Government has finally agreed to take over debts amounting to about US$1,35 billion incurred by the Reserve Bank of Zimbabwe (RBZ) over the years after a lot of hesitation.
Sunday Opinion by Jacob Sithole
By so doing, they are hoping to achieve two things.
Firstly, they intend to deal with the bank’s legacy issues that had precluded government from recapitalising the institution. Secondly, they want to make good what was forcibly taken away from various companies’ Foreign Currency Accounts (FCAs) through an act of unilateralism that struck at the core of business confidence by infringing on property rights.
Many will recall how company executives woke up one day to find that their FCAs had been ransacked by the RBZ without notice. And rightly so, the courts have ruled against the raids, leaving the administering banks badly exposed.
As noble as the government’s intention might sound, a word of caution will suffice.
There is real danger that they might be fooling themselves into thinking that they are fully resolving the RBZ’s legacy issues and restoring the bank’s lender of last resort function when in fact they are merely scratching at the surface.
The point we are making here is that the government must be absolutely sure that they are not adopting a piecemeal approach to resolving issues impeding the RBZ from effectively discharging its duties.
The pertinent question to ask in order to bring out this point is: Are they not simply relying on figures given to them by the very individuals who created this mess in the first place and therefore could be doing it to bury their tracks?
The RBZ’s challenges go beyond recapitalisation, as the officials at the bank would want us to believe. The majority of the challenges are a result of the erosion of confidence in the bank’s ability to execute its duties.
That it was under the RBZ’s watch that the country’s currency lost its value speaks volumes about this, particularly given that the bank’s primary goal is that of maintaining the internal and external value of the Zimbabwean currency.
Because the RBZ could not safeguard the country’s currency, it also lost its responsibility to formulate and implement monetary policy, ensuring low and stable inflation levels and maintaining a stable banking system through its supervisory and lender of last resort functions.
It is well and good that the government is in the process of bringing a new broom to give a new direction to the RBZ, but that should not end there.
Government should also bring in experts to carry out a thorough forensic audit of the RBZ, in particular of the creditors and related transactions in order to bring out every material piece of information to ensure that their intervention is based on facts and not hearsay.
Government can also invite those who feel they might have been prejudiced by the RBZ to come forward and state their case. Some of these cases might be brought before an independent arbitrator or the justice delivery system could be requested to establish a special court to expeditiously deal with these matters to enable the RBZ to start operating unencumbered by the debt burden.
Alternatively, they can make public information on the RBZ’s indebtedness so that those who have queries can take their concerns up with the relevant officials.
While we are aware that part of the debt could be classified as being of a state security nature, there surely must be a way of ring-fencing this sensitive part of the debt, and only bring out that which falls outside this bracket.
In the past, the media has reported several wrangles pitting the RBZ and other external parties, which must form the basis of their investigations in establishing the true facts.
What immediately comes to mind is the current dispute between the central bank and its former employees who were retrenched in 2009 and have not been paid their packages in full. There are also disputes between the RBZ and other parties who are contesting the way they were treated by the regulator and are claiming compensation for it.
And yet what appears to have been forwarded by the bank to Government are debts relating to funds that were seized from FCAs and loans secured from the International Monetary Fund, the World Bank, the African Development Bank and other governments, as well as expenditure incurred in the procurement of such critical things such as fuel, drugs, medicine and agricultural equipment at the pinnacle of the economic crisis, but is that all?
The government should avoid half measures by interrogating all issues on its own without being led by interested parties who may be swimming against the tide in order to deal with the RBZ’s historical issues in a holistic manner.