'We had to think outside the box'

HARARE - Gideon Gono, who retired in December 2013, after a 10-year tenure as governor of the country’s central bank, the Reserve Bank of Zimbabwe, was at the forefront of the country’s fight to survive crippling economic sanctions, the most punitive ever imposed on any African country by Western governments and institutions.

Meant as a tool for “regime change” in reaction to Zimbabwe’s land reform programme, the sanctions led to the implosion of Zimbabwe’s economy, and it was left to the efforts of President Robert Mugabe, Gono and the Zimbabwean leadership to stem the tide.

How Zimbabwe survived the sanctions is the story told here in graphic detail in the New African magazine, by the man who was at the eye of the storm. This is Gono’s first interview since his retirement as he has adamantly refused to speak to the media.

The Daily News yesterday started publishing the whole New African magazine interview.

Continued from yesterday

Mugabe has become the only African leader — both traditional and political —  in pre-and post-colonial African history who is still standing after being assailed by the combined might of the nations of European stock. How do we account for this?

A: Well, as I said, no other African country in the history of economics has actually withstood the kind of pressures that we went through. We are yet to document how we did it, but let me say to you that we surprised many people and the credit must go to Mugabe. He directed all our actions and operations, so credit for the survival of the country and Zanu PF as a party goes to him,

Q: Zimbabwe’s inflation rate rose astronomically. Couldn’t you have controlled it to a more reasonable level?

A: We could have kept inflation below double digits if this was an option but it wasn’t. As a central bank, we could have pushed a hard-nosed tight monetary policy and not printed any money. We would have had low inflation if we had decided not to try to assist industry and get involved in other quasi-fiscal operations. By being blind to the realities of our situation, and pursuing conventional in-box economics, we could have kept our inflation to even single digits but at what cost? This is the issue! At the cost of very high inflation in terms of dead bodies!

There would have been lots of dead bodies lying in our streets, of children, the elderly, the vulnerable, and the sick, piling up in the hospitals and streets on a daily basis. Our only option was to go for a lesser evil, and we chose monetary inflation in place of dead bodies. It was a deliberate choice!

Dead men have no tales to tell, and that was our philosophy. With the wolves at the door, we had to use each and every tool at our disposal to defend the family rather than let the enemy have their way.

During that period, we experienced floods and droughts that destroyed our crops, and if we had not done what we did through the central bank, and through the interventions that were directed by none other than Mugabe, people would have died of hunger or from the lack of medicines.

Q: What you did was quite revolutionary, wasn’t it?

A: Yes indeed, and as I said earlier, the credit should go to Mugabe. We sat down, the president and I, and agreed to deploy any sovereign tool that was at our disposal and that included the printing of money or “quantitative easing” as it was later called the world over after 2008.

We had no foreign currency, but we needed foreign currency to buy medicines and food. We are not a fuel producing country but we couldn’t do without fuel.

Our industry depended literally on 70 percent imported inputs and needed foreign currency. Our agricultural output was not good enough at the time and we needed foreign currency to import food. Our military needed spare parts. We had national elections that required funding as a constitutional imperative, and all these requirements needed our creative attention.

If we had not done what we did and our law enforcement agencies had failed to do their duties properly, the same outside forces would have been the first ones to scream the loudest about the breakdown of law and order in Zimbabwe, and the need to send international forces to “protect civilians”.

Q: Like they did in Libya.

A: Exactly. They would have used the pretext of protecting civilians to come in here to execute their selfish regime change agenda. If we had not done what we did to capacitate and keep our military machinery in place, we would have been fodder for our enemies. But because the world was aware that our defence forces were well taken care of, they dared not even dream of attacking us militarily.

Q: In fact, you also promoted the mechanisation of agriculture.

A: Thank you for reminding me about that. Yes, in order to fortify ourselves against hunger, we had to get our farmers to use the land more productively and this meant that we had to quickly mechanise our farming operations. We also had to print money in order to build dams and irrigation infrastructure on farms, turning some farms from one-season farms to two- or three-season operations.

Q: But in choosing not to keep inflation to below double or single digits, a lot of your countrymen and women seriously suffered during this time.

A: I concede that point. But what confronted us was no walk in the park. It was war, economic and political war! We never promised anyone that there would be no pain. We had to sweat! We had to work in overdrive, and in the process there was collateral damage or unintended consequences that befell our people. I regret that, but we had no option. The choice was for us to succumb, put our necks on the guillotine and accept being cut. That we refused.

We never wanted a single Zimbabwean to suffer. But I accept that people suffered, and I take full responsibility for that. It was in the execution that we may have erred or failed. But the failure was not out of a desire to inflict pain on our people.

Q: In summary, how do you describe your feelings about the 10 years you spent as governor?

A: It is akin to asking a heart surgeon to describe his experience after a 10-hour heart operation on a patient to a restive group of family members and relatives. All the surgeon can say is that he did his best with his team of assistants, and that the operation is a success as the patient is now out of intensive care. But the patient still requires delicate care in order to fully recuperate, so this is not the time to bring him whisky!

But quite frankly, the economic respiratory attacks of the nature we experienced in Zimbabwe soon after our land reform programme was launched, precipitated a sharp decline in our economic fortunes.

This increased the economy’s vulnerability to the unprecedented punitive sanctions that were imposed on us. It required extraordinary skills to deal with the extraordinary situation at hand.

Q: But for a longtime, it looked like you were fighting a losing battle.

A: Well, our endgame was life at all costs. In other words, the end justified the means. Of course, we were not blind to the fact that we could not go on indefinitely under those extraordinary conditions. We, like others, prayed every day for a quick resolution of whatever problems had given birth to the prevailing challenges, and hoped a solution would be found earlier rather than later. Each day the challenges remained unresolved, the situation became worse.

Q: Zimbabwe was really in dire straits at the time.

A: We were faced with what I call a “ceased economy and we had to apply “seizure therapy” to deal with it. There are still many challenges in our midst which, if not attended to with the urgency and dexterity they deserve, may cause the health of the economy to deteriorate to a level requiring another bout of intensive care treatment. My hope and prayers are that we do not get there.

Q: Your critics say your tenure as governor of the central bank was full of controversies? Is that how you see it?

A: Those who see me as controversial know one thing, which is that I think outside the box. I am not a conventionalist. A good example is when between 2004 and 2007, I was saying to the IMF and other Western scholars and economists that extraordinary circumstances call for extraordinary interventions which may not be in today’s textbooks and they would disagree and write negatively about me in their reports.

But I kept telling them: “ There is no way in my brand of economics I am going to allow a factory to close down simply because the tradition is that a central bank should not extend help to a factory.”

I was called all sorts of names for thinking outside the box, but today that way of thinking is what has saved the world economy, although instead of calling it “Mugabenomics”, they call it something else!

In 2008, when large companies and banks in America, Europe, and elsewhere started failing, the White House published the following: Today, President Bush outlined decisive government action to preserve and sustain America’s financial system and economy. This is a pivotal moment for America’s economy. Problems that originated in the credit markets and first showed up in the area of subprime mortgages — have spread throughout our financial system. As a result, the government is acting now to protect our nation’s economic health from serious risk. That was September 19, 2008.

To the letter, every action that the Americans and the Europeans and others took to control the crisis, came from Mugabe’s script. They started printing money like it had gone out of fashion, except that they did not want to use the words “printing money”, they called it “quantitative easing”.

Q: President Obama even continued the bailout programme when he succeeded Bush.

A: Yes he did! But listen to this one: George Bush’s September 19, 2008 press statement had something more besides — and, again, it was right from the Zimbabwean script, even using Mugabe’s exact words. George Bush said: “Our economy faces unprecedented challenges, so we are responding with unprecedented action.” Did you hear that? Was it Mugabe speaking? That was what Mugabe had been saying for five years before George W. Bush spoke in 2008.

And the US President was not finished: He went on: “ The federal Government should intervene in the marketplace only when necessary; in today’s financial market, government intervention is essential.” Did you hear that? If Mugabe had a different name and nationality, he would have been up for a Nobel Prize for thinking outside the box.

*To be continued tomorrow

Comments (4)

Gono hapana chawakaita apa. What you did was like someone who goes on to seal a hole (by brazing) in the rusted bottom of a pot. The pot will soon develop other holes because the bottom is rusty. The solution would have been to buy a new pot because you will be sealing a lot of holes on the pot forever. The whole bottom is rusty dummy! The country is either broke or it has money - this thinking outside the box is a load of cobblers - look at our debt - $10 billion because you think you were “thinking outside the box”. Your “thinking outside the box” hasn't helped us at all, instead we are mired in cataclysmic debts. What you should have done was to advise Mugabe to step down because he is hopelessly inept.

Musona - 4 July 2014

what thinking outside the box. say you were stealing outside the box.

thief - 4 July 2014

10years of insulting our people by gono. Kuudza chembere dzakawana mari nekuparwa nemashanga edonje kuti in your words "your money is now manure". Inga haunyari. Chembere dzaibatwa batwa mazamhu nemagaro by the police uchiti tsvagai mari irikubiwa nevanhu. Since when does money became central bank private property. Thus what u call thinking outside the box hey. You owe our people living and the dead ab aopology Mr Waste Gorvenor

kutendadzamwa - 4 July 2014

Despite what people say about Gono and Bob, what they did was copied by USA and Europe. Evidence is there to see. For me that is biggest testimony to their performance. The second testimony is winning elections. If what they said and did was wrong, how would they get re elected, with a constitutional majority. I just wish I had given them more support at the time.

Alex - 5 July 2014

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.