalition letter to Brink Cohen Le Roux

Brink Cohen Le Roux
BCLR House
19 West Street
Houghton 2198
Attention: Messrs.Odendaal , Bothma, P. Colyn, M. Khumalo, Ms. K. Young
Re: Proposed Settlement Offer for your client’s ZAR 81,440.15 claim against SAS
SMM v Master of the High Court and others
My committee and I had the privilege of attending the court hearing on Friday, 22 September 2006 at the High Court of South Africa in Johannesburg.
I am the Chairman of the Friends of Zimbabwe Coalition (FOZC) comprising a variety of concerned groups on the deteriorating human and property rights situation in Zimbabwe. We have been monitoring a number of high profile cases in Zimbabwe that involve the illegal nationalization of private assets by the government of Zimbabwe using draconian measures.
One such case involves Mr. Mutumwa D. Mawere, a citizen and resident of South Africa, who controlled the largest black conglomerate with diverse interests in mining, agriculture, manufacturing, trading, and financial services until President Mugabe promulgated a decree in September 2004 placing Mawere’s assets under the control of a state appointed administrator, Mr. Gwaradzimba, using extra-judicial methods.
The circumstances leading to the nationalization of Mawere’s assets are well documented in the media. When we learned about your client’s urgent application to review and set aside the decision by the presiding officer of the Master of High Court to admit as proved claims submitted by Africa Resources Limited (“ARL”), Africa Heritage Management Services (Pty) Limited (“AHMS”), and ECC Properties (Pty) Limited (“ECC”) we decided to attend the court hearing to better understand the commercial and political nature of the ongoing onslaught by the government of Zimbabwe targeted at Mawere personally and all assets that are under his control.
We have watched with concern at the grave human and property rights violations that are embedded in the Mawere case starting with the abortive extradition application in May/June 2004 followed by his specification and subsequently the specification of SMM followed by its nationalization. At the core of this case is the interference of the government of Zimbabwe in commercial affairs of private companies and the criminalization of business against a background of a dysfunctional state that has to date not taken responsibility for the economic problems besetting the country.
We came to the hearing with great expectations that no South African judge would recognize the draconian measures employed by the government of Zimbabwe in obtaining control of Mawere’s assets not only because these measures fly in the face of the South African constitutional democracy and its underlying principles but recognizing these measures would effectively sanction what is comparable to the doctrine of mala fide expropriation of a member’s interests. I was shocked to learn that your team of seven (7) attorneys were representing SMM in a claim whose face value of only R81,440.15 was disproportionate to the costs of counsel.
We can find no justification of such a big team taking an interest in proving a claim and subsequently making all attempts to ensure that no other claim is proved other than confirming the hand of Mugabe who as you may be aware has forced all of us to seek refuge in other countries including South Africa. We are all victims of the Mugabe regime and it was not surprising to learn from Mr. Odendaal in his submission to court that the authority to lodge the court application was provided by the Minister of Justice, Legal & Parliamentary Affairs, Mr. P. Chinamasa, who for your information is familiar with my personal victimization at the hands of the Mugabe regime.
We have read your founding affidavit and are aware that SMM tried before to prove a claim but withdrew from interrogation while at the same time making all efforts to subject other creditors to interrogation. This attitude is to be expected from the Mugabe regime and its agents. I had no idea that the government of Zimbabwe would attempt to stretch its arms into the courts of the Republic of South Africa by enforcing its unlawful property seizure campaign while individuals like Mawere remain helpless while lawyers make a fortune out of this unfortunate human tragedy.
While I appreciate your role as legal service providers to clients the peculiar circumstances surrounding this case and your sustained involvement in it while your client was conspicuous in his absence at the hearing speaks volumes of what is at play in this matter. It appears that no amount of money will be spared to advance the illegal activities of the Zimbabwe government and your professional role in it as evidenced at the hearing is not only concerning but contemptuous of what one would expect in a civilized and democratic country.
You are aware that President Mbeki has repeatedly made the point that the resolution of the Zimbabwean crisis lies in the hands of Zimbabweans and yet it appears that your conduct suggests that there is direct involvement of South African individuals and institutions in perpetuating and profiting from Mugabe’s gangster like rule. We also read the Master’s Report that exposes your contemptuous approach to the office charged with administering the affairs of insolvent estates. My colleagues and I did not believe that Mugabe was represented by a team of six (6) white lawyers and one black lawyer given the anti-white posture he takes at home. It was revealing to us and we could not help but take photographs of your team so that we can convince our colleagues both here and at home that you are indeed Mugabe’s boys and girls and our salvation will not be near until we expose the connection between the illegal actions of the Mugabe regime and a white conspiracy involving you.
The economic meltdown in Zimbabwe is well known to you leading us to ask who is paying for your services while the average citizen of Zimbabwe is condemned to a lesser standard of living. Foreign exchange is not available and it is criminal for residents to hold foreign currency and yet your team appears to have unfettered access to foreign currency for your services. Unlike Mr. Jacob Zuma whose friends came to his rescue it appears that Mawere is fighting the government of Zimbabwe and its proxies alone and the matter has not been given the profile it deserves given its political and economic context.
Having read the papers and the travesty of justice that continue to characterize this matter particularly after the Judge postponed the matter without ruling on whether the matter was an urgent matter or just a continued abuse of the courts by your client, our committee met on Saturday, 23 September 2006 to review this case and came to the conclusion that we must tender an offer to your client to settle the claim of R81,440.15 that has given your client the right to continue to abuse the rights of Mawere and the companies he represents. The extra-territorial abuse that has seen Mugabe steal CFI shares and your aiding and abetting Mugabe and his cronies to disguise this theft while in Zimbabwe, the Mugabe regime would like the public to believe that Mawere was responsible for the collapse of his business empire. We have been made to believe that Mawere through SAS was responsible for externalization of funds from Zimbabwe and any control of the liquidation of SAS by anyone connected to the Mugabe regime is worrisome to any rational person. Why is it that you wish to control the administration of the liquidation of SAS and why are you scared about any other person being in control of the affairs of SAS? There is need for transparency to determine if the actions of the government of Zimbabwe in taking over the control of Mawere’s companies in Zimbabwe and Zambia were justified.
In making this offer, my committee is conscious of the true identity of SMM and we are concerned about the lack of transparency on your part in purporting to represent a company when in truth and fact you are representing the interests of the government of Zimbabwe. It is the aspect of unmasking the identity of SMM in South Africa that appeals to our group not only because your court action presents an opportunity for us to expose for the first time in South Africa the corruption that now characterizes state behavior in Zimbabwe, but also because you are beneficiaries of dirty money. Some of our members are asylum seekers who have been denied asylum by the government of South Africa principally on the grounds that Zimbabwe is a safe environment and allegations of human and property rights abuses are unfounded.
We believe that the SMM case presents a unique opportunity for us to demonstrate to the South African and international community the extent to which the Mugabe regime is being sustained by the collaboration of people like you. You are aware of the sanctions environment that has been put in place in response to the unorthodox manner in which the Zimbabwe government has chosen to conduct business and there can be no better case study than the SMM issue to bring home the fact that the world cannot stand by while human and property rights are being abused with impunity, coupled with the worrisome involvement of respectable attorneys like you. We have no illusions about the role of money in explaining your choice of clients but we think that time has come for us to act decisively to cure the Mugabe injury not only for the people of Zimbabwe’s benefit but for South Africa as well. I am sure you will join us in this fight by accepting our offer of settlement of the nominal value of your client’s claim so that we can step in to help expose the unacceptable behavior of the government of Zimbabwe.
We make this offer without prejudice and trust that you will take our interests in this matter in good faith and assist us in bringing closer the day when Zimbabwe can be free of tyranny and gross human and property rights violations that should offend any decent law abiding citizen of South Africa. We have taken some of the pictures that are attached hereto to help our country man know Mugabe’s true South African friends. I am sure you will agree with me that your role in Zimbabwe’s decay needs to be exposed and responded to with the contempt it deserves. We have confidence that our intervention in this matter and obvious interest in the outcome of the SMM saga will force Mugabe to defend his misrule in South Africa rather than use nominees or agents as soldiers of fortune.
We await your response by no later than 10:00 hours tomorrow morning to allow us to make a payment to a designated account of your client’s choice.
Yours faithfully
Mr. Sairos (Sox) Solomon Chikohwero
Chairman
Cc:
Minister of Justice and Constitutional Development, South Africa
Minister of Justice, Legal and Parliamentary Affairs Zimbabwe
The Master of the High Court Johannesburg,
Pamela Dube
Norman Klein
D. Lindup
T.V. Matsepe
E.J. Mathato
Y.M. Seckle-Marupen
ECC Properties (Pty) Ltd
Africa Heritage Management Services (Pty) Ltd
Africa Resources Limited
SMM Holdings (Pty) Ltd

Zimbabwe: a short road to Banana Republic

AFRICA is not alone in seeking to challenge the current global architecture in which the powerful seem to have arrogated to themselves the right to define and dictate a value system that ensures no accountability and responsibility to the less powerful.
The language coming out of many developing countries seems to confirm the widely held view that a unipolar world in which the US and its allies have sought to framework their response to the global challenges outside the UN system and only choose to use the multilateral platform for their own ends poses the most significant threat to world peace and security.
However, with few exceptions Africa finds itself at its most vulnerable point in history to have a meaningful voice in the globalization debate. The few countries endowed with natural resources are increasingly flexing their muscle particularly in respect of how their resources are exploited. While the ideological debate appears to be taking shape with the marginalized seeking to organize so that they can challenge the powerful nations there appears to be no compass to inform the basis on which a transformation of countries like Zimbabwe should unfold.
Should Zimbabwe accept the neo-liberal ideology that is premised on a market system as the basis for a post-Mugabe era? What are the development options for Zimbabwe? Are Zimbabweans taking the time to reflect on the global issues while at the same time debating the ideological challenges that they confront? After twenty six years of nation building experience, what lessons can we draw that should guide the debate on the way forward?
It is important that in as much as people may find Robert Mugabe objectionable as a head of state, there are many in the world who admire him for the courage to stand up for what are perceived to be the rights of the marginalized. There are few in the world whose perspectives of life and governance resonate with the world’s poor than Mugabe. There is no doubt that intellectually Mugabe is a giant and yet at the execution level his policies appear not to provide hope and jobs to his natural constituency i.e. the poor. Could it be the case that Mugabe may be the only revolutionary in an environment infested with vultures, mercenaries, cockroaches, parasites etc? Does Mugabe know what is going on? Does he have a clue on what time it is?
While the country has focused its attention on the fate of one individual, I believe that it is equally important to focus on the governed and interrogate the proposition that the health of any nation state can only be as good as the interests that underpin it. Some may argue that any environment that allows an individual to pursue his/her self interest ultimately may prove a sustainable basis on which development can take place. In this construction, it is not the state that should think for the individual rather it is the individual who shapes the destiny of any nation.
However, we should accept that the notion that an individual outside the framework of the many can be the engine of development is a contested issue. In fact, many would argue that there is a significant role for the state to play in shaping the destiny of any nation. Although there are few successful examples of nation states that have materially improved the standard of living of their citizens using a socialist model, Mugabe is not alone in believing that in as much as the market system did not decolonize Africa one should not look to a market system to address issues of poverty and unemployment. Under this framework, one can understand the calls by many leaders in the developing world for a new compact that places natural resources under the control of the state and benefits arising from their exploitation being placed firmly under the control of the state. The question that then arises is who should be in control of the state and the basis on which citizens can choose their leaders on an informed basis.
In the final analysis we may discover that there may be many similarities between Tony Blair, George Bush and Mugabe than meets the eye. In fact, many leaders in the world end up believing that their choices are the only rational and correct ones. Once you understand the common trait in political leadership, it is important that nation states develop institutional mechanisms that would make it difficult if not impossible for a person like Blair monopolizes the political space with his ideas and mistakes.
In the case of Africa, one needs to appreciate the fact that most leaders end up being surrounded by people who become experts at lying to the extent that a leader who overstays in power may end up undermining the values that he purports to stand for without even knowing. The more a person stays in power the wider the power density becomes. It is not inconceivable to imagine that even Fidel Castro may not be able to imagine what Cuba would have been without him and in fact his own subjects often end up believing that no one else can do better.
"The ability of Shiri to swap a farm and get what he wants should the standard upon which every citizen should be treated"
MUTUMWA MAWERE
Given the complexity of the Zimbabwean dilemma, I have come to the inescapable conclusion that we need to break down high sounding words so that people can better conceptualize what they need to do in their own self interest to make a difference not only for Zimbabwe but all people who share the African heritage. I am reminded that the newly industrialized countries have demonstrated that when for example Koreans made the decision that their relationship with poverty must change, that decision elevated the standing of all Koreans to an extent that even risk averse banks can now lend money to an ordinary person of Koreans extraction with the confidence that he/she will honor their obligations.
However, in the case of Africa, we still have a long way to go notwithstanding the fact that some countries are making tremendous strides to live up to the expectations of their citizens it is still a challenge for perception that Africans cannot be trusted with money to change. I have come to accept that I can only be as good as my fellow Africans and unless we pull up together we only serve to undermine our own heritage. It is common cause that good black lawyers, doctors, architects, etc need good black clients. We have a collective responsibility to create our own form of African corporate heritage that will allow us to have our own case studies so that those who wish to be in business can have people to look up to and not the other way round.
For this week, I thought I could share with you an article that was published in the Sunday Mail of 3 September 2006 that is quoted hereunder in its entirety. The articles raises a number of legal, political and governance issues that I thought would help in broadening and deepening the kind of debate that not only Zimbabwe needs but the rest of the continent.
The two principal actors in the article are RBZ governor Gideon Gono and Airforce Commander Perence Shiri. In contemporary Zimbabwe, it is important that we locate the basis upon which Gono derives his power base and implications thereof. Unless we understand the power dynamics and the interplay between the powerful forces, it would be difficult to appreciate why the change agenda may appear to be mirage. I have chosen to analyze the article as one way of demonstrating the power of literacy in nation building.
‘THE RBZ will from January next year treat banana farmers like any other farmer and allow them to retain 75 percent of export proceeds to cushion them from ever rising costs of securing chemicals and other farming inputs.
Speaking during a tour of the Commander of the Airforce of Zimbabwe, Air Marshal P. Shiri's Hopedale farm in Bindura, RBZ Governor, Dr Gideon Gono said he would lend support not just to Hopedale Farm but to other deserving farmer to benefit banana farming programmes."
It is important to note that a new policy was announced during a tour presumably because Gono may have been invited for the purpose of lobbying him to accommodate the interests of Shiri. In this case, all banana farmers benefited from Gono’s tour. What this suggests is that if you are not powerful enough to have Gono’s ear, you are doomed in terms of policy. One may ask what would have happened to banana farmers whose predicament is not different from other farmers if Gono had not visited the farm.
"Dr Gono said the purpose of the visit to the farm was to give him an opportunity to see a green field and an innovative farm following an invitation by Air Marshal Shiri."
It is clear that Shiri was smart enough to invite Gono, having established that random-walk-policy-making is now the order of the day. All you need is to convince Gono and the rest is history. For Shiri, I am not sure whether he would support any change from the status quo because the current system does deliver on request. How many people know that policy making has now been reduced to a pedestrian approach? If one assumes that Gono has the same 24 hours that every Zimbabwean has, how many problem areas can he physically visit to make a difference?
"Having gotten the opportunity to get out of the city, I have taken the opening to visit farms in districts and get first hand information on what is on the ground for planning purposes. Many are good at planning, but never get results because they would be out of touch with what they will be planning for," Gono told the Mail.
Is it the appropriate role of the Governor of the RBZ to retail policy making? Should the RBZ operate as a commercial bank that deals with the public and plans accordingly? Would it not make sense for the RBZ to use the existing banking channels to get intelligence about the market environment? Why is it necessary for the Governor to get first hand information? Does he not trust other people to give him the intelligence? To the extent that Shiri is a direct beneficiary of unorthodox policy making, what would his attitude be to the need for good corporate governance practices at the RBZ? Should Shiri not be the one to demand that policies are put in place that responds not only to the interests of the powerful but to even the vulnerable members of the society? If Shiri is now a businessman while at the same time being entrusted with the defence of the country, is there no risk of a conflict of interest? Is there no risk of corruption, where Shiri because of his position in government gets what he wants when other people do not have the same access?
Speaking on the sidelines of the tour, Air Marshal Shiri said he came to Hopedale Farm at the end of April last year from Irene farm in Marondera where he was into tobacco farming.
"I am not a good tobacco grower and it is not my favorite crop. I researched with friends and it dawned upon me that there was an opportunity for me to grow bananas then set on a mission of identifying a piece of land where I could grow the crop. I needed an area with lots of water, hot temperature and frost free and found one in the Pote Valley which offers a conducive climate," he said.
He said he negotiated with a farmer who was at Hopedale and approached Government so that they would swap farms since that farmer was interested in tobacco farming. Air Marshal Shiri said the former owner of the farm grew maize, vegetables and soyabeans. He said he had to go through the process of ripping and deep ploughing the land before he planted 53 hectares of bananas in August last year and started harvesting them after one year and two weeks.
Air Marshal Shiri said his target was to plant bananas on 150 ha of land in September 2007 and has already cleared 40 ha to start the ball rolling. He said he was facing problems securing chemicals, as bananas required special chemicals which were not readily available on the domestic market. The farm employs 120 full time workers and several seasonal workers from Musana communal areas.
Air Marshal Shiri's goal was to enter the export market, but at present sales were confined to the local market. "I would prefer to export on my own unless there are inhibiting factors where I would require a third party. When we start exporting, we will benefit and we appreciate that we have been using foreign currency generated by others to get where we are. We hope to be weaned and help other sectors," he said.
Air Marshal also has 10 ha of potatoes, 50 ha of wheat, a ha of garlic and five ha of sweet potatoes under cultivation.
The ability of Shiri to swap a farm and get what he wants should the standard upon which every citizen should be treated. This interesting part is that articles like these that help educate us all on what is possible and what power can do never become part of the conversations that Zimbabweans have. How can Shiri help other Zimbabweans to push their personal agendas using the state machinery and yet be able to intimidate Gono to see the work in their own eyes and self interest without being accused of corruption? If Shiri chose to hide his interest and exported bananas at a parallel exchange rate would he risk ending up like many who have been accused of externalization? If Shiri can be given a dispensation on the spot why is it that the majority of Zimbabweans cannot access the same privileges? If it is obvious to Shiri that incentives are required to stimulate production why should he not use his influence to ensure that all willing and able Zimbabweans have then same dispensation?
To the extent that land reform program has created new interest groups in Zimbabwe, what is of concern is that manner in which these interests choose to communicate with government. Would it not have made sense for Shiri to locate himself with fellow banana farmers so that they can articulate their positions to government better rather than encourage Gono to undermine the very principles of good corporate governance that he purports to be upholding? If the President is aware of how policies are being formulated, why then would he be vocal about corruption when the system appears to be functioning on different principles? Even the settler white commercial farmers organized themselves into institutions that allowed them to speak with one voice.
Having read the article above, I wondered whether Zimbabwe was not on its road to a banana republic where the rules on the ground may be slippery for the powerless that may have to endure the harassment while those in power have the freedom to chose and swap farms at will. Should we not uphold the principle of common citizenship and equal access to government? What is the risk that Shiri would one day be blackmailed by the same people who appear to have privatized government institutions when the day of reckoning dawns? If the poor became angry at the selective treatment, would Gono go down alone or would he seek to drag Shiri with him? To the extent that Shiri is in the defence force, what is the risk that he may be tempted to protect his personal interests using the state machinery?
All these questions are raised to help expand the envelop of debate so that Zimbabweans can choose for themselves what model they wish to adopt to advance their national interest.

Do you trust your government

LAST week, this column focused on Robert Mugabe, the man, principally because I think it is important that we elevate the conversation about Zimbabwe’s options beyond the fate of one man.
I had no illusions when I took the risky option in trying to argue that Mugabe may after all not be a corrupt man. The reaction I got was not only expected but it underscored the need for us to create a space to debate honestly and frankly about the man who has monopolized the Zimbabwean political space for the last twenty six years.
There are many who believe that history has already spoken about Mugabe and there is no point in debating whether the man is corrupt or not, especially when the political and economic consequences of his reign are there to see. Others maintain that the monopolisation and centralisation of power in one party and one individual necessarily institutionalises corruption to the extent that it would be naïve to absolve the leader from culpability and liability.
I have often debated how I would have reacted if I was Mugabe in the face of a dysfunctional state and an economic system condemned to the intensive care unit with no life support system. Would clinging on to power be in the interests of Zimbabwe? Can Mugabe do anything to restore the public confidence in their government? Does Mugabe realise his real cost to the Zimbabwean economy? Is Mugabe part of the problem or is he trying his best under an environment that is hostile to any ideologically conscious Pan African head of state? Is Mugabe aware of the corruption that now pervades all state institutions? Is it fair to call Mugabe an Imperial Presidency when his underlings can easily pool wool over his face? How does Mugabe’s age play into the Zimbabwean dilemma? Is there hope for change in Zimbabwe?
Any change agenda necessarily requires a change conversation and yet Zimbabweans display an institutionalised and generalised inability to take ownership of the process and define a road map to salvation. The government of Zimbabwe has invested heavily in undermining the formal economy and succeeded in creating an efficient informal infrastructure that may be too costly to transform for any post-Mugabe dispensation.
In the face of a well organised system to undermine the institutions that any progressive society would expect from a government, it is important that we expand the space of discourse using real life case studies of why Zimbabweans have a right to distrust their government. I sincerely believe that Mugabe is convinced that all his subordinates are still genuinely committed to the Zimbabwean project as defined during the liberation struggle.
I have written extensively about how the Reserve Bank has become a theatre of corruption and yet rightly or wrongly many see my writings as unfair on Gideon Gono who is perceived to be doing his best under an impossible situation. If we accept that the economic meltdown was not created by Gono who in any event was only appointed in 2003, then is it fair that the country targets him rather than the head of the fish. Could Gono be a loose canon or is he taking instructions from the big man?
I am not persuaded that Mugabe is fully aware of the corruption axis that now underpins the RBZ and I believe that it is in Zimbabwe’s interest that we document the real corrupt practices and use such examples to challenge Mugabe on governance issues rather than work on a simplistic basis that he is aware of everything that is happening.
It is for this reason that I have decided to use a case of a bank that urgently required liquidity support from the RBZ and instead of the RBZ looking at the request on its own merits, Dr. Gono decided to ask for security from the shareholders, to highlight why property rights owners must be concerned about the integrity of the government and the ulterior motives that now inform the actions of civil servants. It is important that investors and the public at large should take note that the days in which they could take for granted that the RBZ and government in general was a repository of trust are gone. The concept of the public trust relates to the origins of democratic government, and its seminal idea that, within the public, lies the power and future of society, therefore, whatever the trust the public place on its officials must be respected.
This case involves Trust Holdings Limited (THL). THL is the registered owner of 630 million First Mutual Life (FML) shares and 8 million PG Industries (Zimbabwe) Limited shares that were expropriated using extra-judicial measures by the RBZ.
According to THL, these shares were tendered in 2003 to the RBZ to secure liquidity support provided to Trust Bank Corporation Limited (TBCL). TBCL has since been incorporated into ZABG using a decree promulgated by President Mugabe and later enacted into law. On 15 March 2006, THL wrote a letter to the share transfer secretaries, First Transfer Secretaries (Private) Limited (FTS) requesting that they cancel the share certificates held by the RBZ by way of security because despite numerous requests by the bank and their lawyers, the RBZ had refused to release the share certificates.
THL informed FTS that the decision to hold on to the shares by the RBZ was unlawful and the RBZ had already been advised of the decision by THL to proceed to cancel the certificates and issue new ones. On the following day, FTS responded to THL saying that: “Please be advised that your request has been noted, however given the institution and the number of shares involved we have informed the RBZ of it and they have indicated that an answer will be forwarded to us shortly next week…Ideally what should have happened is that, the RBZ should have written to us requesting that the certificates be blocked/locked, citing their interest, or the fact that the shares are held as security. Since this was never done, there appears not to be any legal obligation from our part to deny your request, hence our contact with the RBZ is purely out of professional courtesy, arising from the fact that we are now aware of the issue surrounding the certificates.”
FTS then wrote a letter on 21 March 2006 to the RBZ advising the bank of the request by THL. They brought to the attention of the RBZ that as transfer secretaries of FML and PG, they were never informed in writing of the RBZ’s interest in the shares in which case they would have locked the shares in their database as is the norm regarding shares tendered as security. On 23 March, THL wrote again to FTS informing them of their intent to proceed with the cancellation without any further delay.
On 27 March, Fortune Chasi, responded on behalf of the RBZ confirming that in return for advancing certain funds to TBCL and as part of the security for the debt, THL had freely and voluntarily surrendered the share certificates on the understanding that in the event of failure to discharge its obligations, the RBZ would dispose of the shares to recover the funds advanced. Needless to say that Chasi is a qualified lawyer. He confirmed that the debt was still outstanding. It is important to underscore that both parties agree that there was no loan agreement between the two parties.
Chasi then accuses THL of acting in a devious manner and in bad faith given that the loan had not been paid. He then advises THL that the debtor TBC was under curatorship and as such all the affairs were under the control of the curator. He then advises THL to await the outcome of the deliberation of an Independent Appeals Panel appointed by the RBZ to review the manner in which TBCL was adsorbed into the ZABG. He then said that the replacement of the shares should be put on hold.
In conclusion, he stated: “In light of the foregoing our contention is that the basis for the replacement of the certificates sought by THL is mala fide and lacks merit. Replacing the share certificates in question will result in TBCL and THL being unjustily enriched and the RBZ substantially prejudiced. We believe that it is not your desire to perpetuate the improper conduct of THL and subsequent injustice by replacing the share certificates.”
The letter was copied to the Governor and other senior staff members at the RBZ. What is strange in this case is that two other major shareholders of TBCL i.e. FML and NRZ Contributory Pension Fund who also tendered several title deeds to their properties to the RBZ had their security released by the RBZ.
What lessons do we draw from this case study? Why did the RBZ not adhere to the normal procedures expected from financial institutions in respect of security arrangements? Is it okay for THL to be deprived of its assets without due process for a period of more than three years? Is the RBZ above the law? How can THL be assured that the shares are still in the custody of the RBZ? What would stop any RBZ officer from using the same shares as security for their own private deals? To the extent that TBC has now been nationalized by the RBZ, should the RBZ have continued to hold on to security from only one shareholder without allowing the curator to perform his duties by identifying and recovering the assets of TBCL first?
I believe that any progressive nation should be informed by literate and progressive minds. Given the facts presented in the documents referred to above, there is a dispute of fact regarding whether in truth and fact the RBZ’s security interest in the subject shares was created by agreement giving the RBZ certain preferential rights in relation to the property. Ordinarily, the main rights and purpose a security interest is to allow the holder to seize, and usually sell, the property to discharge the debt the security interest secures. Although I am not privy to the facts on this matter, I can only speculate that TBCL like many banks in Zimbabwe required liquidity support from the RBZ and the bank must have approached the RBZ in good faith thinking that the request will be considered on its own merits only to be surprised when shareholders were now asked for security.
In most countries, central banks do not perform the normal lending functions of banks and ordinarily you would not expect to have a credit committee in the central bank whose function is to consider loans and security thereof from its clients. However, in the unusual circumstance in which Zimbabwe finds itself, the current Governor who was previously a CEO of a commercial bank finds himself tempted to convert the wholesale bank into a retail bank, not caring about the necessary institutional checks and balances that would be required to prevent abuse.
In normal banking, the holder of a security interest is entitled to take possession of such property in satisfaction of the underlying obligation, or, more common, the holder can sell such property (either by means of public auction or private transfer) and apply the proceeds of such sale to the underlying obligation. To the extent that the proceeds of the sale exceed the amount of the underlying obligation, the debtor is entitled to the excess; and, to the extent that the proceeds of the sale do not exceed the amount of the underlying obligation, the holder of the security interest is entitled to a deficiency judgment pursuant to which the holder can institute additional legal proceedings aimed at recovering the full amount of the underlying obligation from the debtor. The power of sale in normally vested in the mortgagor. A security interest is typically granted by a contract called a "security agreement" and the fact of this is that there exists no formal agreement.
Although the RBZ claims that the security was voluntarily and willingly provided, I am not sure that THL is of the same opinion. It is important to underscore the power relationship that must have existed between the RBZ and TBC at the time the liquidity support was provided. The real question is whether TBCL and THL had any choice but to surrender whatever security the RBZ required.
If a security agreement existed, upon execution of such contract by the debtor, the security interest would have existed with respect to the shares. There is no dispute that there was an exchange of value between the parties but what is in dispute after three years are the terms and conditions of the loan. Detractors of the RBZ have argued that it has used its immense powers in an unconstitutional and illegal manner to destroy banks that appeared to be in financial difficulty but whose proprietors were on Gono’s target list notwithstanding the fact that the subject banks might still have had prospects to recover and become profitable by repossessing key assets and forcing these institutions into artificial bankruptcy.
The general principle of most insolvency regimes is that creditors should be treated equally and allowing the RBZ with often disputed security interests a preference to certain assets has permanently upset the conceptual basis of an insolvency is so far as financial institutions are concerned. These detractors go further to argue that the fate of THL was written the day the bank negotiated for a liquidity support as this gave the opportunity for the RBZ to seize and expropriate without compensation key assets of not only the bank but of the key shareholders thereby disabling the same shareholders from defending their institution against a politically induced insolvency.
The role of the RBZ as a super creditor against a background of a decaying socio-economic order must be interrogated. What is scary is that what happened to THL can happen to anyone with impunity. The real issue is whether the big man is aware that the RBZ has now been transformed into an extortion and expropriation platform for officials who can take a lien on your assets with absolutely no documentation. The response of Chasi just goes on to show how contemptuous public officials have now become to citizens who believe they have a right to challenge corrupt and abusive actions. It is now easy for the government to expropriate assets under the guise of enforcing pseudo security arrangements that would not withstand any legal challenge.
When public expectations are betrayed by they very officials you expect to uphold high moral and corporate governance standards you have reason to be worried. What would Dr. Gono say if the behavior of the RBZ in this transaction where funds are advanced with no adherence to any corporate governance standards and three years later it emerges that the bank had been keeping a client’s assets outside the scope of the law?
The importance of the rule of law cannot be overstated. I am sure that if citizens were generally aware of the state of their government and found a mechanism to communicate intelligently with President Mugabe he would see that the governance and corruption concerns are not driven by imperialist maneuvers but by citizens who are increasingly fearful of dealing with their own government for fear of being victimized or stripped of their assets.
When any country reaches the level that Zimbabwe appears to have sunk, any sitting head of state has reason to reflect on his relevance if indeed he believes in democracy. I have no doubt that if President Mugabe were to be presented with concrete case studies of corruption he would have no choice but to respond in a manner that may shock even his worst adversaries.
It is my conviction that any President who claims to be a servant of the people will be duty bound to respond when compelling evidence is presented before the nation that will even lead him to question the wisdom of remaining in office if it is established that he has constructively created an environment where the rights of citizens can no longer be protected by his administration. So far the target has been on the man and not on the government that he leads.

Mining companies voting with their pockets

'WHOSE minerals are they anyway?'; is a question not unique to Zimbabwe.
It is often said that God made minerals and hid them and it is our job is to find them. The tragedy is that mankind has not found a mechanism to manufacture minerals and, therefore, the depletion of nature’s deposit and the sharing of benefits between host countries/communities necessarily becomes a contested issue.
Those who have been endowed with black liquid gold in the form of oil have used the resource successfully to drive their development agenda.
The role of the state in leveraging natural resources for developmental needs is well documented and yet the move by the government of Zimbabwe to acquire 51% of all minerals assets has generated controversy both in the domestic market and internationally.
Zimbabwe like many African countries is well endowed with diverse minerals. I had the privilege of working in the Oil, Gas & Mining Division of the International Finance Corporation before moving to South Africa in 1995 where my responsibilities included the financing of mining projects in Africa. What was striking at most of the mining conferences that I attended discussing opportunities in Africa was the absence of African (black) players in the sector.
In fact, Africa was largely represented by international mining houses and government representatives who complemented Africa’s resource endowment while ignoring the human capital resident in the continent but alienated from the resource sector. Those who have attended the Mining Indaba in Cape Town will confirm my observation. The situation is not different in South Africa where the geology is still owned under an apartheid structure where blacks are excluded from the value stream of God’s endowment prompting the government to put in place a legal framework to encourage the assimilation of blacks as participants in the shareholding of mining companies.
The absence of serious black players in the mining industry is evident in Africa notwithstanding the resource endowment given by God. However, there is no consensus on how best to connect blacks with their minerals. Some believe that the state should be the custodian of this resource and you will find Robert Mugabe’s philosophy being consistent on the question of land and minerals. Others believe that capital and expertise should drive the resource exploitation and beneficiation agenda with social responsibility programs for the affected communities while the fiscal regime should take care of the rest. It is clear that the government of Zimbabwe does not trust blacks in the private sector to be custodians of any national treasure.
When I read the news about the Impala platinum deal and how Zimbabwe was short changed to take an equity stake in an undefined resource while Zimplats maintains 100% control of the defined reserves, I couldn’t help but laugh about how hollow the policy of equity participation is. It seems that the government is quite happy taking an effective 36% stake in Zimplats’ un-delineated resource that will require exploration capital to establish minable reserves. What we are not told is under what a framework does a Head of State meet mining companies to cut deals?
If for example, it was Mawere cutting such deals, what would the people of Zimbabwe say? Corruption! They will shout in unison. Or would they understand that in a failed state, the Head of State is ultimately the personal custodian of the national mineral heritage and any deal he cuts is in the national interest?
If black Zimbabwean investors do not have access to their own Head of State and Impala has unfettered access, what does this say about how far Zimbabwe has traveled in the quest for national sovereignty? While black business is disabled in Zimbabwe, multinational corporations are being enabled by Mugabe? Is this not ironic particularly given political rhetoric about sovereignty?
It is important to understand the mindset that supports the proposition that black investors should not be trusted in their continent. The liberation struggle project was premised on a capitalist state in which the individual and not the state is the centre and driver of change. The right to vote was one and the political architecture was defined on the basis that the majority shall govern. However, those who took the baton of power in many cases ran away with it crowding out the majority in the nation building enterprise. They liberators patented the struggle and could not accommodate any other centre of power. Could it be that the ideology that has informed post independent Zimbabwean economic policies is a socialist/communist one where the state under the control of the liberators becomes a person that represents all former oppressed people?
The founding fathers of Zimbabwe took a decision at independence to use borrowed funds for education and social investments while at the same time not focusing on job creation. Any genius would have recognized that the system was not sustainable and hence the need for ESAP in the late 1980s. The choices made at independence, and not the land reform, may have a lot to do with Zimbabwe’s problems. However, it is easy to blame it on sanctions and the land reform program.
They say if you do not know where you are going any road takes you there.
I am not sure whether at independence, our founding fathers took the time to determine the destination of Zimbabwe and locate our contemporary problems and solutions appropriately.
The inability to accept the market system with its imperfections as an efficient mechanism for allocating resources may also explain Zimbabwe’s problems. One is not clear what the precise deal Impala cut to be confident that profits will be realized in an economy that does not allow its citizens to sell foreign currency at market rates while those in power have access to it at a distorted rate only to collect rents using the black market. Could it be that Impala was guaranteed a special exchange rate regime that could only be concluded by the Head of State? While individuals like Makamba, Mushore, Makoni, Nyemba etc are being harassed for externalization, Impala is immune from the same regime. How is this possible? Why not have the same deals for everyone? If the Zimbabwean environment is unfavorable for business, why is it that no multinational has been targeted for externalization?
While the rest of the country is waiting for a rainy day, Impala’s finance director David Brown said he was optimistic that talks between his company and the government will result in the state taking 30 percent in his company and not 51 percent. Why is he so optimistic when other Zimbabweans are anxious about tomorrow? Brown is reported to have told South Africa’s Mining Weekly last week that Impala, the world’s second-largest platinum-miner, has had discussions with President Mugabe regarding the draft and, through the Zimbabwe Chamber of Mines, is continuing to negotiate with government over the issue.
“We are optimistic that our negotiations will be successful. Impala Platinum hopes to convince the government to reduce the 51 percent to 30 percent, which would be comparable to South Africa’s black economic-empowerment (BEE) policy’s 26 percent, though also vastly different in that the 26 percent in South Africa is held by the private sector and not the state.
“We would be comfortable with those levels,” says Brown, emphasizing the importance of awareness that, at this stage, the proposed legislation is still in draft form and has yet to be promulgated.
He also commented on Zimbabwe’s worsening economic crisis, saying inflation rates are too high and that mining in Zimbabwe is already problematic.
“But one cannot choose where to mine; we mine where the resources are and, therefore, cannot just leave the country and operate elsewhere.”
But what happens if what is in the draft becomes law?
“If the government decides to go ahead with 51 percent then it means that any expansion projects would be impossible and it would really be difficult to operate,” Brown conceded.
He added that there had to be a balance between debt and equity and companies must be able to raise appropriate levels of debt, but it would be difficult to sustain that balance with the government owning 51 percent of mining companies’ shares. Brown reported that Impala Platinum was currently in the process of forming ideas and believes it can put together and submit a solid proposal to the Zimbabwe Chamber of Mines.
“I am pleased that the Zimbabwean government has taken the proposal process seriously and is listening to what we have to say,” said Brown. The company is also engaging with government to ensure that the exchange rate is reasonable and that a greater degree of certainty is created for mining companies. Brown says Impala would be disappointed if President Mugabe decided to go ahead with the proposed draft considering the fact that Impala has contributed significantly towards Zimbabwe’s economic development.
“We’ve also provided infrastructure such as roads, telecommunications and clinics, which have benefited a number of people. We are not just extracting the resources — we are also giving back to the community. Operating in Zimbabwe is tough but the country has a good mineral resource base and companies which want to operate there have to find a way to make it work,” he added. Impala Platinum currently has two assets in Zimbabwe; it owns 87 percent of Zimplats and 50 percent of Mimosa, a partnership with Aquarius Platinum."
The jury is out about the implications of companies like Impala, Rio Tinto cutting deals while the rest of the country has a raw deal. To what extent will change come if the country is reduced to deal making? It is not clear whether miners live in a different world or have to endure the same suffering that most Zimbabweans are going through. While most Zimbabweans are afraid that they may wake up in prison for committing a crime induced by bad policies, multinational corporations are busy making profits. Is it conceivable that profits are highest when an economy is dysfunctional? What role does Gideon Gono play in choosing the winners in a failed state? To the extent that mining companies take a long term view of their investments, why are they not interested in investing in a good and transparent environment where they do not have to cut deals that nationals would not be allowed to cut with a Head of State?
While other political players are busy exploring transitional government structures, new constitutions and free and fair elections, mining companies are voting with their pockets. What does this suggest about the politics of Zimbabwe where mining houses have discounted the threats of change in search of profits and entrenching their economic stake in Zimbabwe while its citizens are externalized by a combination of bag governance and corruption.

Implications of Chindia on African development

LAST week, I was one of about 200 business persons who attended a dinner hosted by Investec Private Bank to celebrate the economic ascendancy of India in South Africa.
The High Commission of India and the Consul General of India both made presentations chronicling the achievements made by India since 1991 when New Delhi decided to liberalize its economy by throwing off the shackles of Fabian socialism and embracing free markets.
India is now one of the major trading partners of South Africa and some of India’s major brands like Tata, Mahindra Mahindra, State Bank of India, Mittal etc now have African operations headquartered in South Africa. We were told that India considers Africa as a natural partner in its quest to expand its global tentacles.
A representative of Investec Private Banking made a very interesting presentation about the emergence of India and China as the two most interesting development case studies with different political and economic systems. While China’s reforms started in 1979, India’s market reforms only began in 1991 but India is catching up with China. The economic ascendancy of both India and China is naturally one of the most widely discussed trends in today's globalized world.
The countries' advantages are formidable: huge surpluses in working-age populations; cost competitiveness; efficiencies in manufacturing and services; and huge markets increasingly integral to the business strategies of multinational companies, all make them structural drivers for global productivity and disinflation.
The two economies will be the dominant growth stories for the next 30 years. By 2015, India's gross domestic product is projected to reach the $2 trillion mark while China's is projected to surpass $6 trillion, driven by the powerful combination of favorable demographics, structural reforms, and globalization. There is little doubt that the importance of the two countries is only likely to rise.
By 2050, China and India will make up half of the global economy. Information technology has been India's most remarkable business success story. The sector now contributes 4 per cent of the nation's GDP and the industry's revenues are growing by 38 per cent a year. Analysts predict it will have sales of $70 billion by 2008. It is the efficiency and the fact that India is a market economy that was considered as the driver in helping the country catch up with China in the future.
This week, I decided to look at the experiences of Chindia and implications for Africa in general and Zimbabwe in particular. The Chinese reforms began one year earlier than Zimbabwe’s independence and the changes in 1979 were necessary not because there was a political will to open the economy, but because the consequences of the Cultural Revolution left it with few options. The liberalization was half-hearted and limited to a few sectors, and nowhere near as broad as it needed to be. The Chinese took a different strategic choice than India that remained a democratic country characterized by far reaching market reforms. China remains a communist country with the state playing a central role in the development of the country. With respect to political reforms, China has not moved from a one party state.
China and India, therefore, represent two exceptional countries that have an African agenda but with ideologically different social and economic systems from which one can draw lessons regarding development options for Africa. In both countries, one can accept the proposition that free markets are a sine qua non for development. However, the same is not true in the political market where China has defied the odds by maintaining a repressive political and social order while allowing the economy to be driven by a combination of private and public capital. In the global arena, both countries are now players with China increasingly providing the world with the manufacturing platform and India with the intellectual property platform.
The Chinese and Indian entrepreneurs are active in driving the development agenda unlike in Africa where black Africans are missing in action. The entrepreneurial vacuum that is glaring in Africa for a variety of reasons is also the driving force behind both India and China participating in the new scramble for African resources under the guise that their economic imperialism is friendlier than the western imperialism that led to the political and economic subjugation of Africa.
The new India shares a lot with Zimbabwe: both have been colonized by the British. They both are well endowed with a highly literate and educated population. They also have large segment of the population in the diaspora. The non-resident Indians have played a leading role in the renaissance of the country by creating institutions and also playing a catalytic role in mobilizing investment for India. When the reforms began in India, Zimbabwe was only eleven years old and the signs were already evident that the economy was in for a rough ride. Those were the years of ESAP (euphemistically called Eat Sadza And Porridge or the Extended Suffering of African People) and given the development strategy chosen at independence the fate of Zimbabwe was already written. In fact, the massive investment in education, health and rural development that Zimbabwe has been credited for were not sustainable. They were funded with borrowed funds and the economy was not growing.
Many have asked whether Zimbabwe has any prospect of changing its fortunes. Some have blamed the land reform program and the targeted sanctions as the source of Zimbabwe’s problems while others have put the blame squarely on bad policies.
What then are the lessons from the Chinese and Indian experiences?
The Chinese example would say that democracy does not have any bearing on economic growth and prosperity. If anything, the economy can grow with the state machinery being controlled by one party. It is not surprising that the Chinese have no problem with the political crisis that is often cited in the west as the major problem facing Zimbabwe. We have seen the Chinese responding to the Zimbabwean political and economic crisis in a predictable manner and more determined to take a slice of the resources to feed into the expanding Chinese economy. On the other hand the Indian example provides many lessons for Zimbabwe about what not to do in a democracy. The economic policies pursued by the government of Zimbabwe in the face of an economic and political crisis are not dissimilar to the policies that characterized the pre-1991 Indian governments where the markets were controlled by the state.
I left the dinner more convinced of the importance of learning about the Chinese and Indian experiences if the prospects of transforming Zimbabwe from the current basket case are to be realized. If India and China can do it, I am sure that Zimbabwe can also rise to the challenge. The real threat remains that the Chinese and Indian form of imperialism may not be in the national interest of Zimbabwe. Is it not ironic that in as much as the western countries remain engaged in Africa through a combination of state and non-state actors, we have yet to see the Chinese version of the Salvation Army or the Red Cross.

Probability of Africa taking ownership of its destiny remote

LAST week I was privileged to be one of the speakers at the Brightest Young Minds (BYM) conference in Johannesburg.
I also attended a Gala Dinner for the 100 students at the Presidential Guest House on Saturday night.
For my column this week, I could think of no better subject than to share with you my presentation to the BYM.
When I was invited to speak to the BYM, I did not know anything about the organization but was given discretion to choose my topic. I was impressed by the theme behind the BYM and the sponsors who saw the need to bring 100 young men and women together for a week to exchange ideas on how to contribute to Africa’s promise.
For me, it was a great experience to share my insights with these minds on Africa’s challenges and promise and the role of the youth in shaping and defining Africa’s destiny.
I started my presentation by acknowledging Africa’s rich history and resource endowment. With 54 countries, Africa is continent with a lot of promise and yet full of challenges and contradictions. South Africa, being the youngest country in the continent is leading the way in redefining the continent’s corporate architecture in terms of the ownership of economic assets as well as in changing the composition of the board rooms of Africa’s key corporate players.
What was striking about the BYM class of 2006 was the skewed representation of white students compared to blacks. Notwithstanding the small number of black students represented in the team, I was impressed by their input and confidence.
I told the students that life is nothing but a nuisance of time. However, when great minds decide to apply their minds for the collective good, life can have meaning not only to the current generation but to the future generations.
Each generation has the obligation to create the footprints that tomorrow can be used as references to yesterday’s generation. Being the luckiest generation to be alive, twelve years after the birth of South Africa, the obligations are quite onerous not only because there are few examples of success stories in Africa but because the contemporary history of Africa has been defined by conflicts, economic failure, and an apparent inability by many African leaders to take responsibility for their failure to provide leadership and choosing the easy road of blaming former colonial masters.
I used Zimbabwe’s history to illustrate some of the key issues that may help them better deal with South Africa’s potential growing pains and opportunities. Zimbabwe is one of the luckiest countries to produce two strong individuals in the pre-colonial and post-colonial eras who both have complained against the former colonial power for different reasons.
On 11 November 1965, Ian Smith and his team chose to declare independence from Britain unilaterally. Like the USA, Smith knew the consequences and yet he had the courage to take the lead. One is never sure what the real cost of UDI was to the people of Zimbabwe. However, as Smith signed the declaration of independence, his team was already at work looking at the economic and political implications. Sanctions were imposed but soon the world was impressed with how the settler community managed to regroup and create what was described in 1980 as a sophisticated industrial and financial system outside South Africa. Zimbabwe also produced Mugabe who was one of the liberators and was supportive of the sanctions regime against UDI.
In 2000, Zimbabwe attracted the attention of the international community for different reasons. The economy was already in intensive care and the land reform was in earnest. However, the institutional response to the sanctions regime sets Mugabe and Smith apart. One was able to organize a small privileged settler community to take responsibility and move on and the other has not been able to get out of the quagmire. The inherited economic and financial system is fast crumbling while sovereignty is the primary focus with no discernible economic strategy underpinning the policy choices. I told the students that the white population in post-colonial Africa is analogous to animals in a zoo. Their number can increase through either reproduction or immigration.
The latter is controlled by blacks and yet even after 26 years of independence, the genius of Mugabe has not been able to provide any economic solution to the perceived white problem. If one assumes that Zimbabwe had a problem with about 5,000 white farmers who controlled most of the productive land, what should have been a better response to the land question? Can animals in a zoo be a real threat? In terms of actuarial analysis, would whites still pose a threat to a growing black population in 50 years for instance? Why was there a hurry to resolve the land issue in this generation? Was the urgency worth the cost? If not, why was the country condemned to poverty in the interest of resolving the rights of only 5,000 people who cannot reproduce themselves in sufficient numbers to pose a threat to the majority?
In the case of South Africa, about 4 million whites still pose a serious strategic threat to more than 42 million blacks to the extent that laws are being enacted to protect the rights of the majority. In as much as South Africa has produced the Old Mutuals, Sanlams, Liberty (even before Mandela was freed), I asked the students why post-colonial Africa has failed to produce new mutuals in the form of institutions to underpin black values. The Asians have demonstrated what is possible in one generation and yet countries like Zimbabwe have chosen to focus for 26 years on the minority without creating conditions and policies conducive for the majority. While we may disagree with Ian Smith, no one can argue that the Rhodesian economy in 1980 was good for his constituency and yet 26 years after independence can we rationally argue that the Zimbabwe of today is what its liberators had in mind? If not, should the blame be on the bilateral dispute with Britain or should it be on the brightest minds in Zimbabwe and indeed in Africa that have failed to call a spade a spade.
I told the students that the knowledge, execution and capital gaps that confront and characterize contemporary Africa need to be bridged through an investment in improved literacy. On the knowledge front, there are many in Africa who genuinely believe that Zimbabwe is a victim of white conspiracy and imperialist maneuvers. They argue that if whites had never visited Africa, the continent would have done better. Even the older African countries still hold this view and believe that animals in zoos where blacks are gate keepers are a threat. If this proposition is accepted, then the probability of Africa taking ownership of its destiny is remote.
I challenged the students to critically examine the African journey from the womb of colonialism to today. If we look at the people in whose hands Africa’s resources are, one would be shocked to find out that the majority are alienated from what God has given to Africa not because of a conspiracy but because of bad policies. I made the point that it is important to look at the interplay between bad policies and development. If our students and scholars were in the engine room their input will go a long way towards better putting in place an environment where leaders are made accountable for bind stewardship instead of allowing them to play victims even where evidence suggest otherwise.
The corporate civilization of Africa still has to be written and it is important that an investment be made to ensure that such a civilization will include black players. Is it not ironic that black corporate citizens are more often called criminals and crooks than genuine businesspeople? You will find that more in known about the new black businesspeople than the real players in the South African economy. You will find more said about the likes of Ramaphosa, Motsepe, Sexwale than Rupert, Oppenheimer etc. While the former represents new money (only twelve years old), the latter represents more mature and old money and yet very little is known and written about it. I told the students that they should study Africa’s history in its entirety rather than focus on selective issues. Africa needs genuine role models and even those who have chosen the political theatre as their vocation have also been labeled criminals.
At the dinner on Saturday, I was encouraged when the students said to me that they were greatly inspired by my presentation and had spent the rest of the week debating the issues that I had flagged. As we continue to grope for solutions for our beautiful continent, we cannot help but admire the inert capacity that is available and yet not utilized. I made the comment sometime back that God made minerals and hid them and our job is to find them in the strange places of the world. The conflicts in Africa and myriad of problems may just be a sign that there is a plan for future generations in Africa to benefit from the endowment. Imagine an Africa free of conflicts and bad leaders, what would have happened to its minerals and its great minds?

Ask not what Africa can do for you but what you can do for Africa

ON JULY 12, 2006, I was one of 14 South African business leaders who were invited to a corporate forum lunch that was addressed by Deputy President Pumzile Mlambo-Ngcuka.
The forum is chaired by Zoli Kunene. I thought it would be fitting and appropriate for me to share with you the Deputy President’s presentation on the challenges and opportunities that exist in the second decade of South African independence.
Lest we forget, South Africa is Africa’s youngest child whose destiny has important ramifications for the entire continent of about 54 nations.
In this context, it is important that we understand the thinking that informs the African continent not only because of the emergence of South Africa as a leading investor in the rest of the continent but because if the country get its act together, it is conceivable that other countries may benefit from its experiences to their advantage.
The Deputy President started her presentation by providing an African context to the South African challenges. She said that with a few exceptions, Africa is on the march with many countries experiencing growth rates of about 5% and is slowly re-branding itself as a theatre of conflicts to a continent of hope and democracy. She cited Mozambique and the DRC as examples of what is possible with determination and political will. With respect to South Africa, she said that many commentators and analysts are of the view that a growth rate of 6% is timid.
She said that during the first decade, the government was dealing with challenges to increase access to the rest of the population to basis services and now about 50% of the population has access to water, electricity, health and other services. The challenge of the second decade is now to universalize access and address the infrastructural constraints to which a budget of about R370 billion has been set.
With such an ambitious development program, the government was interested in forging partnerships with non-state actors. She observed that most of the private sector partners unfortunately regard infrastructural and institutional capacity building investments as exclusively a government responsibility notwithstanding the fact that profits cannot be sustained without such investments.
Like many industrializing countries, South Africa is not immune from the pressures to accommodate a growing middle class. The provision of affordable housing to this growing sector still presents a challenge and yet the private sector partners usually are slow to take the mantle leaving the public sector as the only source of intervention.
As many of you are aware, South Africa inherited a dualistic economy characterized by a sophisticated industrial, mining and financial first economy in which the historically advantaged are the primary drivers co-existing with a less developed second economy where the majority still ekes a living. With such an inheritance, South Africa has no choice but to bridge the divide between the two economies by investing in the second economy. At the industrial level a number of sectors including tourism, business process outsourcing, bio-fuels, agriculture and others have been targeted for attention.
She lamented that a majority of the people of South Africa are still trapped in a vicious cycle of poverty while the national economy appears to be growing. The government had realized that without the growth being shared by all, the risks inherent are two obvious and damning for us to do nothing hence the introduction of a number of initiatives aimed at ensuring that growth is accelerated and the benefits there from are shared. For those interested in investing, the government would welcome intervention by the private sector in a number of areas aimed at stimulating and supporting the small and medium scale enterprises that not only need financing but require mentorship.
However, the most enduring challenge for South Africa remains on the institutional and capacity fronts where the legacy of apartheid is proving to be the most significant constraint to transformation and growth. Education and skill development have been highlighted as the priority areas requiring joint action by all. However, the Deputy President observed that one gets the impression that most private sector partners only invest in education just because they want to be nice to the government and not because they believe that it is in their interest. The country desperately needs to bridge the skills gap.
After her presentation, there was some discussion on the role of the private sector in addressing the challenges. My input to the discussion was on a familiar theme: financial literacy as an empowerment enabler. I informed the meeting that we had launched an initiative under the Africa Heritage Society for professionals and businesspersons to donate their time to good causes in Africa. In particular, I informed the Deputy President about my weekly column on New Zimbabwe.com and promised to write an article about the meeting in the hope that those interested in contributing either with donated hours in the identified priority areas or in relocating to South Africa to address the skills deficit in the country should contact me so that I can forward the names.
For the many who believe that Africa needs their skills, this is your time to make a difference. The skills required are varied with a strong bias on technical areas. The Deputy President was very receptive to my suggestion and requested me to coordinate with her staff. Already South Africa is a home to many Zimbabweans and other Africans but the country can only realize its full potential if it can harness the talent that is not only available in Africa but globally. The knowledge agenda requires agents with the solutions that are appropriate and it is important that we recognize South Africa for accepting that skills can be imported to help address the gaps.
It is critically important that we locate the direct and causal relationship between good governance and growth. It would be unthinkable for South Africa to contemplate investing substantial amounts in infrastructure and capacity building if the economy was dysfunctional. Equally, investing in infrastructure without private sector investment would be a waste of resources.
For South Africa to have the confidence of hosting the next World Cup in 2010, indicates the level of comfort the government has with the direction of macro-economic management that it has chosen. The country is fast becoming a magnet for investment from other countries and what is glaring in its absence is the investment by Africans. It is also interesting that the even the Chinese use the same door like other people when they invest in South Africa unlike the practice of cutting special deals as we have witnesses in other African countries. While it is accepted that South Africa is still in its infancy in terms of post-colonial experience, it is notable that the country is growing its middle class faster than any other African country and this provides enough cushion against those in government who may entertain the notion that they alone should dictate the destiny of the country.
The presence of a critical mass of domestic private capital in South Africa makes provides a disincentive against bad policies and should naturally give confidence for the investing public. I was quite impressed by the approach and humility displayed by the Deputy President at the meeting and the response by the private sector representatives was quite encouraging. While it is fashionable for many African governments to regard foreign investors as the only legitimate source of investment, it was striking that the government of South Africa considers the domestic players important enough to warrant attention and respect. In writing about this meeting, I was conscious of the many skeptics who may have reservations about the development model chosen by the South African government that largely recognizes the role of private capital in the development process.
Could South Africa become the next Chindia of Africa? What would it take for South Africa to build a sustainable platform to underpin the economic transformation of the continent? Who should take the lead in South Africa’s economic transformation agenda? How can Africans become the drivers of change rather than passengers in their continent? Why is it that Africans have not been able to emulate the experiences of Indians, Chinese, Jews, Irish, and British etc in Africa? Even as South Africa gropes for solutions on its key skills challenge, it is more than likely that Africans are not on the radar screen not only because their host governments will complain about the brain drain but because the confidence level on African capacity is so low in Africa that most governments are tempted to look elsewhere.
I am made to understand that already other nationalities are responding to the South African challenge in a more organized and informed manner. However, Zimbabweans in South Africa have so far not been able to organize themselves as a force to better communicate with the government about their positive and significant contribution to the economic transformation of the country. This lack of organization has invariably led to xenophobia against people of Zimbabwean origin and ironically the same attitude is not displayed against newly arriving Indians and other nationalities that come into the country and are easily assimilated into organized groups.

Financial sector central to Africa's growth

LAST week I was in Tanzania and on my way back to South Africa, I bought a copy of the July 2006 edition of the Business in Africa magazine.
An article by David Christianson entitled “Reforming Africa’s Financial Sector”, caught my attention.
The article is based on the latest IMF Regional Economic Outlook for Sub-Saharan Africa released in May 2006 that has a chapter dedicated to “building up the financial sector” in the region.
Although there is no consensus on whether Africa should pursue the capitalist or socialist route to address its development challenges, the development experiences of other continents suggest that a private sector-led approach offers more promise than a state-driven one that has condemned many African states to poverty and underdevelopment.
While the role of financial services in transformation societies is widely acknowledged, the question remains where to begin in the case of Africa and whether there is a way of prioritizing reforms to deliver disproportionate benefits upfront and in so doing accelerate the development agenda.
In Zimbabwe, like the rest of the continent, there are many areas that need reform but the financial sector stands out as the most promising one in changing the political and economic architecture of the continent. The IMF’s experience as observed in the report is that countries with better functioning financial systems grow faster. The report argues that there is a causal relationship between good financial sector and higher growth and this is supported by historical data. The report also observes that outside of South Africa, African economies have a higher share of foreign ownership than any other continent.
Indeed, we have seen foreign banks even in South Africa like Barclays Bank reclaiming the space lost under apartheid to take a commanding position in Africa’s financial markets. The trend has increased since 2000 not only because Africa is a profitable market but these banks lend almost exclusively to governments and foreign owned corporates that dominate the African market at the expense of indigenous institutions.
The IMF report highlights two related factors about African financial markets i.e. they are very small which increases overheads and thus raises the cost of banking operations and secondly, banks tend to be inefficient by international standards thanks to the mostly high levels of inflation, corruption and the excessive concentration of the sector. As a result, it is argued that indigenous firms end up paying a great deal for their capital compared to their counterparts in other parts of the world.
Under these conditions, banks can charge high interest margins and still remain profitable notwithstanding difficult operating conditions imposed by bad macro-economic policies. While the IMF argues that sub-Saharan banking systems can be made more efficient by eliminating distortions, many of these distortions are a source of lucrative economic rents for the ruling elites who stand to lose by any greater internationalization of African economies through removals of senseless interventions by unaccountable central banks.
The IMF provides three general prescriptions for Africa. First, it suggests that more use should be made of alternative instruments to collaterisation like leasing, group guarantees and reversible equity stakes to overcome bottlenecks. Second, sub-Saharan countries should avoid the temptation to introduce a new range of state-owned financial institutions. As most are aware, Zimbabwe since the appointment of Gideon Gono as governor in 2003 appears to be going the other way.
We have observed the emergence of institutions like ZABG and its role in the nationalization of private banks. Equally, Finhold is now virtually a state-owned and controlled institution. Although the IMF publication does not find it necessary to point to recent experiences, many African governments are now well aware of how disastrous these sorts of institutions have been. In many cases, they become instruments of state sponsored corruption through political lending decisions like the productive sector facilities in the case of Zimbabwe.
While the IMF report recommends the need to maximize the role of markets, minimize costs and avoid distortions from interventions, countries like Zimbabwe have chosen risky and potentially disastrous paths where the central bank has effectively crowded out private sector institutions at a great cost to the country by assuming quasi-fiscal functions. Many have observed that under Gono’s leadership, the Reserve Bank of Zimbabwe has been turned into a super trader, banker, government and a conduit for sophisticated corruption where the parallel market is being managed to the benefit of a selected few and to the detriment of the majority.
Third, the IMF suggests that there is a need for African governments to apply the legal and regulatory framework more even-handedly in response to the over politicization of the financial sectors of a number of African countries including Zimbabwe. It advocates the establishment of specialized commercial courts and the harmonization of commercial law and practice within the emerging trading regions.
The report also points out other well known problems with respect to African banking like the role of governments in crowding out the private sector for capital and consequences on costs of capital and marker efficiency. Interventions like the ones we have seen in Zimbabwe where banks are no longer able to price their own risk limit the potential of private banks. A development strategy that is premised on interventions such as prescribing artificial floor price on deposits and a cap on lending rates is a recipe for an economic tsunami. Africa is generally characterized by poor legal frameworks which affect among many other things, property rights and enforceability of contracts.
We have observed how in Zimbabwe, the state has become an instrument of illegality by passing a number of laws that would be abominable in many functioning economies, and the price the nation has to pay. There is a causal link between respect for property rights and the potential impact of financial sector reform in so far as the legal rights of creditors and shareholders are protected. In countries where the share of private loans as a percentage of GDP is higher than state loans, the potential impact of financial sector led development strategy is higher. There is a close relationship between the strength of the private sector growth and the effectiveness of any financial systems. In the case of Africa, the problem is not just the financial sector but the entire business environment and climate.
It is difficult for indigenous African enterprises to access capital through the formal financial sector. This problem is not unique to Zimbabwe but is common in the whole continent. In fact white controlled corporates domiciled in South Africa are increasingly taking advantage of the situation by accessing credit from international capital markets and deploying the funds through equity investments in the rest of the continent. Through initiatives like NEPAD, South African companies are colonizing the rest of continent to the detriment of indigenous African companies who have difficulty in accessing capital.
Indeed South African corporates are spreading their wings in Africa. In the case of Zimbabwe, we have seen the government embarking on a suicidal mission to quash the emergence of a vibrant indigenous business sector and replacing it with a foreign controlled sector. Someone drew my attention to an article published two weeks ago by the Herald in which four Chinese companies were reported to have concluded mining deals with the state-controlled Zimbabwe Mining Development Corporation (ZMDC). In the four deals, the Chinese had a controlling stake of a minimum of 51% contrary to the posturing by the government about sovereign control of resources.
I have had my own share of experiences in accessing capital in the Zimbabwean market. When I took over control of SMM in 1996 following the acquisition of asbestos and industrial assets by Africa Resources Limited (ARL) from T & N, I was confronted with a real dilemma when the foreign owned banks that were the banking partners of the acquired companies withdrew their facilities because the control of the companies had changed. Overnight, the companies were confronted with a financial predicament that only was resolved by the intervention of three indigenous banks.
Without the support of these indigenous banks, the indigenization project was doomed from the start. However, it did not take long before the Reserve Bank of Zimbabwe applied pressure on the indigenous banks to offload their exposure from my companies. This left me exposed resulting in me realizing that without a robust and functioning banking systems that is nationally anchored the prospect for an African renaissance is just but a pipe dream. I was forced to respond by establishing First Banking Corporation (FBC) in 1997 and this helped a great deal in addressing the financial challenges confronted by many entrepreneurs in Africa. Although it is argued that the prospects for Africa’s transformation lies in the small, medium and micro-enterprise sector, my experiences have demonstrated that Africa needs its own giants like Toyota in the case of Japan, Mittal in the case of India, Samsung in Korea etc that can then underpin an African banking platform as well as support the downstream players who may be SMMEs.
In Africa with the exception of South Africa, we do not have African brands or corporate institutions that can drive the African development agenda. The vacuum is more obvious in the financial sector notwithstanding it’s catalytically and pivotal role in the development process. In fact only South African banking institutions are emerging as pan-African players and their attitude to African risk may not be too different as during the apartheid era. Even in South Africa, we still have to see the emergence of black controlled financial institutions as a prelude to the required transformation that needs to take place before Africa can take its rightful place in the commonwealth of progressive nations.
Africa’s promise is firmly rooted in the ability of its people to take ownership of their destiny. There can be no better place to start than in the financial sector not only because of the critical role it plays in lubricating the development process but because it banking is a repository of trust and as long as Africans do not trust and respect each other, the continent will remain a football for other nationalities to play their game to their advantage. No African government has come up with an agenda that seeks to place Africans at the pinnacle of the financial services industry rather we have seen governments take measures to diminish and in some cases eliminate indigenous involvement in the financial architecture while enabling foreign controlled banking institutions to take the lead.
It is up to us to appreciate the centrality of financial sector reforms in Africa to the development challenge that confronts the continent. Some have argued that Gono has used the financial system in Zimbabwe to create a new power centre that is not accountable to anyone but whose impact on nation building could be decisive in positioning the country as a basket case of the world. Every generation has to account for its existence and our generation is particularly blessed in having access to technology to know what other nation states have done to reduce poverty and enhance development and yet we have allowed buffoons to take charge of our destiny without a destination in mind.

Who is Gono's boss?

"Without the work done by the RBZ, we would not be where we are now." - Robert Mugabe.
On Wednesday, July 26, President Mugabe paid tribute to the RBZ for playing a constructive and positive role in progressing Zimbabwe’s nation building agenda.
He singled out Gideon Gono, the Governor of the central bank, whom he appointed in December 2003, as the person deserving praise. He further observed that while he personally found Gono’s leadership acceptable and exceptional, Gono had become “so unpopular that some ruling party officials (and not opposition party members) want him dead”.
The question is why would ruling party officials want Gono dead, and not his principal, unless one accepts the proposition that the emperor has abdicated and that Gono is now de facto President of the ruling party and the unelected head of state?
Why would the head of the executive branch of the state publicly acknowledge that the country’s destiny is in the hands of one individual? Indeed, the President said that: “Without the work done by the RBZ, we would not be where we are now”.
It is clear from this statement that the so-called economic meltdown in Zimbabwe has not registered in the mind of the President and accordingly he sees no evil in the actions of Gono.
Could the President’s observation mean that he has lost confidence in his own cabinet and has pinned hopes for an economic turnaround on Gono? Who is Gono accountable to? Gono is one of three black governors appointed by Mugabe since independence and yet his predecessors have not received any public praise. What was missing in the President’s observations was a critical analysis of Gono’s record as governor. Indeed, no cost benefit analysis has been done on Gono’s tenure as governor in relation to the economy of Zimbabwe.
It is important that the impact of Gono on the economy of Zimbabwe and the real cost to the economy of his actions are measured and fully digested before accepting what appears to be a pedestrian assessment of his accomplishments against a background of a fast crumbling economy. One also needs to critically examine what, if any, benefits have accrued to the Zimbabwean economy from Gono’s tenure as Governor.
I believe that it is important that we interrogate Gono’s record not only because the President is aware that even his own party see danger in misguided policies and programs coming out of the RBZ, but because unfortunately the President, like many Zimbabweans, seems to have accepted that he has no cure to the ills of the Zimbabwean economy outside the context of Gono’s actions.
'Who is Gono anyway?' is an appropriate question to ask when a party elected by the people of Zimbabwe to govern seems to have outsourced the functions of government to a third party. Gono as Governor should ideally be accountable to board of governors of the RBZ. The RBZ is governed under an act of Parliament like many state actors. The Minister of Finance who is a member of Parliament should also ideally be responsible for directing the overall economic agenda of the country. The RBZ’s focus should be on monetary policy but it appears that under Gono, the mandate of the bank has been expanded to encompass fiscal and other issues that ordinarily would be under the control of cabinet.
Unfortunately, the real boss of Gono i.e. the Chairman of the board of governors of the RBZ, is not even known by the President let alone the other members of the board. In singling out Gono, the President must have been aware that he was in fact saying that his Minister of Finance was not up to the job.
If one understands the institutional framework that underpins the operations of the RBZ, one can safely conclude that there is a coup de etat in Zimbabwe that has been sanctioned by the President who now appears to have direct oversight of the RBZ when this should not be the case. Why would this particular Governor enjoy the direct confidence of the President when he should not be reporting to him? If one looks at Gono’s predecessors, it is obvious that they did not have the kind of relationship with the President that Gono enjoys and the question is what has changed to make this Governor assume extraordinary powers as acknowledged by the President.
It is also significant that Gono is not even an office bearer in the club from which the President is supposed to derive his legitimacy i.e. Zanu PF. Why would the President allow a non-office bearer to pilot the party and government’s agenda to the extent that the President accepts that the fate of the country is now inextricably linked to the actions of one man? What is the value of the electorate choosing a government of their choice when their fate can be surrendered to an individual whose actions are outside not only their control but the control of the party, parliament and cabinet?
Having posed a number of questions above, it is important that we attempt to locate Gono in the contemporary political economy of Zimbabwe. Gono is not the first one to assume presidential powers while the elected president remains in his own world fighting Bush/Blair and the white-settler community. I have no doubt that the same comments the President made about Gono would apply to the Professor Moyo when he was still in cabinet. In the case of Professor Moyo, the President would also have said: “Moyo, there are some circles that do not love him. I am sure that without the work done by the Ministry of Information, we would not be where we are now.”
In fact, Gono may have taken over from where Moyo left. Gono’s academic and professional career is well known to Zimbabweans. He has been acknowledged as one individual who through self determination has managed to transform himself from a tea boy to the second most powerful man in Zimbabwe. He learned through correspondence and he may share the passion for education through distance learning with the President and hence the natural attraction between the two. Gono rose through the ranks and worked for state institutions including the Zimbabwe Development Bank and the Commercial Bank of Zimbabwe before being appointed to his current position.
It is his tenure at the CBZ that provides interesting clues about his connection with the President and why he may have acquired, rightly or wrongly, the title of a 'turn-around genius'. His record at the CBZ has not been properly understood and digested for anyone to make an informed assessment of Gono’s capability and capacity as a manager. For the record, CBZ was the successor to the BCCI controlled bank that collapsed internationally leaving the joint venture project between the government of Zimbabwe and BCCI exposed. It is important to recognize that CBZ was a post-independence project by the government to enter into the banking arena but the government could not trust anyone locally to establish a partnership but chose a foreign bank as a majority partner. The bank was heavily exposed to government and the political elites. The asset quality was bad and non-performing. When Gono took over the bank was technically insolvent.
What has not been said about the much talked about turnaround is that under Gono, the government issued directives forcing state institutions to do banking with CBZ. Under such a scenario, the prospect of failing was non existent and anyone could have performed a miracle. With a politically active operator and a smooth talker, the bank’s fortune began to change for the better.
However, its operations were inextricably linked to the government and the bank began to perform quasi-fiscal operations and outside the RBZ became the largest source of government funding. Gono was the point man for not only fuel procurement but also the principal advisor and expeditor for the government. The bank’s fees were determined by him and government officials were afraid to challenge him lest they be exposed and flushed out of the system.
The bank was then privatized with the International Finance Corporation taking an equity stake in the bank. ABSA then also came into the picture with a strategic equity stake but with no control as control remained vested in Gono. With an iron fist, Gono controlled the bank as if it was his own and continued to enjoy the support of the government. For people who know Gono closely, they appreciate that he is a control freak and likes to be praised. At CBZ, he single handedly handled the transactions and he was accountable to himself earning a reputation that he was a close advisor of the first family not only because he was their banker, but because all ministers got their loans and toll fees through his facilitation.
In better understanding Gono, it is important that we also locate the role of Professor Moyo is repositioning him from a mere a banker to a broad-based state operator. The Professor appointed Gono as the Chairman of the Zimbabwe Broadcasting Corporation while Chombo appointed him to the University of Zimbabwe council. He was awarded an honorary doctorate degree from the UZ earning the title Dr. Gono. When Tsumba’s term as governor expired, the only viable successor who understood the mentality of government in terms of controlling economic behavior was Gono. Gono is a product of the state machinery and passionately believes that the state can solve all economic problems. Although he was operating a private bank, he acted more like a state actor than a market driven practitioner. While other indigenous banking executives chose to set up their own institutions, Gono remained under the state umbrella. It is also ironic that although the government was a large shareholder in Zimbank, the relationship between the bank and the government was not as close as that with CBZ.
When Gono was appointed Governor, it was obvious that he would not want to relinquish control of CBZ. Even when Barclays Bank acquired a controlling interest in ABSA, they were warned to keep their hands off CBZ confirming that Gono is still an interested party in eventually taking a controlling stake in bank in his personal capacity. It is no wonder that CBZ under Makuvise is like an extension of the RBZ.
However, the actions taken by Gono as Governor to which he is now being credited by the President are instructive. First he took charge of the economy placing the RBZ at the centre of all economic issues. He then started the state of the nation addresses under the guise of Monetary Statements. He then proceeded to put in place a range of fiscal and monetary instruments aimed at controlling the private and public sectors. Through the productive sector facilities, the RBZ became a primary banker to companies. Its interventions have expanded with each day. Although he promised that he was going to cure the inflation problem, inflation has increased to hyper levels under his watch. He also became the champion of the anti-corruption drive targeting specific individuals as a way of convincing his master that the source of Zimbabwe’s problems was a few individuals who were corrupt and had to be uprooted. He converted the RBZ into a police station and transformed externalization into a worse crime that homicide. He managed to convince Mugabe that it was not bad governance that led to the economic meltdown but a combination of the consequences of the land reform program and the so-called “illegal sanctions” imposed by the west.
The consequences of Gono’s reign are quite obvious to all but it appears that the President is oblivious to the real cost to the people of Zimbabwe and the region of misguided policies. It is an understatement that Gono’s policies are controversial and any rational thinking person would agree that they are misguided. The policies have included a fixed exchange rate, stringent and selective anti-graft measures and large-scale printing of money and such policies are bound to annoy not only the ruling party officials but any right thinking Zimbabwean. Imagine that under Gono, some exporters are given a preferential exchange rate while others have to be penalized with an artificial exchange rate.
While the President is grateful to Gono, Zimbabweans remain exposed to the most hostile economic environment characterized by an annual inflation at nearly 1 200% and critical shortages of foreign currency, fuel and drugs. Through Gono, the government continues to intimidate its enemies through trumped up externalization charges. He is the architect of all the nationalization schemes that have been put in place including the theft of my assets. With the encouragement of the President, there is no doubt that many well to do Zimbabweans will find their second home as either exile or prison. When he announces his Monetary Statement this week, it is not unexpected that he will focus on corruption and conspicuous private sector consumption that he believes is unacceptable for other and not for him and his circle of friends.
Through a combination of patronage and intimidation, Gono is now a feared man in Zimbabwe. He is effectively the CEO of Zimbabwe Inc. and has effective control of the state machinery and anyone who dares challenge him risks a lot. Even Parliament could not ask him how the RBZ managed to print money to pay the IMF and also managed to make it a secret for the nation. The suppliers of the foreign currency remain nameless and faceless and the exchange rate used will never be known. The role of the RBZ under Gono in undermining democracy and transparency is a subject that will require its own examination and assessment.
However, it is clear that the roadmap to a normal and functioning Zimbabwe will necessarily have to involve dealing with the RBZ and its governor. It is surprising that even the opposition politicians, with the exception of Tendai Biti, have not situated the RBZ as the biggest theatre where actions that threaten the existing and future generations of Zimbabweans are being perpetrated with active blessing of the head of state. One can only pray that the President will wake up to the fact that his own colleagues that have identified Gono as the root cause of the problems of Zimbabwe are actually pointing a finger at him.
Why would Gono become more unpopular than his principal who is supporting him even in the face of a dysfunctional economy? Could it be that within Zanu PF there are people singing the song: “Amazing Grace” where they were once blind and now they can see? Yesterday it was the Professor and now it is Gono. The real question is what are the people are saying about the President whose legitimacy ought to derive from the people who ultimately are bearing the brunt of bad governance? Will we ever get to the stage where accountability is located where it should be and culpability can then be correctly situated and managed?