The Herald (Harare)

4 February 2013

Zimbabwe: Well Done Governor Gono, for Rescuing the Ordinary Citizen

Reserve Bank Governor Dr Gideon Gono last Thursday presented his first Monetary Policy Statement at a time when economies, not only ours, are reeling from a slowdown in economic activity. Besides the global economic meltdown Zimbabwe's economy also has to contend with the negative effect of sanctions, adverse weather conditions and liquidity challenges.

In the background of such a negative setting, Dr Gono's job could not have been easier.

There was increasing presssure on him to be the bearer of some good news.

He tried, at least as he managed to convince his fellow bankers to effect the long talked about reduction of bank charges and undertake to pay interest on deposits.

For a long time both Dr Gono and Finance Minister Tendai Biti have spoken strongly against the the high bank charges prevailing a situation that was seen against international banking practice.

All the 25 banks appended their signatures to a memorandum of understanding binding the signatories to a framework for bank charges and interest rates. The central bank will play a supervisory role and those found operating outside the agreement risk sanctions and the possibility of losing their banking licences.

While this could be viewed as a positive move on the part of the bankers, we feel that they could have handled it better considering that the issue had been hanging since the advent of dollarisation which saw most banks declaring profits way out of this world at a time when most companies were struggling to recapitalise their operations. Obviously there was something that was not tying up.

Considering that most companies were shunning the very same institutions for charging high interest rates on short term funds, there was need to revert them to read from the same hymn book. For the ordinary citizens, who had an element of mistrust for banks, the environment was not conducive for cultivating a culture of savings.

Another measure of good news brought by the monetary policy statement was the support for the small to medium scale enterprises largely viewed as the nursery of larger firms of the future.

The banks were ordered to factor the SME sector in their portfolios so that they constitute a third of their loan books.

Globally a vibrant SME sector is viewed as the engine for economic growth, poverty reduction, bridging supply gaps in the economy and uplifting standards of living.

There was an outcry that most banks were not generally being responsive to this sector and efforts to engage the bankers were at times unthinkable as some of them relegated the SMEs to the "unbankable class".

Under the MoU banks will provide tailored products such as loans and advances especially supply contracts and order financing.

Another blueprint to emerge from the Governor's presentation was the Banking Sector Vision 2020.

The vision is an ambitious undertaking centred around the pursuance of banking sector solvency and stability to anchor sustained economic growth and development.

It is the long term vision of Governor Gono and his "merry men" to reinvigorate the banking sector to where it was and should be.

Needless to say there is a lot to be done and this can only be achieved with a committed team under the watchful eye of the RBZ boss.

It is possible.

Dr Gono should also be applauded for coming clean on his position regarding the indigenisation of the banking sector as he previously seemed to be taking a wait-and-see attitude.

He spelt it out clearly to the affected institutions that they have to follow the laws of the land without exception barring the much cited sensitivities of the sector.

Considering that the majority of the banks are locally owned anyway, it does not make much sense to continuously defend the obvious.

To realise the Vision 2020 and ultimately achieve sustainable economic growth and development, there is need for all of us to sing from the same hymn book and this includes the politicians, the bankers, business and the ordinary people.

We owe it to ourselves to focus on matters that will make a difference to the generality of Zimbabweans instead of dwelling on issues that ultimately make us the laughing stock of the world at a time when emerging economies are leaving no stone unturned as they thrive for even better outcomes.

Ads by Google

Copyright © 2013 The Herald. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.