Gono offers exporters new incentives but maintains grip on financial sector


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Central bank governor Gideon Gono announced new measures to boost foreign currency inflows from exporters and Zimbabweans living abroad but, at the same time, maintained his grip on the financial services sector which he said continued to play truant despite the clamp down that began in January.

In his monetary review statement which was applauded by agriculture, commerce and industry, Gono offered a new exchange rate of $5 200 to the greenback to Zimbabweans living abroad who sent money back to the country. The same exchange rate applied to exporters who sold their foreign exchange to the auction market.

He said this rate would be reviewed in six months from the beginning of May, but hoped that it would be revised downwards as inflation is expected to have dropped substantially by then.

Inflation, the country’s number one enemy, has started declining and never reached the 700 percent peak that had been predicted. It dropped from 623 percent in January to 603 in February and stood at 583.7 percent in March.

Gono said the inflation target of 200 percent by the end of the year could still be achieved. It could only be missed if there was a failure to restrain costs of things like fuel, electricity, water, wages and salaries.

The central bank governor said monetary authorities had not acceded to calls by exporters for a 100 percent foreign currency retention because the exporters were not honest enough to surrender all the foreign currency they earned.

As an example, he said, over 100 exporting companies with outstanding export receipts of $36 million had not responded to calls by the central bank to acquit of their proceeds. Companies would therefore continue to surrender 25 percent of their earnings at the official rate of $824 to the greenback.

Gono said the stringent measures that had been taken on the financial institutions had paid off. The financial sector was now safe and sound. All banks had to conform to international best standards by January next year.

It was now a requirement that independent non-executive directors should now form the majority on boards of banking institutions. Any shareholder with 10 percent of more was not allowed to become part of management or to chair the board.

Gono dispelled allegations that his clampdown was reversing indigenisation saying he strongly rejected the notion that tried to equate indigenisation with unsound corporate culture, cosmetic management, technical mismanagement and fraud.

“Let it be known that we will not be swayed from the course we have chosen to follow and the message to my indigenous colleagues in the banking sector is please shape -up to international standards or pack-up,” he said.

“Time for short cuts or intimidation is gone and gone for good. Our country and its people expect nothing less than honesty, uprightness and accountability from those to whom they entrust their hard-earned savings and to this end, no amount of emotional weeping will persuade us to compromise standards we have sect for the sector and its players.”

Gono said he expected greater responsibility from indigenous bakers instead. “Our view is that being indigenous imposes an even greater responsibility, obligation and duty towards one’s country; towards one’s depositors and towards one’s economy, a shortcm9oning which a few of our brothers and sisters running and owning indigenous institutions seem to have forgotten.”

He said the central bank had been forced to print money for the productive sector while banks were holding on to billions of cash. During the week ending 2 April, for example, total underpayment of statutory reserves was $642.8 billion.

“This level of indiscipline through cosmetic and creative accounting cannot be allowed to continue,” he said. “With immediate effect, the Reserve Bank will be approaching all defaulting institutions for them to fully account for their shortfalls and comply with statutory requirements.”

Insurance companies were also not complying with prescribed asset holding thresholds. Life insurance companies only had 9 percent when the requirement was 45 percent. Life reinsures had a paltry 5 percent against the required 45 percent. Non-life insurance companies were, however, complying. They had 31 percent instead of the prescribed 30 percent.

On the thorny issue of amnesty for those who externalised funds, Gono said any amnesty was the prerogative of the State president and not that of monetary authorities. He encouraged all those who had externalised funds to repatriate the money through the central bank’s exchange control division.

The contact person was Fortune Chasi, the bank’s legal advisor and assistant to the governor. He could be contacted on fchasi@rbz.co.zw or phone 263 11 870 120 or 263 4 702 995, fax 263 4 705 890.

Gono said while this was not an amnesty, he believed that those who came forward would receive a sympathetic ear if any amnesty was granted by the government. “We sincerely believe that our views as a Bank will be persuasive in the minds of law enforcement authorities when they come across voluntary disclosures and repatriations. We also believe that those who have to date voluntarily repatriated what they had externalised (and there are a few around) are now sleeping more peacefully at night than before,” he said.

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The Insider

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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