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Posts Tagged ‘inflation’

Gono: If one man cannot “kill” an economy, neither can one man “save” it

Posted by CM on October 15, 2009

Reserve Bank Of Zimbabwe Gideon Gono’s power and influence have waned in the wake of the inclusive government that has brought in MDC officials into important economic portfolios. Gono may still hold on to his title and position, but there is little doubt that his power has diminished considerably.

The once unchallengeable Gono has now found himself in the new and unfamiliar role of having all his decisions and opinions second-guessed and often derided. The man who the Zimbabwean media once portrayed as a miracle worker who could walk on water now struggles to defend the legacy of his bygone hey days.

Gono’s defence of his many controversial actions of recent years as central banker during the country’s worst period of hyper-inflation is essentially that no matter how bad things were, if it were not for his efforts they would have been far worse. He feels hurt and disappointed that Zimbabweans are not grateful to him for saving them from a much worse fate then they experienced during the tough times whose worst months were in 2008.

Here is an interesting example of his thinking about this, from a recent interview:

…Gono, who presided over the collapse of the local currency, insisted he was not to blame for “killing” the nation’s economy…He again rejected calls for his resignation after President Robert Mugabe’s unilateral decision to appoint him to a new five-year term last year — one of the major disputes facing the eight-month-old unity government.

“The immorality and irrationality of the whole argument is that ‘Gono must go because he printed money and he killed this economy. That’s a white lie because no single individual can harm or kill an economy,” he said.

Gono also stands accused of siphoning off state money into secret accounts in Asia and Europe, a charge he denies.

“Whatever I did had authorisation from the government of the day,” said Gono, a former commercial banker. He described his job as “a plumber mending burst pipes. I prevented this country from descending into chaos like Somalia.

No doubt Gono has been misunderstood in many ways, although it is far from clear in which ones. But  it is also probably true that by haughtily and flauntingly wielding as much power over the economy as he was clearly allowed to do for a while, as well as through the media over-exposure he seemed to so love, he may well have brought on to himself the genesis of his present public relations troubles.

Poor embattled Gono is no doubt quite correct to argue that he could not have single-handedly “killed” the Zimbabwean economy. Whether he indeed prevented it from desceding into the chaos of Somalia is subject to debate and will likely never be resolved.

But I found an interesting insight into Gono’s mindset. It is that he denies an individual can kill an economy, but then seems to go on to claim that an individual can save it, and that this heroic one-man deed is his real legacy to Zimbabwe. There seems a contradiction in Gono’s words in what it is possible for one man to do to/for an economy then!

I wonder if this mix of immodesty and refusal to take responsibility for anything that went wrong under one’s watch while ascribing to oneself superhuman positive achievements are not part of the attitude that have contributed both to Gono’s meteoric rise as well as his dramatic fall. I think there are lots of lessons in there about the deadly cocktail of overarching ego mixed with almost unfettered power. They can quickly take you up, but they can just as quickly bring you down.

Posted in Economy | Tagged: , , , , | Leave a Comment »

The futility of trying to put a number to Zimbabwe’s hyper-inflation

Posted by CM on December 10, 2008

Zimbabwe’s current astronomical and rising inflation rate will provide years, decades worth of study for scholars. But the over-riding concern now is the way an inflation rate said to be in the millions percent makes hour-to-hour survival a huge struggle for ordinary Zimbabweans.

But it can also be examined as a sort of sad but fascinating, incomprehensible game. And The Zimbabwe Crisis provides all sorts of opportunities for people of all types to sell their ‘expertise.’

A case in point is the silly game of trying to pin down what exactly Zimbabwe’s rate of inflation is. Obviously if an ‘expert’ is asked, s/he can not give the most honest answer and say, “Prices are changing so rapidly, so variably and so unpredictably it is impossible to say what Zimbabwe’s inflation rate is with any certitude.” Or even merely reliably, even with a very large standard deviation. I might add that it is a mostly meaningless exercise anyway.

But that doesn’t stop some people from trying. Newspapers need copy every day and today’s Zimbabwe provides some of the most colourful. And there is no shortage of “experts” who are happy to be quoted by the media. Builds up the consulting CV.

The Guardian (UK) had a story recently about the present cholera epidemic. The report wandered over from discussing hospitals and disease to tackling inflation.


Money is a complicated business in Zimbabwe even if most people do not have much. Cash has been in desperately short supply because the government cannot print fast enough to keep up with hyperinflation. Officially inflation stands at 231m percent, but that was in July. Since then the central bank has regarded economic statistics as a state secret.

John Robertson, one of Zimbabwe’s most respected economists, has accurately estimated the rate of inflation in the past. He says it shot through the billions, trillions and quadrillions between August and October until it reached 1.6 sextillion percent last month. A sextillion has 21 noughts.

Robertson says the number is almost meaningless. “Inflation at the present rate is academic. Nobody says they’ll increase salaries on this figure. It’s impossible to work with it.”

An interesting piece of  diversion from the reality of what the levels of hyper-inflation mean for Zimbabweans just trying to get by from day to day.

I grinned at the reporter’s judgment that his quoted source had “accurately estimated the rate of inflation in the past.” If it was an estimate, how then could it also be accurate? Besides that nit-picking detail, who adjudged the ‘accuracy’ of the source’s previous guess? On what basis?

Despite the reporters awkward attempt to put a plug in for his source’s reliability, at least the source was honest enough to admit that Zimbabwe’s rate of inflation is so high that the numbers being bandied about, likely including his, are completely meaningless.

Besides knowing that price increases have astonishingly got out of control in Zimbabwe, no one has the slightest clue what the rate of the change is. People like John Robertson might just protect their reputations if they learned that sometimes when reporters come calling it is better to just say, “no comment.”  

Posted in Economy | Tagged: , | 1 Comment »

Gono again blames inflation symptoms; causes, solutions remain beyond his control

Posted by CM on December 6, 2008

For the five years that Gideon Gono has been governor of the Reserve Bank of Zimbabwe he has tried all kinds of things to try to prevent inflation from shooting way out of control. All have failed.

But the economic, social and political pressures of hyper-inflation are so strong that he must be seen to continue to be trying to control it, even though its ultimate causes are way beyond his purview.

One does not need to be an economist to understand how falling productivity in agriculture, mining and other sectors caused the currency to lose its value. And how then continually printing more currency over the years for all sorts of needs without linking it to to increased economic productivity simply devalued the Zim dollar even further. That inflation has now reached the unprecedented, unfathomable level of millions of percent!

In normal times we would expect Gono’s RBZ to control inflation by adjusting the quantities of currency in circulation and putting in place various monetary policy measures to try to control production and spending in one direction or another. But Zimbabwe’s inflation situation has gone way beyond the ability of the central bank to do that.

The currency is not going to be suddenly stabilised and then strengthened by increased economic activity. There is absolutely no reason to believe there is going to be any sudden increase in earnings from agriculture, tourism, mining or manufacturing in the short term. Foreign credit that would also help to artificially shore up the Zim dollar is no longer available to the country in any meaningful amounts.

Given these basics, there seems no other realistic currency/inflation-stabilising pressure to look forward to other than a large hard-currency injection of some sort. And that is impossible to imagine in the absence of an implemented political settlement between Robert Mugabe’s MDC and Morgan Tsvangirai’s MDC. Even with it, there is no guarantee that aid and loans would come in the quantities required and soon enough to lower inflation to the levels pertaining in the rest of the world in a hurry.

Obviously Gono and the RBZ have no influence on the successful  implementation of power-sharing between ZANU-PF and the MDC. And not only does the RBZ no longer have the ability to control inflation by controlling money supply, the hyper-inflationary pressures have forced it to do the exact opposite: print cash like crazy so that the public can try to keep up with prices that escalate by the minute, but in the process further “fuelling” hyper-inflation.

Gono is criticised by economists for worsening inflation by churning out more currency every week despite falling production, making the currency ever more worthless. But if he tried to “rein in” inflation by reducing circulating currency, there would be an outcry from the public who would not be able to access the amounts of currency required to keep up with skyrocketing prices. What you need a bag of cash for this week you may need a suitcase’s worth next week.   It is hardly surprising that after years of this  situation that simply could not continue indefinitely, foreign currencies like the US dollar, South African rand and Botswana pula have become the preferred media of change, causing other problems.

Mr. Gono is on a treadmill and cannot get off: he is fully aware of these inter-linked imperatives of a capitalist economy like Zimbabwe’s, but he is in a position where he simply has no choice but to try to reconcile the un-reconcilable. The effect is that all his efforts are to merely run around in endless circles. Only a political settlement and emergency external hard-currency injection of some sort can now break the circle enough to eventually make it possible for him to eventually play a traditional central banker role in any positive, meaningful way.

Three days ago Gono released the country’s first ever $100 million note to try to reduce the daily bank queues as people struggle to withdraw amounts of currency sufficient to keep up with galloping prices (not just of goods, but of the forex that is now very necessary to buy all sorts of goods and services at all). The system struggles and fails to keep enough of that currency because of the extent of the hyper-inflation, and despite the currency printing presses working overtime to keep pace. And it is  necessary to print currency of ever outrageously higher numerical value. It has already been announced that next week a $200 million note will be released. A billion dollar note cannot be far into the future at this rate, but this can’t go on forever, or even for very much longer.

So Gono releases trillions of Zim-dollars’ worth of his new $100 million note to the banks the day before it is to become legal tender. The next day he has a temper tantrum against some of these banks for releasing the notes into circulation a few hours before they technically became official currency. Gono goes to town, accusing the banks of being responsible for many of the sins for which he and the RBZ are often blamed, such as buying foreign currency from the street, making nonsense of the official exchange rate(s).

All of Mr. Gono’s many pent-up frustrations seemed to find an outlet on the discovery of this infraction by the banks. We are told of how the managers at several banks “have been relieved of their duties after vast sums in new notes issued to them by the Reserve Bank of Zimbabwe found their way onto the illegal parallel market on Wednesday evening (i.e. night of release to the banks by the RBZ and eve of becoming official tender). Several top bankers found themselves “banned” from their profession for five years.

Gono makes  a very big deal about the notes hitting the streets a few hours “early.” He insinuates that this is proof that the banks have a big role to play in ‘economic sabotage’ activities like driving the ‘illegal’ foreign currency market.

“We are sick and tired of being labelled crooks,” said Gono in regards to himself and the RBZ (said to be the biggest buyer of ‘illegal’  forex, not an unreasonable suspicion given that none is easily available ‘legally.’) His over-dramatic out-burst seemed designed to say to the public and what he as called his ‘principals, ‘ “Aha, you see? You have been accusing/suspecting me of being the bad guy all along, but here are the real culprits; we have caught them red-handed, I have been innocent all along.”

Technically and legally Gono has a point about the impropriety of the notes being released a few hours before they should have been. But the technical, legal correctness of his position has been far superceded by the economic realities. In the circumstances, it is petty in the extreme of Gono to make a big deal about this.

The banks acted exactly as you would expect based on the economic survival imperatives that have come to over-rule any law in the Zimbabwe of today. It is now overwhelmingly about survival, not a relatively little thing like legality. The “early” release of the notes, whether to buyso-called  illegal foreign currency or to just pay account holders writing cheques, was simply to try to use the currency before it lost a big chunk of its value, which it is doing by the millisecond. A deal negotiated the afternoon of the RBZ’s release of the new note to the banks, but only paid for the next morning when the note was legal would have been worth considerably less for the cash recipient. That is how fast the currency is losing its value.

So yes, banks that are supposed to be outstanding upholders of propriety can be accused of acting willfully illegally in this case, but my point is that the overall economic environment is such that this is a petty point: almost everybody is always technically flouting one law or another in the course of just trying to stay one tiny step ahead of hyper-inflation and all the other things that have gone wrong in the economy.

So the banks may have acted technically illegally, but they behaved entirely rationally for the situation. It is fooling no one for Gono to mainly focus on what in the circumstances is the really minor ecnicallegal, legal point of the ‘early’ release of the new notes.

Far more important are the bigger, more significant factors that account for that behaviour being entirely expected and rational in the present situation. Unless and until those factors are dealt with by Gono’s principals, then his little temper tantrum was simply an irrelevance of a side-show. Banks, their clients and everyone else will keep trying to find ways, legal or otherwise, in the ultimately futile exercise of trying to avoid, reduce  or delay the effects of hyper-inflation.

Gono famously said “failure is not an option” in regards to lowering inflation when he began his first RBZ term with much fanfare five years ago. What Gono’s little performance in regards to the release of the latest note shows is that for now, failure is a reality, and not necessarily for reasons within his control.

Posted in Economy | Tagged: , , | Leave a Comment »

On the latest teachers strike

Posted by CM on March 17, 2008

In an environment of hyper-inflation like Zimbabwe’s, regular strikes for pay increases are hardly surprising. It is difficult to keep up with which group of civil servants is on strike at any given time.

There was therefore nothing really new about the most recent teachers’ strike. And weeks before a seminal election, there was nothing surprising about Mugabe’s announcement of a salary increase which sounds impressive until you compare it to the rate of inflation.

But the speed with which the strike was called off by the teachers’ union after Mugabe’s vote-buying tactic, while understandable, says some depressing things about the Zimbabwean situation:

Thousands of teachers in Zimbabwe’s state schools have ended a three-week strike after being awarded a 754 percent salary increase by the government, their union said on Friday.”We urge teachers to return to work,” said Raymond Majongwe, secretary general of the Progressive Teachers Union of Zimbabwe, calling the salary increase a victory for teachers and the nation.

Majongwe said the government agreed to hike the monthly teachers’ salary to 3.4 billion Zimbabwe dollars (115,300 US dollars at the official rate, but just 115 US dollars at the widely-used black market rate), up from 369 million Zimbabwe dollars.

About 100,000 teachers walked off the job country-wide three weeks ago, demanding a salary review and better working conditions.

The southern African country is in the midst of an economic crisis marked by the world’s highest inflation rate of 100,580 percent, widespread food shortages and 80 percent unemployment.Teachers are migrating in droves to neighbouring Botswana, Mozambique and South Africa, many taking menial jobs to earn money to support their families back home.

The teachers’ demands are entirely reasonable. And I would not advocate continuing strike action that would disrupt the school system even more than Mugabe’s economic mismanagement has done over the years.

Yet how long will the paltry increases keep the workers going? How long will they give them a sense that they are on top of inflation? Two days? Not at all? With those levels of inflation, periodic small pay increases only slightly, imperceptably slow the sinking and falling behind.

The periodic increases may not be nearly enough, and yet it is not possible to have daily raises to keep up with inflation. Yet having a job of any kind is still better than not having one, and there are still meaningful non-monetary perks attached to working in the civil service. Most use their constantly eroded salaries as a minimal base from which to do other things to try and supplement their salaries.

As long as the inflation situation remains as it is, worsening every day, workers are forced to judiciously use the leverage of strike action to try to get a living wage from their employers. But this is a short-term, losing proposition for everyone: the only sustainable solution is a political and economic overhaul in which hyper-inflation is dealt with once and for all.


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The speech Mugabe is unlikely to ever make

Posted by CM on January 9, 2008

Excerpts from an article in the January 3 edition of the Malawi Daily Times:

President Bingu wa Mutharika, in his New Year special message to the nation, said Malawi was on the road to prosperity, promising the country would see more development this year.

He added that based on the experience of his government’s impressive performance in 2007, prospects for 2008 looked brighter. “Malawi is on the road from poverty to prosperity,” he said. “We shall see new growth in our country. We are poised to implement more projects than we promised you in 2004.”

Mutharika said 2007 was a good year for Malawi and its people…

Mutharika said.. he inherited a “sick economy” in 2004 and decided to institute reforms in the public sector and the civil service. They required enforcement of strict fiscal discipline within the social framework of a home-grown development strategy. “We now own the development process and are responsible for its achievement.”

He said in 2007, his government reduced interest rates to 15 percent, making it affordable for businesses, especially small scale and medium scale enterprise, to borrow and service loans.

“We have also reduced inflation rate down from 17.1 percent in 2006 to 8.5 percent during the year. This has been in response to vibrant business activities in the private sector,” he said.

He said his Democratic Progressive Party (DPP) had delivered on what it promised, adding “we didn’t promise what we couldn’t deliver, but delivered what we promised.”

Mutharika in the message said the country was no longer experiencing food shortage during certain months of the year as was previously the case. He said due to sound agricultural policies, Malawi last year produced 1.3 million metric tones of food, which was more than what the country needed annually.

And to give people more money in their pockets, government negotiated higher prices of some agricultural commodities like tobacco, cotton, groundnuts, soya beans and maize. “As a result, many people have had increased purchasing power that enabled them to have effective demand for products. This made many business traders really rich in 2007,” he said.

To reduce dependence on rain-fed agriculture, government built large dams during 2007 and rehabilitated many irrigation schemes that were constructed during the Kamuzu era, to give clean water to rural communities and develop aquaculture industry.

For anyone familiar with the sad reality of present day Zimbabwe, the contrast between how 2007 was for it and its small neighbour Malawi are stark indeed, even keeping in mind that some of Mutharika’s speech was merely the self-serving triumphalism of a politician.

But there are lots of independent indices of how 2007 was indeed a very good year for Malawi. Without a lot of fanfare, Malawi achieved its second maize bumper harvest in a row. Some of the surplus maize was sold or donated to bigger, more “developed” but impoverished and hungry Zimbabwe. And it was done not with any dramatic, wholesale changes to anything, but by the application of simple incentives like a fertiliser subsidy.

After vowing not to repeat the indignity of the country having to beg for food aid as it did during the famine of 2005, Malawi accomplished in two years what Zimbabwe has failed to do in the close to 10 years since “the land revolution.”

Malawi’s achievements are merely another indicator of just how wrong things have gone in Zimbabwe. Zimbabwe has innumerable natural and man-made advantages over Malawi, but we can be pretty certain that Mugabe is unlikely to ever have the opportunity to deliver the kind of good news wrap-up of a year’s performance that Mutharika has been able to do for Malawi.

The two neighbouring countries provide a stunning example of the importance of effective leadership in determining the fortunes of a country. In Malawi we have a poor country with relatively few competitive advantages maximising them to forge ahead. In Zimbabwe is a country blessed with abundant potential wealth not only floundering, but falling behind with each passing year. The main difference between the two? The quality of leadership.

While Mutharika justifiably crows about his government’s achievements in Malawi, all Zimbabweans can expect from Mugabe is more scape-goating, more hurling of insults at real and imagined enemies, more repression and more justifications for failure. The state of present day Zimbabwe, and its short-term prospects under Mugabe, is a tragedy of historical proportions.

Posted in Economy | Tagged: , , , | 1 Comment »

The mysterious case of the disappeared 10 billion dollar court exhibit

Posted by CM on December 30, 2007

I had to check several times to verify that this stunning story was really featured in The Herald (http://www.herald.co.zw/inside.aspx?sectid=28982&cat=1), the government’s own main propaganda rag sheet. Because the Herald’s online archives are so spotty, it is worth reproducing the article in full here:

HARARE provincial magistrate Mr Mishrod Guvamombe yesterday blasted the police and the Reserve Bank of Zimbabwe for frustrating the course of justice by disposing of the $10 billion exhibit recovered from illegal foreign currency dealer Dorothy Mutekede before it was brought to court.

Mr Guvamombe took a swipe at the police and the central bank when it emerged after the testimonies of deputy officer commanding CID Serious Frauds Section Chief Superintendent Alison Nyamupaguma and RBZ director of Financial Intelligence Unit Mr Mirirai Chiremba that the money had already been deposited with the RBZ before the case was finalised and that its serial numbers were not recorded.

In his testimony, Chief Supt Nyamupaguma told the court that on the night Mutekede was arrested, police took the $10 billion cash exhibit to the central bank where it was deposited into a cash detention account.

When the money was taken to the RBZ, it was not booked in the exhibit book at the police station, which is a prerequisite for all exhibits according to the Criminal Procedure and Evidence Act.

Neither did RBZ officials serialise the money on receipt but returned it into circulation.

This prompted Mr Guvamombe to criticise the two institutions for frustrating the justice delivery system, describing their conduct as tantamount to defeating the course of justice. This, he said, made it difficult for the court to establish the source of the cash.

When asked by the court to explain why the police failed to follow the normal procedure of handling exhibits, Chief Supt Nyamupaguma said, “There was a mistake and we need to revisit the whole system,” said Chief Supt Nyamupaguma. “I now see the loopholes in the system and they should be rectified.”

Mr Guvamombe was not convinced with the explanation.

“Both the RBZ and the police are defeating the course of justice. They have taken away our exhibits and we are left with no work to do. In future you should know that exhibits are court property and should not be disposed until the matter is finalised. The RBZ should not be used by the police to frustrate our cases here and I do not know how you should communicate this among yourselves.”

“Why are you not keen to investigate the big fish as opposed to this youthful lady? You are not interested in getting the barons. If you are after the cash barons why bring “runners” like this 24-year-old lady. If I was in your position, I would have investigated the leakage. It is clear that there is no way this woman could have possessed the cash without getting it from the RBZ. You should have the same zeal in investigating the source that you had in dealing with Mutekede’s case. I expect speed and diligence in matters of national interest like that,” said Mr Guvamombe.

Mr Guvamombe said it was apparent that the youthful Mutekede had no access to such a huge amount of cash.

“It is clear that the money came from the RBZ. The money ‘is talking to every one that it is coming from RBZ’, in view of its packaging,” said Mr Guvamombe.

The court also sought an explanation from Chief Supt Nyamupaguma why police were reluctant to probe Harare businessman Jonathan Kadzura on his alleged involvement in the case. He said the matter was still under investigation and they wanted to first complete Mutekede’s case before moving on to other people.

Mr Tapuwa Mudambanuki of Mudambanuki and Associates, who is now representing Mutekede, said his client had no access to such an amount of cash and does not qualify to be called a cash baroness.

“I appreciate that the cash is RBZ packed (sealed in the RBZ’s pre-dispatch plastic packaging) and such amounts are dispatched to meet a (bank) branch’s needs for a day. Commercial banks cannot give such a huge amount to individuals and it would be queer for a young lady like Dorothy to acquire it. The biggest amount deposited in Mutekede’s bank account was $500 million and would it not be a misnomer to call her cash baroness?”

“The RBZ Governor Dr Gideon Gono on (ZTV programme) ‘Face The Nation’ recently was visibly angry with cash barons and baronesses and there is need to get to the bottom of the case,” Mr Mudambanuki said. He attacked police for seeking to punish his client and leaving culprits who were hoarding cash.

“You should have done your work with due diligence. It’s a gross miscarriage of justice to seek to punish this innocent lady for being used as a conduit of cash barons who have access to large sums of money from the RBZ,” said Mr Mudambanuki.

He said his client was being prejudiced as the police applied the law selectively.

“It cannot be possible that she has access to $10 billion from the RBZ. We want to know the truth of this matter because it has an impact on her moral blameworthiness in this case.”

Asked why Mutekede was temporarily released on Saturday night and then rearrested on Sunday afternoon, Chief Supt Nyamupaguma said the arresting detail — a sergeant — thought the case was clearcut since Mutekede had admitted to the charge.

“The arresting detail thought the case was a straightforward one and that there was no need to detain her since she was pleading guilty. He briefed me the following morning and Mutekede was rearrested,” said Chief Supt Nyamupaguma.

In his evidence, Mr Chiremba said when the money was brought to the central bank, it was deposited into a cash detention account, where it could be released by way of a court order. He explained that it would be put into the system but if the police needed it, it would be released to them in the form of a cheque or through a transfer.

Under cross-examination, Mr Chiremba said the serial numbers of the $500 000 new bearer cheques were not recorded and its origin could not be traced.

“If police seize money, they can bank with us and it is treated like any other normal cash deposit in the cash detention account. If they want their money back, they will get it through a transfer or cheque payment. We did not serialise the money at the bank and the source cannot be easily traced,” he said.

Mr Guvamombe warned the RBZ against being used by the police to frustrate matters before the courts. “You should sit down and revisit the cash detention facility because in this case you have destroyed the exhibit. You have handicapped us and we do not know whether that was deliberate or a mistake and I am left baffled,” he said.

After the testimonies by Kadzura, Chief Supt Nyamupaguma and Mr Chiremba, Mr Guvamombe excused Kadzura and said the court would call him if the need arises.

Prosecutor Mr Zvekare argued that Mutekede’s case was now confusing as she initially pleaded guilty to illegally dealing in foreign currency but later shifted goalposts saying Kadzura had given her the $10 billion to source foreign currency for him on the black market.

Mutekede was remanded in custody to Monday for sentence. Earlier, Kadzura had told the court that Mutekede was his “casual intimate girlfriend” of seven months but denied he gave her the said $10 billion. He said he did not know anything about the money and was not aware why Mutekede implicated him.

He initially said Mutekede was just an “acquaintance,” but after further probing by prosecutor Mr Tawanda Zvekare, Kadzura told the court that she was actually his girlfriend but could not disclose the occasions they became intimate.

“She (Mutekede) was my casual girlfriend and I cannot disclose the number of times I took her to bed. It was difficult for me to firstly say she is my girlfriend because I did not see her regularly. If you do not see each other for months, it becomes difficult to safely say she is your girlfriend. Our relationship started about six to seven months ago and in that period I met her on not more than eight occasions.

“I used to visit her at Roadport (a Harare terminus for trans-border buses) but she would only come to my car and we would talk for about two to three minutes. I would go there about once or twice per week although I am no longer very sure of the frequencies,” he said.

Kadzura said he was neither an RBZ employee nor did he have any links at the central bank to facilitate the release of such an amount of money. “I am not a permanent employee of the RBZ and I am not even on the board. I am not even an advisor to the bank and the police in their papers lied. Some may mistake me for an advisor by merely being an economist,” he said.

Kadzura sat on an RBZ advisory panel which was dissolved in January this year. He admitted that he was aware of Mutekede’s illegal foreign currency dealings saying he even advised her on several occasions to shun criminal life. He denied having communicated with Mutekede after her arrest saying the messages purportedly sent to him by Mutekede never reached him.

Mutekede tendered her mobile phone to the court which showed five text messages she sent Kadzura after her arrest and two blank messages purportedly from him.

The phone had the following messages: “call,” “call urgently,” “Hillside Police,” “I am in trouble” and “Jonathan in trouble I need your help.”

In her statement read in court, Mutekede also claimed that she lied to Kadzura that one of her clients, Mohammed Mussa, had offered $20 billion in $200 000 bearer cheques to source foreign currency. She said this was to entice Kadzura to give her the $10 billion to source foreign currency for him.

Kadzura denied having received the said phone messages until the court adjourned to consult Mutekede’s cellular phone service provider, Econet, to verify her claims.

Econet could not provide proof of the messages she sent and received saying it required about two months to trace. But Econet did provide the court with a print out of calls made by Mutekede and it was stated that Mutekede phoned Kadzura on 16 occasions in one-and-a-half hours while she was in police custody on December 23 although Kadzura insisted that he did not communicate with her.

He said he was avoiding answering Mutekede’s calls after learning that she had been arrested. He further averred that his children had access to his phone and Mutekede might have talked to the kids when she phoned.

Mr Guvamombe said the evidence from Econet showed there was communication between the two.

One could take a long time peeling this story like an onion, it has so many juicy, pungent layers.

First of all, it is unprecedented for an arm of the system to openly call into question the integrity of the RBZ as magistrate Guvamombe did. Particularly under its current governor Gideon Gono, the RBZ has been portrayed as the country’s best hope of overcoming hyper-inflation and its many other problems. There almost seemed to be an official campaign to cast Gono as a super-hero who could work miracles, particularly in the state media.

Clearly all that has changed. It is a damning statement for the magistrate presiding over the case of the so-called “cash baroness” to openly say, “It is clear that the money came from the RBZ. The money ‘is talking to every one that it is coming from RBZ’, in view of its packaging.”

In whatever way the RBZ would explain it if Guvamombe’s suggestion on the cash baroness’ source of the Z$10 billion were true, it puts the central bank in an awkward position. It implies that the central bank is very much a part of the “illegal” street foreign currency market, as has been whispered for years. Having to source scarce forex from the street because of the official system’s unattractive fixed exchange rates is inevitable. Yet the RBZ has been crusading against the same market it is accused of being the biggest client of. Gono’s RBZ has always managed to be accuser and finger-pointer, but now more individuals and sectors are openly doing their share of pointing fingers at the once seemingly untouchable Gono and the RBZ.

And indeed, the failure by the RBZ and the police to ensure they had the serial numbers of the exhibit on which their whole case against the “cash baroness” rests stretched credulity. It inevitably causes one to ponder, like the magistrate did, whether this was a “mistake” as the quoted police commissioner claimed, or whether it points to something more sinister.

The pointed barbs of both the magistrate and the defense lawyer about the seeming reluctance of the RBZ and the police to vigorously pursue the real big guns who have access to huge sums of currency while the ordinary folk cannot withdraw small amounts from their own bank accounts are also telling. These open suggestions of the once-revered RBZ being involved in a cover up are unprecedented. They show the extent of the change in public perception of Gono and the RBZ in recent times. It has become obvious to a once unrealistically hopeful public that the problems it hoped Gono could magic-wand away are far deeper than can be dealt with by the RBZ without a wholesale change in the country’s entire system of doing things.

The involvement of Kadzura in Mutekede’s situation was strangely not pursued vigourously by the RBZ or the police. Even the magistrate seemed to contradict his own expressed sentiments about following cases to wherever the leads suggested. The Herald story suggests that Kadzura has far more interesting information to reveal than the investigation or judicial processes have sought to find out.

So the exhibit money has disappeared back into circulation in a way that it cannot be traced. The accused increasingly appears as merely a small cog in a much bigger machine. An apparently key accomplice of the accused is surprisingly given a lot of room and time to cover his tracks. The RBZ has been splashed with a lot of mud which it will be very difficult to clean itself of.

We may never get to the bottom of this particular case, but enough has been revealed to confirm the suspicion of many Zimbabweans that the rot and cynicism of the system runs very high and very deep.

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Harare’s million dollar beer

Posted by CM on December 12, 2007

by Michael Clemens

What’s it like to live in a country whose economy has been shattered by its own leaders? Here’s how a beer purchase in Zimbabwe looks these days:

That’s $1 million Zimbabwe dollars, in four chunky packs of Z$500 notes–collectively, the price of a single beer purchased at a bar in Harare on November 24th. When the beer was quaffed, at the “official” (read: “fantasy”) exchange rate, that was about US$33. At the “black” market exchange rate, that was just under US$1. Today, just twelve days later, it’s only worth around twenty five US cents. Such an economic Twilight Zone forces anyone running a business with the smallest international component to choose between illegality and immediate closure.

Things have gotten so bad that, in a stunning development, enterprising employees of the Reserve Bank of Zimbabwe are selling Zim dollars at the unofficial rate inside the central bank itself to top up their scant wages.

The reason Zimbabwe has the highest inflation on earth is that the regime of President Robert Mugabe is recklessly printing money to finance its expenditures. High inflation has been shown to markedly increase poverty because nominal wages never quite seem to keep up with galloping prices. But why should mass poverty concern Mr. Mugabe, whose chauffeur whisks him around in a Rolls Royce convertible?

Most poverty on earth is so complex that its roots are difficult to trace. In Zimbabwe, the source of the recent surge in poverty is crystal clear. One can only hope that the death-grip Mr. Mugabe holds on his country will soon wither. Until then, Todd Moss and Stewart Patrick have some ideas on how to prepare for the aftermath.

Center for Global Development

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