HomeMultimediaGideon Gono’s tale: The good, bad and ugly

Gideon Gono’s tale: The good, bad and ugly


IT’S now five years since Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono revealed in his first published book — Zimbabwe’s Casino Economy: Extraordinary Measures for Extraordinary Challenges — that he had been offered a job by the World Bank Group with the blessings of former United States President George Bush.


In a first-hand account of his tenure as governor of the RBZ, from December 2003 until November 2008, Gono chronicled “a day in the life of central bank chief of a troubled nation”.

The revelation came as a surprise for many with some claiming that this could have been a ploy by the central bank chief to entice President Robert Mugabe to extend his term of office.

The Reserve Bank of Zimbabwe. Picture: Aaron Ufumeli
The Reserve Bank of Zimbabwe. Picture: Aaron Ufumeli

“Just as I was being dragged to the United Nations Security Council to be put on the sanctions list, I was offered a job by the World Bank as senior vice-president with the full blessings of none other than George Bush himself,”

Gono told the 200 guests who attended his book’s launch in 2008 in the capital.

But was the man a Zanu PF government in quagmire had pinned its hopes on saving the economy equal to the task?

With many criticising him for accelerating the economic meltdown by printing more money and presiding over a hyperinflationary environment, would Gono want another dance at the helm of the apex bank?

That is a debate for another day.

What is clear though is that Rome was burning when the central bank governor’s first term of office lapsed.

Unprecedented runaway inflation, acute foreign currency shortages and a resultant worthless local currency became the order of the day.

Then, Zimbabwe was on the verge of melting and needed a man of steel to take responsibility.

Gono, in his book, blamed the invisible dirty political hands for triggering the then comatose state of the economy.

The former CBZ Bank chief by then insisted that sanctions imposed on the country by Western governments had hit the economy hard, undoing government efforts to establish stability.

The opposition political parties disagreed.

Gono yesterday declined to comment on his future at the helm of the central bank when contacted by NewsDay.


His boss, Finance minister Patrick Chinamasa, could not be reached for comment.

For the Zanu PF regime, a command-type economy was ideal to save the economy.

But that was not the case.

Gono presided over the economy straddling across ministries in his new role as de facto Prime Minister.

He would say the crisis needed extraordinary measures and not textbook economics.

The printing press would not stop as money was printed to finance interventions in agriculture, parastatals and industries, among others.

Gono launched an offensive against malpractices in the banking sector and over a dozen banks were either closed or put under curatorship.

Those that managed to come out of that process are still stuttering.

Gono amalgamated Trust, Royal and Barbican to form the Zimbabwe Allied Banking Group.

The banks were to fight in the courts which ruled in their favour. They were relicensed and got their assets back.

His second and final term was more of a charm offensive on the banking sector that had previously seen him as the new sheriff in town.

In 2012 the central bank put Interfin under recuperative curatorship. Picture: Cynthia R Matonhodze
In 2012 the central bank put Interfin under recuperative curatorship. Picture: Cynthia R Matonhodze

He said the central bank had no appetite for curatorship despite putting Interfin under what he termed recuperative curatorship nevertheless. The bank is still to come out of that process.

Gono came up with sweeteners to win the hearts of bankers he had been on a collision course with.

After announcing an eight-fold increase in minimum capital requirements, Gono made a U-turn, providing an unimaginable grace period for undercapitalised banks.

He extended the compliance period to 2020 from 2014.

Gono also stood in the corner of banks as they fought political predators ready to pounce under the guise of empowerment.

This did not go down well with Zanu PF politicians who believed that Gono, who had forged a good working relationship with former Finance minister Tendai Biti, could have been dating the devil.

The central bank chief last month told delegates attending the launch of a new Econet Wireless product that the launch of EcoCash (a mobile money transfer service) almost suffered a stillbirth after Zanu PF politicians raised concern that the service could be used to boost financial coffers of opposition parties.

“A lot was said. It was said the product is a political product that will be used by Econet to determine voting patterns against a certain party.

“It was said this was a conspiracy by Econet to send out money to voters and bribe them when the time comes and the governor is part of this conspiracy,” Gono said.

“Various economic formulas were developed which were meant to get the (Zanu PF) politburo and my President (Robert Mugabe) not only to fire the governor, but also to shut down Econet and EcoCash. Of course, our wise leaders were able to see through this mischief.”

He did not fight central bank reforms which included an end to quasi-fiscal activities, a development that could have also raised the eyebrows of some hawkish Zanu PF politicians.

Listen to a file audio where Gideon Gono speaks on the alleged ‘missing gold coins:

As speculation over the fate of the central bank chief continues to swirl, like the game of poker, will Gono keep his cards on his chest? Or will he live to rue the snub of the job offer from the World Bank?

Most likely, not!

The central bank chief is understood to have interests in media, real estate, transport and agriculture.

RBZ governor Gideon Gono’s second term, which marked the start of the multiple currency regime has had casualties along the way as the central bank cracked the whip in a bid to restore order in the fragile financial services sector.

Some banks were closed, microfinance institutions crumbled and some are still ailing.

Below are some of the banks that found the going tough during Gono’s second term.

Over a dozen banks have folded since 2004 mainly due to concentrated shareholding, weak corporate governance, owner-managed or controlled and insider loans which all turned out to be non-performing.

1. Interfin Bank
The central bank placed the bank under curatorship in June 2012 and Peter Bailey of KPMG was appointed the curator.

2. Genesis Investments
It was closed in June 2012 after the board of directors of Genesis Investment Bank surrendered its banking licence after the failure of the institution to raise the minimum capital requirements since 2009.The bank failed to raise funds from its 20 investors that it tried to engage.

The RBZ also saw it befitting as the bank was not safe and sound as the bank had problems that included undercapitalised, persistent losses, poor asset quality and paltry deposit base.

3. Royal Bank
After a relentless pursuit to reopen the bank after being closed at the height of a financial crisis in 2004, Royal Bank shareholders failed to keep the bank afloat despite public sympathy.

According to the Reserve Bank, on Friday July 27 2012, the Royal Bank Zimbabwe Limited board met and considered various options to deal with the deteriorating financial condition of the bank.

The board advised the Reserve Bank on the same day that they had resolved to surrender the institution’s banking licence.Royal Bank was re-licenced in October 2010 and granted a two-year grace period to meet the then $12,5 million minimum capital requirements.

The bank, however, failed to raise the capital.

4. Time Bank
Fate unknown

5. Microfinance institutions
After blasting them for behaving like “goblins”, the central bank last year launched an investigation into microfinance institutions which resulted in the closure of All-Angels Microfinance and McDowell International.

The lenders were criticised for charging high interest rates which rendered many into debt traps.

Reports show that the country has nearly 160 microfinance institutions under the supervision of the central bank from 1 800 microfinance institutions during the hyperinflation period in 2008.



Governor and Deputy Governors
(1) There shall be a Governor of the Bank and not more than two Deputy Governors of the Bank, who shall be appointed, subject to subsection (2) and to section sixteen, by the President after consultation with the Minister.
(2) The Governor and Deputy Governors shall be appointed for their competence and experience in matters relating to banking, finance and economics.
(3) In the event of—
(a) the absence or temporary incapacity of the Governor, his functions shall be performed by the Deputy Governor or, as the case may be, by a Deputy Governor nominated by the Governor;
(b) a vacancy in the office of the Governor, his functions shall be performed by the Deputy Governor or, as the case may be, by a Deputy Governor nominated by the President after consultation with the Board and the Minister.

Term of office of Governor and Deputy Governors
(1) Subject to subsection (3), the Governor and every Deputy Governor shall hold office for such period, not exceeding five years, as the President may fix on his appointment.
(2) Subject to subsection (3), upon the expiry of the term of office of the Governor or a Deputy Governor, the President, after consultation with the Minister, may re-appoint him or extend his term of office.
(3) No person shall hold office as Governor or Deputy Governor
(a) for more than two terms of office; or
(b) for a period or periods which, in the aggregate, exceed ten years:
Provided that a person who has served for such terms or period as Deputy Governor shall remain eligible for appointment as Governor.

Disqualifications for appointment as Governor or Deputy Governor
A person shall not be appointed as Governor or Deputy Governor, and no person shall be qualified to hold office as Governor or Deputy Governor, if—

(a) he is a director, shareholder, officer or employee, or a member of any board or committee, of any banking institution; or

(b) he is a member of Parliament; or

(c) he has been adjudged or otherwise declared insolvent or bankrupt in terms of a law in force in any country, and has not been rehabilitated or discharged; or

(d) he has made an assignment to or arrangement or composition with his creditors in terms of a law in force in any country, and the assignment, arrangement or composition has not been rescinded or set aside; or

(e) he has been convicted of any offence in any country and sentenced to a term of imprisonment imposed without the option of a fine, whether or not any portion of the sentence has been suspended, and he has not received a free pardon; or

( f ) he has been convicted of an offence involving dishonesty in any country and sentenced to a fine of any amount or to a term of imprisonment of any duration, whether or not any portion of the sentence has been suspended.

Vacation of office by Governor or Deputy Governor

(1) The Governor or a Deputy Governor shall vacate his office and his office shall
become vacant—

(a) if he has given the Minister such period of notice in writing of his intention to resign as may be fixed in his terms and conditions of service or, if no such period has been fixed, one month after the date on which he gives such notice or after the expiry of such other period of notice as he and the Minister may agree; or

(b) on the date he begins to serve a sentence of imprisonment, whether or not any portion has been suspended, imposed without the option of a fine in any country; or

(c) if he becomes disqualified in terms of section sixteen to hold office; or

(d) if he is required in terms of subsection (2) to vacate his office.

(2) The President, after consultation with the Minister, may require the Governor or a Deputy Governor to vacate his office if—

(a) he has been guilty of conduct which renders him unsuitable to continue to
hold office; or

(b) he has failed to comply with any term or condition of his office fixed in terms of section eighteen; or

(c) he becomes mentally or physically incapable of efficiently exercising his functions.

(3) On the death of, or vacation of office by, the Governor or a Deputy Governor, the President, in consultation with the Minister, shall appoint a person to fill the vacancy:
Provided that, if on the death of, or vacation of office by, a Deputy Governor another

Deputy Governor remains in office, the President need not fill the vacancy. Source— RBZ Act

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