We missed Gono’s sunrises

Gideon Gono

It's neither here nor there what people say about Gideon Gono's economic strategy but fact could be that as a nation, Zimbabwe failed itself by blaming him for the money he pumped into agriculture and industry to try and revive them. By standing aside, the opposition and those who care about Zimbabwe opened the door to corruption and eroded an opportunity that could have changed the future of our children 

 Gideon Gono was an opportunity we missed and if we had listened to him, who knows, maybe we would be enjoying those sunrises or are they sunsets now?

Bar what Gono’s sunrises or sunsets are said to have caused, we missed their brighter and warmer sides.

Ironically, what Gono did is what most western governments have done to keep their banks and major industries afloat. It’s a fact that the USA printed money and is printing money to bridge the gap created by the 2008 economic disaster.

The European Union too is printing money. Even the British are busy printing money. Just don’t talk about India because the printing presses there are running.

Now if other central banks are printing money to cushion their industries and keep their banks afloat so that their economies do not collapse, what exactly was wrong with our system? Why didn’t we embrace and wash in Gono’s sunrises?

I will not bother you with figures and numbers here for the sake of simplicity and clarity, but would like to explain the theory behind printing money. 

It’s called the quantity theory of money propounded by Copernicus. It simply states that money supply has a direct proportional relationship with the price levels. I need not say much because the issue is why did we not embrace Gono’s sunrises?

The crucial question here now is whether printing money leads to inflation. And if it does, why isn’t there a rise in inflation in the US whose debt is piling every second?

US deficit is projected to hit the $1.4 trillion mark this fiscal year and the treasury department says it will not be able to approve any borrowing by 2 August last year.

There were reports early June last year that US Republican law makers were muting a brief debt technical default as a means of encouraging White House to cut down on expenditure. 

China, the largest US creditor that holds more than a trillion dollars in Treasury, raised concern that such an act would plunge the global economy.

There have been arguments that our inflation was driven up by Gono’s money printing ventures and that we were indebted to the IMF etc etc etc.

My point is; why did we suffer so much when our situation was just as good or as bad as that of the USA which I have used as an example? 

Let me give a brief rundown of what Gono did when he took over as Reserve Bank of Zimbabwe Governor.

His first step was condemning old bank notes that had become worthless because of inflation and introduced new currency on 1 August 2006. 

A year later, Gono released Z$200 000 denomination. More came afterwards: December 2007, new denominations were issued Z$250, Z$500, and Z$750 000; next on 20 December 2007, Z$1m, Z$5m and Z$10m were rolled out on 16 January 2008.

About four months later on 4 April, Gono unleashed Z$25m and Z$50m with Z$100m and Z$250m rolling in on 5 May 2008 and Z$500m and Z$5b, Z$25b, and Z$50b landing on 20 May 2008. The biggest one – Z$100b - was unrolled on 21 July 2008. 

By then, money supply had increased from Z$45b to about Z$900 quadrillion.

Since his plan was to rejuvenate agriculture, he then injected money in agriculture purchasing machinery, seed, fertilizer and even giving out money.

He also turned on the banks that were operating like cartels where he pushed out unscrupulous operators and speculators and created the ZABG.

In the process, Gono became culprit number one for causing cash shortages; causing the highest inflation in the world and collapsing social services namely health and education. Price hikes were also blamed on Gono.

What Gono’s critics fail to understand is that had we utilised his ideas, we would have been somewhere. All that money put into agriculture could have changed our fortunes.

If I can revert to the USA again where the Emergency Economic Stabilisation Act was enacted on 3 October 2008 to purchase distressed assets and inject capital into banks.

The Bill, signed by President George W. Bush before leaving office, made available US$700billion under the Troubled Asset Relief Program (TARP) that would prevent an economic depression and restore confidence in the USA credit markets.

Today, the USA economy has not been back to what it used to be before the 2008 economic problems but at least there is some sense of pride and development.

This, maybe, is where the difference is; support and national pride. In our case we did not take any pride in Gono’s efforts. For most of us, it was a Zanu-PF thing. 

Indeed, Zanu-PF made it their thing. 

That’s why most if not all those who benefited from the RBZ were non-productive farmers who sold the fuel, seed and fertilizer they got; who used the tractors as kombis or luxury ‘cars’ for driving to the bar; who still today use the land as a place for a homestead while the fields run empty throughout the year.

And nobody had the guts to stop them because they played the party card. I know a top figure who got a combine harvester which was never used. The last time I saw the machine, it was parked at Concession.

There are also some who just went to take things just for the sake of taking when they could not utilise them. Today, equipment is lying unused on barren farms.

We missed this other side of Gono’s sunrise.