Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

***The views expressed in the articles published on this website DO NOT necessarily express the views of the Commercial Farmers' Union.***

Eric Bloch: RBZ sees realities

Eric Bloch: RBZ sees realities

Thursday, 11 August 2011 19:15

THE Monetary Policy Statement (MPS) recently presented by the Governor of 
the Reserve Bank of Zimbabwe,  Gideon Gono, was like several breaths of 
fresh air. It demonstrated an awareness of the innumerable constraints still 
impacting upon Zimbabwe’s economy, in striking contrast to the recurrent 
contentions by so many in the political hierarchy, that all is well save for 
the alleged, highly misrepresentative, impact of the so-called “illegal 
international sanctions”.
Whilst there has been a minimal economic upturn as evidenced by a marginal 
increase in Gross Domestic Product (GDP), the reality is that almost all 
economic sectors continue to be confronted by many major restraints in terms 
of real and lasting growth, something not acknowledged and admitted by those 
In contrast, the MPS recognises that most Zimbabweans continue to be plagued 
by intense poverty and concomitant hardships, and that reversal of the ills 
of the majority of the populace necessitates substantive actions to address 
the countless growth restrictions of the many afflicted sectors of the 
economy.  Some of the realities highlighted in the MPS included:

That notwithstanding growth projections for the mining sector are  44% 
in 2011, the sector continues to face challenges of lack of funds for 
recapitalisation and refurbishment of mining equipment, unsustainably high 
costs of production, an uncompetitive investment environment and skills 

Apart from being underfinanced, the prevailing political uncertainties 
around compliance with Zimbabwe’s  Indigenisation law requirements, cast a 
dark shadow on the sector.

That the manufacturing sector faces major challenges of antiquated 
plant, equipment and machinery, low effective demand, liquidity constraints, 
high competition from imports, and high costs of borrowings.

That the tourism sector enjoyed improved performance in 2011, but that 
performance is expected to be weighed down by non-implementation of an open 
skies policy, the deteriorating road and rail network, congestion at 
Beitbridge border post, lack of access to Visa card facilities at some 
tourist sites, and unavailability of lines of credit to improve the quality 
tourism products, and many other factors.

The financial sector has witnessed the manifestation of structural and 
operational deficiencies since 2004, including a shift from core banking 
business to speculative transactions, abuse of bank holding company 
structures to evade regulation via a web of sinister companies, poor 
corporate governance and management practices as well as insider dealing and 
abuse of depositors’ funds in pursuit of incestuous self-aggrandisement 

Their holding companies have wafer thin capital bases, and engage in rapid 
local and regional expansion with no proper internal controls and adequate 
capacity, and disregard of prudential laws and regulations.
The MPS emphasises that going forward, Zimbabwe needs effective debt 
management policies to curtail accumulating debt to unsustainable levels, 
concurrently with encouraging mobilisation of domestic savings and foreign 
direct investment into the key export and productive sectors.
The statement reinforced the Reserve Bank’s very forthright and commendable 
recognition of these and other realities by calling for a diverse range of 
positive and constructive policies and programmes to address the myriad of 
the economic ills, and to progress a meaningful economic recovery.
Amongst the measures emphasised as necessary was that Zimbabwe must have a 
holistic programme covering the entire production chain in agriculture. 
That programme needs to encompass security of tenure for farmers, financing, 
distribution mechanisms, constructive marketing and pricing, contract 
farming, realistic measures for loan recoveries, dispute resolution 
mechanisms, and a state role in rural community agricultural production.
In particular, emphasis was placed on the need for security of land tenure 
to ensure long-term agricultural planning and access to financing, with 
99-year leases being market valued, registrable and executable, enabling 
them to be used as collateral for financing of farming operations. 
Currently, farmers have no effective and assured ongoing, secure tenure, and 
therefore they have no substantive collateral needed in order to obtain 
working capital funding.
The Reserve Bank issued a 35 page, comprehensive supplement to the MPS, 
urging a constructive sectorial approach to economic  empowerment and 
indigenisation.  At the outset of the supplement, Gono emphatically stated 
that whilst the Reserve Bank is unreservedly supportive of Zimbabwean 
indigenisation and economic empowerment, its pursuit must not be  “any 
attempt to hide behind the indigenisation law in order to commit or justify 
acts of economic banditry, expropriation and or unfair practices that 
suggest that we are not a law-abiding citizenry, or any attempts to parcel 
out pieces of the economic cake and opportunities to a few connected cliques 
of people, whilst the majority of intended beneficiaries remain with 
Moreover, the governor said that the “law must not be used to multiply 
pockets of inefficiency, in as far as utilisation of national resources and 
opportunities of the country of the country is concerned”.  He added that 
“the empowerment strategy should also take account of the fact that, in 
terms of ownership” 73,5% of GDP is already indigenised or under 
governmental control.  That statement will undoubtedly be viewed sceptically 
by most of the population, and by almost all of Zimbabwe’s political 
However, the governor did not rest only upon that statement, but 
corroborated it with a detailed tabulation.  It demonstrates the GDP 
contribution of those governmental or predominantly indigenised enterprises 
as including agriculture, hunting and fishing ventures that have a 17,6% 
share in GDP, those in the distribution, hotels and restaurants sector 
having an 11,1% share, transport and communication enterprises having a 7% 
share in GDP, education with a 9,2% share and many other sectors’ 
enterprises and operations (also predominantly indigenised or under 
governmental control) also participating materially in GDP.
The supplement contends that the indigenisation and economic empowerment 
thrust must be to improve basic welfare of the nation and reduce poverty in 
line with the internationally recognised United Nations Millennium 
Development Goals.  It also calls for awareness that “the acquisition of 
equity and majority shareholding in companies have minimal short-term 
benefits to the indigenous people and should therefore be the medium to 
long-term national goals”, instead of being pursued with undue haste.
Hopefully, these sage advices will be heeded by the politicians in general, 
and by the Minister of Youth, Indigenisation and Economic Empowerment, 
Saviour Kasukuwere, in particular.



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