RBZ bill watered down

The RBZ Amendment bill, gazetted by the Minister of Finance Tendai Biti on August 14 after Cabinet unanimously endorsed it, was first subjected to scrutiny by Parliament’s Budget, Finance and Investment Promotion as well as the Public Accounts Committees before it was sent to the House of Assembly last week, where it was passed with minor changes. The main aim of the bill is to reform the central bank, including whittling down the wide-sweeping powers of the central bank governor, Gideon Gono, who had assumed an omnipotent role in the national economy.

The bill will slash the powers of the governor by installing an independent chairperson and board. Zanu (PF) was whipping into line its Senate caucus to have the Bill further amended to cover concerns that ostensibly emerged too late to be raised when the Bill was before the House of Assembly, Paul Mangwana, the Zanu (PF) caucus representative said. Mangwana said the Zanu (PF) Senate caucus wanted the RBZ Board and not Biti to appoint members of the audit and oversight committee that has been established under the bill.

A new section 29A introduces an audit committee whose members are the deputy chairperson of the RBZ Board and two other persons appointed by the Finance Minister outside the board. While the proposed establishment of the audit committee is in line with international best practices on good governance, and is meant to enhance the central banks transparency and accountability, the Senate, where President Mugabe’s party has a working majority, buoyed mainly by appointed senators and chiefs, has become the new battleground in efforts to block Biti from further clipping Gono’s wings.

The Senate reportedly wanted Section 29A (3) to be amended to provide that the audit committee prepares reports to the board and not to the oversight committee, further downgrading Biti’s envisaged powers under the bill, which Zanu (PF) claims will make the Finance minister too powerful, an assertion rejected by Biti. Zanu (PF) managed to arm twist the MDC last week to agree to offer an amnesty to Gono, but observers say it could be annulled if there is concrete evidence of impropriety. Mangwana said the Senators were also not happy with the clause that all the shares held by the Reserve Bank in any company incorporated in Zimbabwe in which it has a majority shareholding be seized by the State. Gono used these shelf companies to run his so-called quasi-fiscal activities that crippled the economy by taking over functions of the national treasury, including buying farming inputs and extending financial support to government departments.

The argument is that while the bank has been allowed to dispose of its shares in any company in which it has a majority shareholding, it is being directed to settle liabilities vis–vis other commercial banks,” Mangwana said. We would have preferred a wording that expands the settlement of liabilities. RBZ has interests in Carslone Enterprises (mining); Fiscorp (Pvt) Ltd, Homelink (Pvt) Ltd (property development) and the Export Credit and Guarantee Company, all of them set to be seized by government. Mangwana wants the State to inherit the staggering debts accrued by these companies when it takes them over once the RBZ Amendment Bill becomes law. Biti’s bill proposes that the RBZ clears its debt obligations on these companies.

Even after the ongoing spirited attempts by the Zanu (PF) caucus to further water down the bill, it still significantly puts a restraint on the Reserve Banks propensity to dabble in quasi-fiscal activities. The bill confines the central bank to its core functions of setting monetary policy and ensuring price stability, eliminating once and for all Gono’s reckless minting of cash that fuelled hyperinflation.