At the height of the currency crisis every Zimbabwean was a trillionaire, while the Reserve Bank governor worked overtime to prop up President Robert Mugabe’s regime.
Gideon Gono’s feat gave rise to nicknames among the ruling elite – “Mr Fix it All” or “Consider it Done”. He used what he termed “extraordinary measures to tackle extraordinary economic circumstances”.
His second term at the helm of the central bank comes to an end this month. It’s been a decade since Gono took office in December 2003. Inflation had only reached 619.5% and interest rates were still in double figures. Five years later, inflation would have surged to four figures.
However, Mugabe kept Gono close, and became a central figure in his strategy of clinging to power.
Leading economist John Robertson said even though the law calls for a maximum of two terms, he would not be surprised if Mugabe invokes his presidential powers to lengthen the governor’s term.
“However, I know that Dr Gono has already told some people that he does not want to serve another term. Despite that, if he is put under pressure to accept, he might well do so. Dr Gono’s performance was very much the result of his determination to please the president,” said Robertson.
From tea boy to central bank governor
Gono rose from a tea boy at the National Breweries in 1977 to central bank governor 26 years later, by which time he had established a business empire with interests in farming, publishing and the media.
As the economy went into meltdown, he kept the mint’s printing presses working around the clock, seven days a week, printing trillions worth of Zimbabwe dollars, the value of which was quickly stripped by inflationary pressure. He responded by striking off up to 10 zeros at a time to save computer systems from crashing and Zimbabweans from carrying huge wads of cash.
He also imposed strict bank withdrawal limits. After people had withdrawn the maximum amount they were often unable to buy a loaf of bread with the money.
In 2008 alone, he introduced 24 new currency denominations, including a one-trillion-dollar note. A 100 000 banknote at the time was worth one US dollar on the widely-used black market – half the asking price for a loaf of bread.
It was around this time that the former United States ambassador to Zimbabwe, Christopher Dell, dispatched a cable to Washington proclaiming “The end is nigh” and predicting Mugabe’s downfall.
Members of the army – Mugabe’s traditional backers – began looting, raising fears that the Zanu-PF leader’s loyalists could eventually be pushed into a revolt by the political and economic crises.
Gono clings on
Still, Gono – and Mugabe – clung on, using tactics such as raiding foreign currency accounts of private individuals, companies, nongovernmental organisations and trusts that left the bank with debts amounting to $1.5-billion.
Victims are still struggling to recover their funds, and the Supreme Court has ordered Standard Chartered to pay one of its clients nearly $50 000 held at the central bank.
Gono also opened a number of companies in the central bank’s name, including bureaus de change and gold mines, and resorted to buying foodstuffs in neighbouring countries for free distribution to the restive population.
A number of banks that were skirting his unconventional banking rules either had their operating licences cancelled or were placed under curatorship, and 16 money transfer agencies were closed.
This week political analyst Ricky Mukonza said Gono’s policies, such as managing to come up with measures to continue with the use of the home currency under an environment of hyperinflation, were innovative but his co-operation with Mugabe was his major undoing.
“His legacy is a mixed bag, one of an expert economist whose reign at the central bank got tainted by his politics and his attempts to mix politics with economics in a polarised political environment. If you take his lust for political power and his involvement in Zanu-PF politics out of his legacy, he has been an outstanding governor. His politics spoilt everything good he did or intended to achieve at the bank,” said Mukonza.
Gono was touted as possible finance minister after Mugabe’s July 31 election victory, but he was overlooked in favour of Patrick Chinamasa, the previous justice minister and a lawyer by profession.
Gono was at times a voice of reason. He called for an end to farm invasions and his criticism of the country’s indigenisation drive in which foreign-owned firms must cede 51% shareholding to locals.
Robertson said Gono’s leadership style was destructive, but he did so to avoid being made to shoulder all the blame. Gono has previously flighted press advertisements that showed that everything he did was sanctioned by Mugabe. Also, a new law has granted him immunity from prosecution for measures undertaken in the name of the state.
“In his book (Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges), written after the first five-year term ended in 2008, Gono admits to attending several meetings a week to receive the president’s direct guidance … to reinforce the claims made repeatedly by Mugabe that the imposition of sanctions left the authorities with no option but to take the decisions that eventually destroyed the Zimbabwe dollar.”
His former adviser, Munyaradzi Kereke, previously accused Gono of looting the central bank of millions. Gono denied any wrongdoing.
Economist and Movement for Democratic Change MP Eddie Cross said Gono had worsened Mugabe’s political problems.
“In a way, Gono was responsible for the economic collapse because he was running a parallel government. He exploited the ignorance of the political leadership at the time who did not understand the seriousness, the consequences of what he was doing,” said Cross.
“You can’t beat the markets. Eventually the whole system was overwhelmed and forced the abandonment of the Zimbabwe dollar.”
“In a way, Gono was responsible for the economic collapse because he was running a parallel government”Zimbabwe’s Reserve Bank governor Gideon Gono has always tried to please President Robert Mugabe, say analysts.