'Chinamasa walking a tight rope'

HARARE - Former Finance  minister, Tendai Biti, who is now shadowing his successor, Patrick Chinamasa, has warned the Zanu PF government must stick to key markers agreed to during the inclusive government era, failure of which the party risks driving the already fragile economy to the ground.

This week, Senior Assistant Editor Guthrie Munyuki interviewed the MDC secretary-general who clearly longs for continuation of the work he did during his tenure. Below are excerpts of the interview.

Q: Are we likely to see the economy remaining on the path that you had taken during your tenure as minister of Finance and do you share the view of being equated to the late Bernard Chidzero?

A: I am different from Bernard Chidzero and anyone else because I inherited an economy that was in tatters, an economy that had gone through 14 years of sustained economic decline, an economy that was bleeding with inflation of 500 billion percent.

Bernard Chidzero and those who were there in 1980-1981 inherited an economy which was so strong that the Zimbabwean dollar was 1 on 1 with the British pound.

The Zimbabwean dollar was stronger than the US dollar and there was a lot of goodwill.

The Zimbabwean government, between 1980 and 1985, got US$4 billion in development aid. We operated in a different environment.

Chidzero and others operated on the basis of a vibrant economy which had been slowed down by sanctions. I operated in an environment where there was no economy.

So my key task was to, number one; restore macro-economic stability, stop the hemorrhage that had been taking place, the current deficit and so forth.

Number two, it was to lead, to provide a vision, which I did in the Short Term Emergency Recovery Programme (STERP) which we basically wrote in two weeks.

What did we achieve? We achieved macro-economic stability, we achieved growth.

In 2010 and 2011, Zimbabwe was the fastest -growing economy in the world, growing in real terms; at 9,4 to 9, 7 percent per annum.

My legacy is that of actually re-establishing a functional economy where there were goods in shops, an economy where children are going to school and universities, an economy where there is commerce, there are cars and offices, where people are working, which was not the case in the crises years, particularly 2008.

Q: There is a new regime including a new Finance minister. Do you see a continuation of that recovery path in the economy?

A: I think that to come up with a way forward; you have to understand where you are.

My problem with the current people (Zanu PF government) is that they do not know where we are.

They do not know that they are lost. And a person who does not know is lost cannot ask for directions. So they will continue moving around in circles like headless chickens.

The position of our economy is so precarious. Number one; we do not have capital in Zimbabwe. We need capital.

I would estimate that we need at least $4 billion immediately for recurrent expenditure, for short-term needs and current account deficit.

We require $14,2 billion for infrastructure in the next five years. There has not been meaningful gross capital formation in this country since 1968.

That is why if you wake up someone who died in 1968, he will not get lost in Harare! So we have no capital.

But whoever is now minister of finance (Patrick Chinamasa) is operating under a very restrictive environment. He does not have (a) monetary policy because we dollarised.

The Reserve Bank of Zimbabwe cannot print money. His fiscal options are extremely limited.

Normal economy functions on the basis of what is called a fiscal diamond. He does not have a fiscal diamond. 

A fiscal diamond is the existence of number one; your capacity to borrow cheap money on the international financial markets. We do not have that.

We have got a sovereign debt of $11 billion.

So we cannot get money from the World Bank and African Development Bank. And because our risk profile is so high we cannot get any money from the international financial markets.

That is why countries who are different from us, who do not have those problems, (can get money).

Zambia for instance went into the market asking for $400 million, the bond was overpriced to the tune of $11 billion.

Rwanda very recently went into the market and wanted $400 million and got $ 4 billion.

I wanted $30 million in October of 2012 and I got $ 7 million because no one trusts a predatory government.

Then number two, he (Chinamasa) cannot get overseas development assistance which again is a fiscal tool because of political reasons.

Then number three; part of the fiscal diamond depends on what you yourselves can do in terms of reform effort.

There, he is going to have a problem because he would want transparency over the diamonds but he will find soldiers waiting for him there and the sophisticated infrastructure of looting that has been set up.

Then the things that I could get away with because I was MDC, he will not be able to get away with.

The secret of being a good finance minister is that you must know what has to be done and this is a technical thing.

I am not even sure that I am  a lawyer anymore. I think I am an economist now!

So you must read and understand from a very technical point of view.

Once, you have the knowledge and you know where you want to go, you must be a thug, you must have the capacity of pushing. You must be very thick-skinned.

But you must also be a diplomat. In fact you are a core minister of Foreign Affairs because when you go to Washington, Brussels, it is diplomacy.

When you talk to local donors, it is diplomacy.

The way you communicate with fellow ministers as well, it is also diplomacy.

So you must know when to shout like a mad man, you must know when to listen, you must know when to deny information by omission.

You must be versatile and you must have dexterity and quickness of mind but most importantly you must be honest and consistent because the greatest thing you want is trust.

The bankers must trust you that if he says he is going to do this he is going to do it. Commerce must trust you that if he says he is going to do it, he is going to do it.

When I became Finance minister the question that used to be asked was yes, you have written STERP, are you going to implement it?

Anthony Mandiwanza asked me that question on March 30, 2009 and I said we are going to do it, remove surrender requirements, and he was shocked.

The next question that came to me was are you going to return the Zimbabwe dollar.

And I said guys if there is one thing that I would commit suicide for and refuse, is the return of the Zimbabwe dollar.  So in the end people knew that, once he steps his foot, he steps his foot, haatangike.

And you need that because you must be consistent. The problem is that these people (Zanu PF government) are going to be eclectic; choose this because it suits them. We will just perpetuate the concept of a high-cost-low-trust society.

Q: You worked closely with the IMF and World Bank during your tenure, what were some of the markers they laid down as part of encouraging revival and are these still critical in reviving the economy?

A: Well they were minor things like reporting of data. We were in control of that.

So I would say the first real marker is transparency over diamond revenue.

I had done a legal frame work.

I had done a Statutory Instrument before I left which had been done by the Attorney-General’s office. What was left was just to enact that into law.

The diamond policy we adopted in the previous government also had said there was going to be a new Diamond Act and the taking out of diamonds from the Precious Minerals Act.

Whether they are going to do it or not, I am not sure. Diamonds are complicated.

The second marker was to do with Domestic Debt. We had to clear domestic debt.

That would have been a very easy marker to do that.

But I think for this government, because it has made so many promises, it is going to be impossible and my belief is that this government is not going to abandon the SMP (Staff Monitored Programme) by choice but they are going to abandon the SMP by virtue of non-compliance, lack of discipline, direction and determination to meet particularly this marker.

The third issue is reserving money for social expenditure and again that is easy because here the donors could chip in if they trust you, education, and so forth.

The IMF has changed, in the long run these issues will not be issues.

But now they are saying we want to make sure that you are parting money in social delivery, health and so forth.

Then the fourth issue is the limitations on unilateral borrowing because remember the purpose of the Staff Monitored Programme is to say you have got a debt (of) $10,7 billion, you cannot pay it but you want these countries that you borrowed to cancel and forgive your debt.

So they want to know that you are going to be disciplined then they will cancel your debt.

That is the SMP. So the SMP, therefore, is a test run, probation; are you worth it if we cancel your debt.

Will you not implement the same bad habits that got you into the same debt? So the SMP is really a test of trust; can we trust that if we forgive all this amount of money you will not come back days later with an even bigger debt?

So we agreed to a situation where we will not borrow particularly non-concessionary; that is to say at market rates because we cannot afford them and that if we have to borrow we will only be borrowing at concessionary rates but for necessary infrastructure requirements, which is logical.

I think the Zanu PF government is going to fail this because they are going to borrow to sustain recurrent expenditure, trips and so forth and this will not meet this marker.

And because they do not understand money, they will borrow money at 19 percent, 7 percent, because of lack of craft competency. 

Of those four markers, the two which are their downfall, are internal debt management and the restrictions on borrowing willy-nilly as if you eat money like (an) aphrodisiac.

Q: Your colleague and successor, Chinamasa, is he up to the task given what you have just outlined?

A: I do not think it is for me to comment.

I think it would be unfair to comment. I know him so well.

All I can say is that if he has to deliver for Zimbabwe he has to have a serious paradigm shift.

For starters, he has to dress better! Secondly, he has to know that this is diplomacy; it is carrying the whole country so he cannot shout at people and treat people like they are rubber mats! This is a different ball game.

Q: And what is your take on the proposed indigenisation of banks?

A: One of the things that need to be protected is the financial services sector.

The banking sector is as good as deposits that are in it. So you cannot talk of indigenising the banking sector.

It does not happen because all you are doing is indigenising the building because what is in the banks is not. And everyone who is in his right mind must appreciate the importance of the banking sector particularly a foreign bank.

The person in Britain will not give his money to John Chibadura’s bank which he does not know but he will put his money in Standard Bank or Standard Chartered Bank because he knows those.

He knows that if they default, he’s got recourse. So international banks, you actually need them for international financial mediation which is so desperately required in this country.

Comments (21)

All this self praise does not help anyone. The US dollar was the salvation of this economy and not some fancy foot free financial engineering by the minister and his government. In any case by his own admission he was more of a bean counter than a finance man. With the little resource at his disposal his productive arms in the econmy died under his watch. Industry was allowed to die faster, ditto for Agriculture. Chinamasa is one guy who should not be seen anywhere near anything to do with government..he is that clueless but he appears to have found the elixir to the nation's financial ills by coming up with some reasonable financial plan for helping farmers during the start of the season...one hopes in the same pot he will find something for industry as well. He might not be able to pull it off but at least he is seized with issues concerning the major key sectors of the economy not spend productive time counting petty cash receipts from Zimra and using these to pay salaries and buy fancy cars for government ministers. Biti was the worst minister in that portfolio since independence and nothing will convince any sane person otherwise. Rather he should have been engaged as lower level accountant at the ministry. As a lawyer he may be excused, that there is a world of difference between being a finance officer and an accounting officer..if anything accounting is subordinate to finance and contributes maybe less than 10% of the finance manager's job.

gutter poet - 3 October 2013

Biti is just hot air and nothing else. He conveniently forgets that its Chinamasa who introduced the multi-currency system and not him. Biti actually wanted to make us a HIPC but thank God ZANU PF stopped him!

patrick - 3 October 2013

Gutter poet, urimbavha sevamwe vako, u do not understand what is economy, All the money that Chinamasa is giving to the Farmers, he will not return even 10% of its, these are loans that need to be returned, much will go to ZPF big fish, who had never reformed from the past deeds, they dont repay loans, if you give them money, they will use it otherwise, Fuel vanotengesa, Magetsi havabhadhare, mbeu vanotengesa ipapo ipapo, mark my words vamwe twuSmall fish tunosungwa nekudakwazvo, Zvimwe vanozadza maWarehouses zvowora, so kurasa mari, better kutobhadhara zvimwe panekupa vanhu vasina discipline, vamwe vatori nenzara vanokanga mbeu yacho, if they harvest, they will never sell to GMB, Black market, We are used, so teach them to reform first before anything,

garwe - 3 October 2013

is dressing properly have anything to do with economy. u survived coz of us dollar. that's y yo party lost in d just ended elections coz u suffer from a small mind of a rat! self praise!

chimhukwe - 3 October 2013

People get your facts straight. Chinamasa did not introduce the multicurrency system. All he did was to formalize it. The resourceful people of Zimbabwe dollarized the economy. The so called parallel market (black market) saved Zimbabwe. So please do not give credit where it is not due. Biti seems to know what he is talking about. Don't begrudge his knowledge and capacity just because you do not support his political party.

connie - 3 October 2013

Biti is talking sense. chinamasa wil not revive this rotten economy

kenny - 3 October 2013

Ah lets wait and see there is that guy sharing the platform with us please if you dont understand english don't comment Biti is not talking of dressing smart in terms of clothes be wise read across the lines, then my question to all those arguing who introduced the USD dollar its not about who introduced it it is about who had the diplomacy to go and talk to US Treasury and sgn the agreements for them to agree that Zimbabwe can use thier currency you don't just work up and say OBAMA up yours we are starting to use your dirty money as some used to call it there is diplomacy involved. So answer me who flew to meet US Tresurery to sign the papers was it Biti or Chinamasa

USDollar - 3 October 2013

Look, as already mentioned the street had already dollarized the economy. The dollar had become the currency of choice in trading and even government transactions. This was all happening without Obama's permission let alone Chinamsa or Biti. Thus we the people introduced dollarization and it doesn't matter as to who informed Obama because the deed was already done. Get it.

connie - 3 October 2013

I once joined a small queue at TM in avondale sometime to buy maize meal. A white guy who was in the queue said soon we will have no maize meal to queue for. Some zealots wanted to hit him. 4 months later surely there was nothing to queue for. tendai Biti is only talking sense, but like those who did not believe that white man because he was white we have those who just want to have a go at Biti because he is MDC-T and they are zanupf but reality check, how many indutries have closed, read the Financial gazette if you are intelligent enough.

maita - 3 October 2013

true.....sad but true.....we have two issues here 1.the people of Zimbabwe dollarised the economy but still the money in circulation wasn't enough to sustain the economy through formalising the use of the u.s dollar encouraged investment from small investment and donors....and since there was hope in that there was now an inclusive government, government could actually source out money from outside to be able to pay the civils servants which form bulk of the working class therefore making it possible for everyone to use the u.s dollar....biti did play a big part in the economy....diplomacy is important and you should also have a thick skin when you dealing with finance....telling people what you have and what you dont have and making sure that they accept that....power is invested in those that can use it wisely regardless of what people think for the benefit of them.....

jimmy - 3 October 2013

@connie - one of the very few sensible people around! You are dead right - it was the ordinary people who dollarised the economy, Chinamasa only formalised the use of multi-currencies.

Musona - 3 October 2013

I remember Chinamasa was justice minister responsible for prosecuting people "dealing in illegal foreign currency" , even hounding some bankers out of Zim, prosecuting crossborder traders who sold goods in neighbouring countries & had their forex confiscated, advised government (RBZ) to raid forex accounts for exporters & NGO's. then was briefly given the finance ministry to "redeem himself" by doing the inevitable! He doesn't deserve ANY CREDIT AT ALL!

Ganyamatope - 3 October 2013

lets wait and see whether he is going to deliver since we are saying dollarisation was the one which stabilised the economy, biti has done his part, and from the onset the was hope till he handed over the keys shinamasa, who sound like a headless chicken, lets hope he will shut his dirt mouth

steven - 4 October 2013

gutter poet uri nharadada. look you zanu pf twats can not take the credit of introducing the US dollar without taking the responsibility for destroying the zim dollar. When you Neanderthals took over this economy the zim dollar was at parity with the British Pound and GDP was sky high compared to today. You can not have your cake and eat it too. Idiots.

galante - 4 October 2013

The display of crude disregard for each other's opinion is the reason why we are the most literate nation in Africa but on the other among the poorest. I have no doubt we all have degrees in Adult Education, providing very little contribution to running of the economy.

Peter - 4 October 2013

Very very interesting comments from both sides. Lets come back to this forum in twelve months time and see who was right!

Johno - 4 October 2013

l think people should learn to comment on issues based on reality and not political or ruvengo. When Simba Makoni mentioned US dollar usage during his term as Min of Finance , they caslled him a sellout who was not suppose to be there in what they called "War cabinet" then, whatever that meant. Chinamasa was there and did he say anything then, a big NO. when Gono siad it he was silenced and when Chinamasa knew that it was invertable to work alone and were bound to share power thats when he rushed to announce dollarisation mean while they were the ones who benefited USD black market. Chinamasa will not do things that he deem neccessary to save Zimbabwe but will act according to Zanu pf strategies to keep themselvein power using their starategy of starving us (Zimbabweans) into submission that they are our liberators and own Zimbabwe but what they are assured of is nothing last forever axcept the word of God and God himself.

Nancy - 4 October 2013

Love him or hate him, Biti in the above interview has provided logical and common sense answers to the dialogue. Who will argue against transparency in government and the way it transacts in the diamond industry. Only the corrupt will see fault in this. Who will argue against the use of skillful diplomacy in order for Zimbabwe to be accepted back into the community of nations. Only power hungry, greedy and those with dictatorial tendencies will want to maintain the status quo. Clearly Biti, in this piece has given sound technical responses based on informed knowledge. Chinamasa should be grateful for this information and should take time to learn from it.

connie - 4 October 2013

lets all work for the betterment of our nation,blame is just that blame it will elevate us to lofty albeit deceptive levels of an assumed knowledge over what it is to be done,instead of condemning why not correct.instead of harsh and undue criticism why not inform.Much of our time should be spent in fora,arguing zim economic future not,mourning the excesses and crude injustices perpetrated by some political party.Unity means something you know and we must have unity of purpose,which in our case in the urgent revival of our economy.Lets exchange Solutions not Insults.UNITED WE STAND AND DIVIDED WE FALL.

truth - 4 October 2013

Biti resuscitated the economy which was in a comatose, there was no fuel, no medicines in clinics, no food in shops, sim cards cost $150, children were not going to school etc. You Zhanu PFsychomotor have got a short memory or you are downright stupid as usual. Chinamasa is in charge now lets wait and see his achievements, if any.

Mudhiniwe - 5 October 2013

Tell them wananji

Chaminuka - 6 October 2013

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