Zimbabwe Review

Reflections on Zimbabwe

Government media praises Gono for merely playing catch-up with economic trends

Posted by CM on February 4, 2009

From The Herald:

New policy measures hailed

By Victoria Ruzvidzo and Joseph Madzimure

STAKEHOLDERS across the economic spectrum have commended Reserve Bank of Zimbabwe Governor Dr Gideon Gono for crafting policies that could ignite rapid economic transformation. Measures that included the deregulation of exchange control regulations, local currency reforms and the enhanced foreign currency licensing framework would stimulate production and take the economy back on a growth path.

Confederation of Zimbabwe Industries president Mr Kumbirai Katsande said the central bank chief had exceeded industry’s expectations. “The governor went further than we expected. This presents an excellent platform . . . We needed a statement with hope and this is what we got,” he said.

The Herald report goes on to quote various other big names from commerce and industry, all of them apparently (with The  Herald, one is never sure whether what is reported is what was actually said) lavishing praise on the heroic Gono.

If the policies Gono announced eventually help to “ignite economic transformation” as The Herald so poetically puts it, Gono can hardly be credited with ‘crafting’ anything new or particularly innovative in them.

The US-dollarisation of the economy Gono and the acting finance minister  have now formalised had been happening for quite some time as the Zim-dollar became ever more worthless.

Zimbabwe’s recent example with its fuel supply industry is instructive in this regard. Throughout the first several years of severe fuel shortages that began about the year 2000, the government insisted this was a “strategic” sector that it had to tightly control. That control became increasingly irrelevant as more motorists and industry had to resort to ‘the black market’ for their fuel as the official market could not work with the restrictions government put on it, mainly that of being expected to retail the fuel at less than the cost of sourcing it.

For years government resisted calls to liberalise the fuel sector.  But liberalisation happened by default anyway, because the ‘black market’ became a more significant and reliable source than the ‘official’ market! Eventually government came around to changing its stupid and outdated laws to acknowledge the reality that had been dictated by the market. That is all Gono has done with his ‘currency’ reforms and other measures: accept the reality he has been refusing to do for so long, that whether you like it or not, the market rules!

The US-dollarisation of the economy Gono and the acting finance minister  have now formalised had been happening for quite some time as the Zim-dollar became ever more worthless.

The policy measures The Herald refers to in the first paragraph of its story  merely indicate Gono’s realisation of and capitulation to what has already been going on in the economy, and which he had no power to stop. They were simply inevitable and inexorable trends given the reality that had been brought about by the earlier efforts to deal with economic symptoms instead of causes, and of trying to control the economically uncontrollable.

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