RESERVE Bank governor Gideon Gono has rescued Finance minister Tendai Biti from embarrassment after his showcase project involving the setting up of a domestic foreign currency clearance house to expedite business transactions collapsed last week.
Gono’s rescue operation over the payments system has eased tensions which have been simmering between the two. Gono and Biti appeared at a press conference together yesterday for the first since the new minister took over in February.
Although they appeared in concert at the recent launch of the economic recovery plan, yesterday’s move was the first public display of them actually cooperating in executing their duties.
Biti and Gono played down their in-fighting when they claimed to journalists they were working together well. However, their purported newfound peace was only prompted by the clearing house project disaster encountered last week. Otherwise, their cold war is still icy behind the scenes.
Biti announced the re-introduction of the Real Time Gross Settlement (RTGS) system at the press conference as a damage-limitation exercise after the failure of the clearing house system launch.
An RTGS is a funds transfer mechanism through which money moves from one bank to another on a “real time” and “gross” basis. It is regarded as the fastest possible money transfer mechanism through the banking system.
Settlement in “real time” means transactions are not subjected to any waiting period. Transactions are settled as soon as they are processed. “Gross settlement” means the transactions are settled on a one to one basis without bunching them with others. Â
Biti said ZimSwitch, a local electronic payment system, will be back on April 28. ATM cards and till-point swiping machines are also coming back. Biti wants cheques and other forms of payment introduced soon, but this would need the setting up of the clearing house first.
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The failure of the clearing house project to take off last week has brought Biti and Gono together as they, in terms of the law and necessity, have to work together to sort out the botched payments system.
The setting up of the clearance house and applicable rules was intended to regulate the transfer of payments between banks which are members of the clearance house on behalf of their customers.
Sources within the banking sector said Biti burnt his fingers last week when he tried to introduce a domestic clearing house to facilitate transactions. The system was expected to start last Friday but was abandoned after a realisation that the Bankers Association of Zimbabwe (BAZ) had bungled the mission what one banker described as “blatant plagiarism and sheer incompetence”.
Gono was sidelined during the scheming of the clearing house system, but was later roped in when the initial plan fell apart.
Sources said Biti called for a meeting last Wednesday at 12.30pm to unveil the clearing house system. They said after delegates from the Ministry of Finance, BAZ and Reserve Bank had gathered, Biti gave BAZ president John Mangudya the green light to explain the system and how it would be rolled out in 48 hours’ time.
“Mangudya gave an explanation of how the BAZ came up with the blueprint to set up the clearing house and indicated it was now all systems go,” a source who attended the meeting said. “After that Biti then invited comments from Gono and others. All hell then broke loose. Gono said the presentation was good but “the devil lies in the detail”. He went on to say first it was illegal for the Ministry of Finance and BAZ to work out the system without the Reserve Bank and that second the document was plagiarised from Kenya.”
Sources said after Gono spoke, Biti was dismayed. It was said Biti felt Mangudya and BAZ had badly let him down and embarrassed him before Gono, his bitter rival and subordinate.
After the flop, Gono later suggested the formation of a committee headed by Reserve Bank deputy governor Edward Mashiringwani to rescue the situation.
The 18-member committee headed by Mashiringwani met last Wednesday afternoon at the RBZ to discuss the issue.
In his opening remarks Mangudya said the purpose of the gathering was a follow up on the meeting that had been called earlier by Biti to work out a domestic foreign currency payment system to reduce reliance on cash.
Mangudya indicated that there was a proposal for the adoption of the Kenyan model of clearing and settling foreign currency-denominated instruments. He also said there was no need to “reinvent” the wheel in their planning.
However, sources said Biti was riled because the BAZ document – which he had apparently not even read – was lifted from Kenya and there was abundant evidence of that.
BAZ maintained that Biti was aware of its proposal to adopt the Kenyan model.
On the cover page, the font used to write Bankers Association of Zimbabwe was not official, although there was a bold line which said the document was prepared by BAZ.
The document was written on page two, “revised August 2004” and had on every page at the bottom right KBA which stands for Kenya Bankers Association. Wherever else there was KBA it was replaced by BAZ and the Central Bank of Kenya was substituted by Reserve Bank of Zimbabwe. The name Kenya was replaced with Zimbabwe.
The document also made references on page 13 to the “Central Bank of Kenya’s mean rate of the day of exchange at the clearing house”. There is also a reference to the Kenyan currency, the shilling, elsewhere.  “It was an embarrassing affair,” a source said. “The system launch had to be aborted after the problems were discovered.”-Staff Reporter
