”Zanu and the Mutambara group simply do not know what to do. If they agree to do what the region wants, they are dead in the water.” - Eddie Cross writing on his blog on November 21, 2009, asserting that the MDC led by Arthur Mutambara (MDC M) is deliberately delaying the finalisation of the power sharing talks.
This is an outrageously false comment about the MDC M which bears no relation to the facts.
We all in MDC M want the GPA implemented urgently and fully. We fully supported what the region asked for. I personally had a lengthy discussion with President Kabila’s principal advisor Ilunga Ngandu on November 3, 2009, impressing on him the need to attend to all of the outstanding issues. My colleagues have done the same.
I have been present in Cabinet and know what has been said by all of us there. Arthur Mutambara’s statement made when the disengagement started is a matter of public record. Indeed it was Mutambara who clearly articulated for the first time that the SADC communiqué issued in the January 2009 could not be ignored, something Zanu PF was trying to do.
And as for the allegations that MDC M are responsible for the delays since Maputo consider the following:
• That the MDC M returned home direct from the SADC Summit meeting held in Maputo, Mozambique on October 29, 2009, while the MDC-T went via South Africa and were not available in Zimbabwe until after the weekend. In the meantime, over the same weekend, the MDC M negotiators had to leave Zimbabwe to attend a prior engagement namely the Africa China Summit, in Sharm-el Sheick in Egypt.
• That the MDC M came back from Egypt on Monday night November 2, 2009, and were available for negotiations on Tuesday, November 3, 2009, up until Sunday, November 15, 2009. Regrettably, both Zanu PF and MDC-T were not available, primarily because the latter had to attend to the funeral of the late John Nyamande the MDC T MP for Makoni West.
• On Monday, November 16, 2009, the MDC M negotiators had to attend to government business in Brussels and in Tunis from Monday, November 16, 2009, to Thursday, November 19, 2009. They returned home on Thursday and they had been available for dialogue and they are still available for dialogue. They, in-fact, suggested that the negotiators have a retreat to concentrate on the negotiations from Friday, November 20, 2009, to Monday, November 23, 2009. Regrettably, MDC-T negotiators have been unavailable until today Monday, November 23, 2009.
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The outstanding issues are not MDC T’s concern alone but those of the MDC M (we too want our Governor sworn in etc) and largely of the people of Zimbabwe. Many commentators have expressed concern regarding the MDC M’s involvement in the talks and the GPA since July last year. They have expressed frustration with the fact that the MDC M controls the balance of power and bemoan the “Proportional Representation system-type result” of the March 2008 election which has led to this. They bemoan that a little party like the MDC M which only secured some 8% of the vote should exercise this disproportionate power.
The irony is that it is one of the BENEFITS of a PR system that little parties often hold the balance of power and in so doing prevent the tyranny of the majority – Zimbabwe has had a Westminster system for so long that it just does not know how to handle a “PR type result” which was produced by the Westminster system last year.
A Westminster System, i.e non PR system, does not usually produce this type of result. As we know to our detriment in Zimbabwe during the last 40 years, the Westminster system has allowed single parties to dominate Parliament and the country, often after obtaining a slim majority, with catastrophic consequences. But thank God the Westminster system threw up the PR type result it did last year – otherwise we would never have reached any type of agreement and the country would have continued its slide down towards Somalia.
I understand the frustration felt by some of my political friends in the MDC T when the MDC M has adopted an independent view in the talks. I have on occasions not agreed myself with some the stances adopted by my colleagues who have negotiated on behalf of the MDC M. But the fact remains that it has been as a result of those independent stances that deadlock in the talks has often been broken. It has often been as result of those independent stances that SADC leaders have realised that MDC T positions have had some merit and they have broken away from slavishly following the Zanu PF line.
One day people will begin to understand the critically important role that the MDC M has played since March 2008 in preventing Zimbabwe from being totally destroyed.
It has managed to bridge the vast gulf between Zanu PF and MDC T and in doing so saved the country from complete and utter destruction. It continues to play this role – and this has been no better illustrated than in what has happened in the last few weeks. Aside from the institutional role the MDC M plays, Welshman Ncube’s close personal relationship with President Zuma (remember their children are married to each other – which makes Eddie Cross’ assertion that the MDC M is unhappy with what Zuma has pushed through all the more absurd) has played a key role in stiffening Zuma’s position to ensure that the GPA is fully implemented.
The statements issued last week by the MDC T and my old friend Eddie Cross are divisive. It just does not help our current situation to further divide. Scoring cheap political points does not help our nation.
The statements issued last week are not only false but, more seriously, are destructive to the fragile process we are all in. Now is the time for statesmanship and conciliation if we are to move Zimbabwe ahead.
Senator David Coltart (Khumalo) is the Minister of Education and a senior official of the MDC M
NewZimbabwe.com
27 November 2009
23 November 2009
MDC vs MDC
Rival MDC factions in Zimbabwe’s power sharing government were locked in bitter exchanges on Friday as a SADC deadline for the resumption of dialogue over contested issues plaguing the government passed.
Regional leaders meeting in the Mozambican capital Maputo on November 5 urged President Robert Mugabe’s Zanu PF and the two rival MDC factions led by Morgan Tsvangirai and Arthur Mutambara to “engage in dialogue with immediate effect within fifteen days, and not beyond thirty days”.
The first of those deadlines passed on Friday, with Tsvangirai’s MDC blaming the delays in initiating dialogue on a lack of “sincerity and faithfulness to resolve the outstanding issues” by Zanu PF and the Mutambara-led MDC.
The party accused its ruling coalition rivals of “dragging feet”, adding: “For two weeks, Zimbabweans have waited in vain for the political gridlock to be unlocked.”
In a statement, the Tsvangirai MDC (MDC-T) also launched an unprecedented attack on Mutambara’s MDC (MDC-M) which it contemptuously referred to as a “political outfit”, and “political formation”, without identifying the party by name.
The statement targeted the MDC-M’s negotiators Industry and Commerce Minister Welshman Ncube and Regional Integration and International Cooperation Minister Priscilla Misihairabwi for attack, referring to them as “unelected negotiators who by some chance have found themselves in government … stalling the resolution of Zimbabwe’s political crisis.”
The unsigned statement issued by the MDC-T's information and publicity department said: “Professor Welshman Ncube and Hon Priscillah (sic) Misihairabwi Mushonga have chosen to prioritise flying to world capitals at the expense of resolving critical issues that will deliver real change to the people of Zimbabwe.
“The MDC expects urgent resolution of issues that have stalled the work of the inclusive government. We expect that all parties, especially those that have chosen to ignore the important time-frames, targets and deadlines set by SADC, should urgently meet and clear the deck of the outstanding issues that have poisoned the people’s collective journey of hope spawned by the formation of the inclusive government in February 2009.”
A furious Ncube on Friday night accused MDC-T of a “perennial inclination to indulge in politics of deceit”.
Ncube said he along with Misihairabwi had availed themselves several times since November 5 but it had not been possible to restart the dialogue because of the “unavailability” of the MDC-T’s negotiators – Tendai Biti and Elton Mangoma.
Ncube gave the following statement to New Zimbabwe.com: “The facts are that we left Maputo on Thursday (Nov. 5) night and came to Zimbabwe, while they (MDC-T negotiators) went to South Africa.
“We were in Zimbabwe until Saturday, but they didn’t come back until Sunday. By then, myself and Priscilla were already in the ministerial delegation going to Egypt for the Africa-China summit.
“We were there (Egypt) on Saturday and Sunday, returning home on Monday night.
“We made ourselves available for the dialogue and indicated we were available from Tuesday until Sunday. They (MDC-T) said they were mourning their MP (John Nyamande) and attending funerals, and would not be available until Friday.
“Zanu PF said that they were available on Wednesday, Thursday and Friday but would not be available on the weekend. We cancelled all our other engagements from that period from Tuesday to Sunday, waited for the dialogue, but they were not ready or non-available.
“On Monday this week, I left for Brussels to attend a council of ministers meeting for the Group of African, Caribbean and Pacific States (ACP). It is mandatory for all member countries to be represented at ministerial level, and my attendance was confirmed two months ago.
“Priscilla went to Tunis for a meeting of the African Development Bank where she was required to be present. She returned on Tuesday, and I came back yesterday (Thursday).
“Before coming back, I spoke to MDC-T people and Zanu PF people and indicated that we would be available for the negotiations beginning on Thursday night.
“We suggested to them that in order to expedite the talks, we must all have a retreat out of town and use Friday, Saturday and Sunday to do nothing but dialogue.
“Zanu PF said they were available for the weekend but MDC-T were not. Biti said he was busy with his budget speech and can’t leave Harare. In any case, they (MDC-T) said they would not be available all of this weekend until Monday.
“Right now, we are available, tomorrow we are available, the same for Sunday -- anytime they say they are ready, we are ready.
“Those are the facts. For someone to issue the statement they issued simply demonstrates their perennial inclination to indulge in politics of deceit. The hysteria and arrogance underlying the statement is so despicable that we dismiss it with the maximum possible contempt you can think of.
“You have a bunch of people who have behaved for a long time like spoilt brats and think the whole world must stand and salute them every time they utter their nonsense. We will not worship them now, tomorrow or ever and they can go to hell a 1000 times.”
Tsvangirai’s MDC wants to be given its allocation of provincial governors and ambassadors. The party also says it wants President Robert Mugabe to annul his unilateral appointment of Attorney General Johannes Tomana and Reserve Bank governor Gideon Gono, which he has already refused to do.
South African President Jacob Zuma, urged by SADC to “remain seized with the developments on the implementation of the GPA [Global Political Agreement]” is set to speak to the Zimbabwe leaders next week – either by phone or by sending an envoy to Zimbabwe, sources said.
NewZimbabwe.com
Regional leaders meeting in the Mozambican capital Maputo on November 5 urged President Robert Mugabe’s Zanu PF and the two rival MDC factions led by Morgan Tsvangirai and Arthur Mutambara to “engage in dialogue with immediate effect within fifteen days, and not beyond thirty days”.
The first of those deadlines passed on Friday, with Tsvangirai’s MDC blaming the delays in initiating dialogue on a lack of “sincerity and faithfulness to resolve the outstanding issues” by Zanu PF and the Mutambara-led MDC.
The party accused its ruling coalition rivals of “dragging feet”, adding: “For two weeks, Zimbabweans have waited in vain for the political gridlock to be unlocked.”
In a statement, the Tsvangirai MDC (MDC-T) also launched an unprecedented attack on Mutambara’s MDC (MDC-M) which it contemptuously referred to as a “political outfit”, and “political formation”, without identifying the party by name.
The statement targeted the MDC-M’s negotiators Industry and Commerce Minister Welshman Ncube and Regional Integration and International Cooperation Minister Priscilla Misihairabwi for attack, referring to them as “unelected negotiators who by some chance have found themselves in government … stalling the resolution of Zimbabwe’s political crisis.”
The unsigned statement issued by the MDC-T's information and publicity department said: “Professor Welshman Ncube and Hon Priscillah (sic) Misihairabwi Mushonga have chosen to prioritise flying to world capitals at the expense of resolving critical issues that will deliver real change to the people of Zimbabwe.
“The MDC expects urgent resolution of issues that have stalled the work of the inclusive government. We expect that all parties, especially those that have chosen to ignore the important time-frames, targets and deadlines set by SADC, should urgently meet and clear the deck of the outstanding issues that have poisoned the people’s collective journey of hope spawned by the formation of the inclusive government in February 2009.”
A furious Ncube on Friday night accused MDC-T of a “perennial inclination to indulge in politics of deceit”.
Ncube said he along with Misihairabwi had availed themselves several times since November 5 but it had not been possible to restart the dialogue because of the “unavailability” of the MDC-T’s negotiators – Tendai Biti and Elton Mangoma.
Ncube gave the following statement to New Zimbabwe.com: “The facts are that we left Maputo on Thursday (Nov. 5) night and came to Zimbabwe, while they (MDC-T negotiators) went to South Africa.
“We were in Zimbabwe until Saturday, but they didn’t come back until Sunday. By then, myself and Priscilla were already in the ministerial delegation going to Egypt for the Africa-China summit.
“We were there (Egypt) on Saturday and Sunday, returning home on Monday night.
“We made ourselves available for the dialogue and indicated we were available from Tuesday until Sunday. They (MDC-T) said they were mourning their MP (John Nyamande) and attending funerals, and would not be available until Friday.
“Zanu PF said that they were available on Wednesday, Thursday and Friday but would not be available on the weekend. We cancelled all our other engagements from that period from Tuesday to Sunday, waited for the dialogue, but they were not ready or non-available.
“On Monday this week, I left for Brussels to attend a council of ministers meeting for the Group of African, Caribbean and Pacific States (ACP). It is mandatory for all member countries to be represented at ministerial level, and my attendance was confirmed two months ago.
“Priscilla went to Tunis for a meeting of the African Development Bank where she was required to be present. She returned on Tuesday, and I came back yesterday (Thursday).
“Before coming back, I spoke to MDC-T people and Zanu PF people and indicated that we would be available for the negotiations beginning on Thursday night.
“We suggested to them that in order to expedite the talks, we must all have a retreat out of town and use Friday, Saturday and Sunday to do nothing but dialogue.
“Zanu PF said they were available for the weekend but MDC-T were not. Biti said he was busy with his budget speech and can’t leave Harare. In any case, they (MDC-T) said they would not be available all of this weekend until Monday.
“Right now, we are available, tomorrow we are available, the same for Sunday -- anytime they say they are ready, we are ready.
“Those are the facts. For someone to issue the statement they issued simply demonstrates their perennial inclination to indulge in politics of deceit. The hysteria and arrogance underlying the statement is so despicable that we dismiss it with the maximum possible contempt you can think of.
“You have a bunch of people who have behaved for a long time like spoilt brats and think the whole world must stand and salute them every time they utter their nonsense. We will not worship them now, tomorrow or ever and they can go to hell a 1000 times.”
Tsvangirai’s MDC wants to be given its allocation of provincial governors and ambassadors. The party also says it wants President Robert Mugabe to annul his unilateral appointment of Attorney General Johannes Tomana and Reserve Bank governor Gideon Gono, which he has already refused to do.
South African President Jacob Zuma, urged by SADC to “remain seized with the developments on the implementation of the GPA [Global Political Agreement]” is set to speak to the Zimbabwe leaders next week – either by phone or by sending an envoy to Zimbabwe, sources said.
NewZimbabwe.com
19 November 2009
Reserve Bank Amendment Bill
Reserve Bank Amendment Bill
17 November 2009
This Bill was agreed to in Cabinet and was gazetted on the 14th August. It could be introduced into Parliament at any time after the Houses resume on the 20th October. [Electronic version of Bill available on request – also copy of Reserve Bank of Zimbabwe Act showing the effect of the amendments proposed by the Bill.] The House of Assembly’s Portfolio Committee on Budget, Finance, Economic Planning and Investment Promotion has the duty to consider the Bill and to table a report before the House of Assembly when the Bill has its Second Reading [House of Assembly Standing Order 105]. This portfolio committee could well meet during these next two weeks before Parliament sits again. The committee clerk has said that it is hoped that there will be a public hearing, but this is not certain, so it would be advisable for stakeholders and interested members of the public to submit any representations they may have on the Bill to the portfolio committee now.
Outline of the Bill
According to the Bill’s explanatory memorandum, the Bill seeks to bring the powers of the Governor of the Reserve Bank under the control of the Bank’s Board, to clarify the Bank’s functions and to increase the Bank’s reserves. These objectives are to be achieved in the following ways:
A. The Bank’s powers and functions will be limited by:
divesting the Bank of the function of furthering the Government’s economic policies [clause 2];
restricting the Bank’s power to deal in gold and precious metals. It will be allowed to do so “only to the extent strictly necessary to comply with its international obligations” [clause 3] [but does the Bank — as opposed to the State — have any such obligations?];
preventing the Bank from opening credits and giving guarantees [clause 3] [this will be a considerable reduction in its powers];
preventing the Bank from borrowing foreign currency on its own behalf; it will be able to do so only on the State’s behalf and only to the extent that its reserves are not adversely affected [clause 3];
restricting the Bank’s power to lend money [clause 5]. In this regard:
it will be allowed to lend money to the State and parastatals only if:
the loan [presumably this is the total of all loans — the Bill is not clear] does not exceed 20 per cent of the State’s revenues in the previous financial year;
the loan is denominated in Zimbabwean currency [it is not clear how this applies in the present multi-currency situation];
the loan is repayable within, at most, two years;
in the case of a loan to a parastatal, the loan has been approved by the Minister of Finance and is either repayable within a year or converted into State-backed securities;
b. the Bank’s function of lender of last resort to banking institutions will be limited to three-month loans given with the approval of the Minister of Finance to support banks’ daily lending business [It is not clear if these limitations will override the Bank’s lending powers under the Banking Act – this Act available on request];
c. the Bank’s power to lend money to its employees will be limited to loans that are commensurate with those given by commercial banks to their employees;
6. divesting the Bank’s Board of power to determine Zimbabwe’s monetary policy, to ensure price stability and to fix interest rates; those powers will be transferred to a Monetary Policy Committee consisting of the Governor and his deputies, and other members appointed by the President after consultation with the Minister of Finance [clause 13];
7. requiring the Bank to maintain reserves to cover all its liabilities to the public in Zimbabwe; at present its reserves need cover only 40 per cent of its foreign liabilities [clause 17];
8. requiring the Bank to give the Minister quarterly statements showing the state of its reserves, and obliging the Minister to table the statements in the House of Assembly [clause 17];
9. divesting the Bank of all the subsidiary companies through which it carried out its “quasi-fiscal activities”. The only companies it will retain are the two that print currency notes and deal in gold. The Bank’s shares in all the other companies are to be transferred to the State, apparently without compensation [clause 19].
B. The Bank’s internal procedures will be improved
The Bank will be obliged to establish an audit committee [clause 13].
C. The powers of the Minister of Finance over the Bank and its officers will be enhanced by:
obliging the Bank to follow the Minister’s instructions when representing Zimbabwe’s interests at foreign meetings and in international organisations [clause 2];
ensuring that any instructions given to the Bank by “the State” are conveyed to it through the Minister [clause 4] [so the President will not officially have independent access to the Bank and its Governor];
requiring the Board to consult the Minister before appointing an acting Governor if the Governor’s office falls vacant [clause 6] [currently the President appoints an acting Governor in such circumstances];
making the Minister’s permanent secretary a non-voting member of the Bank’s Board [clause 8];
obliging the Bank’s Board to send the Minister copies of minutes of all its meetings [clause 11];
setting up an oversight committee consisting of the Minister’s permanent secretary and all other Board members to conduct a twice-yearly review of the Bank’s performance [clause 13];
most importantly, empowering the Minister to give general policy directives to the Bank’s Board, which the Board will have to carry out “with all due expedition” [clause 18].
D. The Governor’s powers will be limited:
the Governor will no longer be able to appoint a deputy to act for him in his absence; this power will go to the Board [clause 6] — though, somewhat contradictorily, the President rather than the Board will appoint a deputy chairperson to chair its meetings in the Governor’s absence [clause 10];
the Governor’s wide power to delegate functions to officials in the Bank will have to be exercised subject to the Board’s directives [clause 7].
E. Board members to disclose assets
The Bill will oblige all members of the Bank’s Board to disclose their assets to the President within a month after the Bill becomes law [clause 19]. [Regrettably, there is no provision requiring the President to publish the lists of assets so disclosed.]
Merits and Demerits of the Bill
The Bill has been criticised in the Press on the grounds that it reduces the Bank’s independence and, while limiting the Governor’s powers, gives excessive powers of oversight to the Minister of Finance. In particular, the proposal to allow the Minister to give directives as to the policies the Bank must pursue is criticised as being contrary to international best practice, which requires central banks to be independent. And finally, the Governor of the Bank is reported to have protested at the State’s acquisition of the Bank’s shares in its subsidiary companies, on the ground that depositors’ money was used to acquire the shares and the acquisition amounts to an expropriation of that money. There is substance in some of these criticisms.
A. Independence of Bank
It seems to be generally accepted that central banks should be given a large measure of operational independence. The draft SADC Model Central Bank Law, for example, seeks to enshrine the principle that central banks in the region should “act independently and without fear, favour or prejudice or direction from any authority or institution”. Internationally, the more effective central banks are those with the greatest independence: the U.S. Federal Reserve, for example, and the European Central Bank. The powers that the Bill will give the Minister, in particular the power to give policy directives to the Bank, will make it impossible to say that the Bank is truly independent. It may be in practice, of course, because the Minister may choose not to control the Bank. But potentially he will be able to do so, which means the Bank will be subject to direction and control by the Government. And experience has shown that Ministers who are given powers tend to exercise them.
B. Bank’s functions
In clarifying and reducing the Bank’s functions, the Bill is sound. The scope for engaging in “quasi-fiscal activities” will be greatly reduced, and the Bank will be confined to its core functions: setting monetary policy and ensuring price stability. The Governor is reported to have welcomed the clarification, saying that it is noble for RBZ to focus on its core business.
C. Reserves
Similarly, the statutory controls which the Bill will impose on the reserves kept by the Bank can only benefit the country. The Bank will no longer be able to run down the reserves to nugatory levels. It should be remembered that they are not the Bank’s reserves: they are the country’s reserves and the country, represented by the Government, must have a say in how they are maintained.
D. Reduction of the Governor’s powers
The Governor’s powers will undoubtedly be reduced by the Bill. He will no longer be able to delegate powers to subordinates without the Board’s permission, and he, like the Board, will have to obey the Minister’s directives. This reduction in the Governor’s powers is no bad thing. While one may accept that the Bank itself should be independent, that is no reason for giving its chief executive officer overreaching powers within the Bank’s structure.
E. Corporate Governance
Some of the changes to the Bank’s corporate structure will be beneficial – that the Bank will be required to establish an audit committee is in line with international best practice; and the provisions that the Board should send its minutes to the Minister, to keep him or her abreast of what the Bank is doing, and that the Bank’s quarterly statements are presented to Parliament will increase transparency. On the other hand, the establishment of a committee to formulate the country’s monetary policy, to ensure price stability and to set interest rates, seems to leave the Board of the Bank with little to do. The committee’s three functions comprise the main functions of any central bank. If those functions are to be handed over to a committee, what role is the Board to perform? Similarly, the new oversight committee — which is really the Board chaired by the Minister’s permanent secretary — is unnecessary. Why should the Board have to reconvene itself into a committee, with a new chairperson, to consider reports from the Bank’s audit committee?
F. Seizure of shares
It is doubtful if the Government’s proposed expropriation of the Bank’s shares in subsidiary companies is constitutional. This clause may, therefore, attract an adverse report from the Parliamentary Legal Committee. It would have been better if the Bill had simply required the Bank to divest itself of the shares. [The clause’s unconstitutionality lies in the fact it makes no provision for compensation, or for notice to be given, or for an appeal to the Administrative Court, or for any of the other procedures required by section 16 of the Constitution. The proposed expropriation of shares would be permissible only if they were “held by a body corporate established directly by law for a public purpose in which no moneys have been invested other than moneys provided from public funds” [section 16(9)(b) of the Constitution]. The Bank is certainly a body corporate established directly by law for a public purpose, but according to the Governor it has been engaging in “retail banking”, accepting deposits from embassies, NGOs and parastatals, etc., and some of their money was used to purchase the shares. Whether the Bank was entitled to engage in such banking business is itself doubtful [the Reserve Bank of Zimbabwe Act does not seem to allow it] but presumably the Government expressly or tacitly permitted the Bank to do so. Hence it may be hard for the State to maintain that no money other than public money has been invested in the Bank, which it must do, if the acquisition of shares is to be brought within the provisions of section 16 of the Constitution.]
Conclusion
The Bill will undoubtedly improve the internal workings of the Reserve Bank. It will make the Bank more open and more accountable, and will restrict the Bank to its core functions. But it will also reduce the Bank’s independence. However, those who oppose the Bill on this ground have to face that independence can lead to the Bank and its officials becoming less accountable to the people, whom they are appointed to serve and that independence does not guarantee that the Bank will perform its functions competently. While the Bank was independent, its Governor and Board permitted Zimbabweans to suffer the highest level of hyper-inflation seen in modern times, and permitted the value of the Zimbabwean dollar to collapse to nothing. If Government oversight is the price we must pay for accountability and competence, it may be a price worth paying. The ideal would be to achieve a balance between independence and accountability
From the Ministry Of Finance Website: http://www.zimtreasury.org
17 November 2009
This Bill was agreed to in Cabinet and was gazetted on the 14th August. It could be introduced into Parliament at any time after the Houses resume on the 20th October. [Electronic version of Bill available on request – also copy of Reserve Bank of Zimbabwe Act showing the effect of the amendments proposed by the Bill.] The House of Assembly’s Portfolio Committee on Budget, Finance, Economic Planning and Investment Promotion has the duty to consider the Bill and to table a report before the House of Assembly when the Bill has its Second Reading [House of Assembly Standing Order 105]. This portfolio committee could well meet during these next two weeks before Parliament sits again. The committee clerk has said that it is hoped that there will be a public hearing, but this is not certain, so it would be advisable for stakeholders and interested members of the public to submit any representations they may have on the Bill to the portfolio committee now.
Outline of the Bill
According to the Bill’s explanatory memorandum, the Bill seeks to bring the powers of the Governor of the Reserve Bank under the control of the Bank’s Board, to clarify the Bank’s functions and to increase the Bank’s reserves. These objectives are to be achieved in the following ways:
A. The Bank’s powers and functions will be limited by:
divesting the Bank of the function of furthering the Government’s economic policies [clause 2];
restricting the Bank’s power to deal in gold and precious metals. It will be allowed to do so “only to the extent strictly necessary to comply with its international obligations” [clause 3] [but does the Bank — as opposed to the State — have any such obligations?];
preventing the Bank from opening credits and giving guarantees [clause 3] [this will be a considerable reduction in its powers];
preventing the Bank from borrowing foreign currency on its own behalf; it will be able to do so only on the State’s behalf and only to the extent that its reserves are not adversely affected [clause 3];
restricting the Bank’s power to lend money [clause 5]. In this regard:
it will be allowed to lend money to the State and parastatals only if:
the loan [presumably this is the total of all loans — the Bill is not clear] does not exceed 20 per cent of the State’s revenues in the previous financial year;
the loan is denominated in Zimbabwean currency [it is not clear how this applies in the present multi-currency situation];
the loan is repayable within, at most, two years;
in the case of a loan to a parastatal, the loan has been approved by the Minister of Finance and is either repayable within a year or converted into State-backed securities;
b. the Bank’s function of lender of last resort to banking institutions will be limited to three-month loans given with the approval of the Minister of Finance to support banks’ daily lending business [It is not clear if these limitations will override the Bank’s lending powers under the Banking Act – this Act available on request];
c. the Bank’s power to lend money to its employees will be limited to loans that are commensurate with those given by commercial banks to their employees;
6. divesting the Bank’s Board of power to determine Zimbabwe’s monetary policy, to ensure price stability and to fix interest rates; those powers will be transferred to a Monetary Policy Committee consisting of the Governor and his deputies, and other members appointed by the President after consultation with the Minister of Finance [clause 13];
7. requiring the Bank to maintain reserves to cover all its liabilities to the public in Zimbabwe; at present its reserves need cover only 40 per cent of its foreign liabilities [clause 17];
8. requiring the Bank to give the Minister quarterly statements showing the state of its reserves, and obliging the Minister to table the statements in the House of Assembly [clause 17];
9. divesting the Bank of all the subsidiary companies through which it carried out its “quasi-fiscal activities”. The only companies it will retain are the two that print currency notes and deal in gold. The Bank’s shares in all the other companies are to be transferred to the State, apparently without compensation [clause 19].
B. The Bank’s internal procedures will be improved
The Bank will be obliged to establish an audit committee [clause 13].
C. The powers of the Minister of Finance over the Bank and its officers will be enhanced by:
obliging the Bank to follow the Minister’s instructions when representing Zimbabwe’s interests at foreign meetings and in international organisations [clause 2];
ensuring that any instructions given to the Bank by “the State” are conveyed to it through the Minister [clause 4] [so the President will not officially have independent access to the Bank and its Governor];
requiring the Board to consult the Minister before appointing an acting Governor if the Governor’s office falls vacant [clause 6] [currently the President appoints an acting Governor in such circumstances];
making the Minister’s permanent secretary a non-voting member of the Bank’s Board [clause 8];
obliging the Bank’s Board to send the Minister copies of minutes of all its meetings [clause 11];
setting up an oversight committee consisting of the Minister’s permanent secretary and all other Board members to conduct a twice-yearly review of the Bank’s performance [clause 13];
most importantly, empowering the Minister to give general policy directives to the Bank’s Board, which the Board will have to carry out “with all due expedition” [clause 18].
D. The Governor’s powers will be limited:
the Governor will no longer be able to appoint a deputy to act for him in his absence; this power will go to the Board [clause 6] — though, somewhat contradictorily, the President rather than the Board will appoint a deputy chairperson to chair its meetings in the Governor’s absence [clause 10];
the Governor’s wide power to delegate functions to officials in the Bank will have to be exercised subject to the Board’s directives [clause 7].
E. Board members to disclose assets
The Bill will oblige all members of the Bank’s Board to disclose their assets to the President within a month after the Bill becomes law [clause 19]. [Regrettably, there is no provision requiring the President to publish the lists of assets so disclosed.]
Merits and Demerits of the Bill
The Bill has been criticised in the Press on the grounds that it reduces the Bank’s independence and, while limiting the Governor’s powers, gives excessive powers of oversight to the Minister of Finance. In particular, the proposal to allow the Minister to give directives as to the policies the Bank must pursue is criticised as being contrary to international best practice, which requires central banks to be independent. And finally, the Governor of the Bank is reported to have protested at the State’s acquisition of the Bank’s shares in its subsidiary companies, on the ground that depositors’ money was used to acquire the shares and the acquisition amounts to an expropriation of that money. There is substance in some of these criticisms.
A. Independence of Bank
It seems to be generally accepted that central banks should be given a large measure of operational independence. The draft SADC Model Central Bank Law, for example, seeks to enshrine the principle that central banks in the region should “act independently and without fear, favour or prejudice or direction from any authority or institution”. Internationally, the more effective central banks are those with the greatest independence: the U.S. Federal Reserve, for example, and the European Central Bank. The powers that the Bill will give the Minister, in particular the power to give policy directives to the Bank, will make it impossible to say that the Bank is truly independent. It may be in practice, of course, because the Minister may choose not to control the Bank. But potentially he will be able to do so, which means the Bank will be subject to direction and control by the Government. And experience has shown that Ministers who are given powers tend to exercise them.
B. Bank’s functions
In clarifying and reducing the Bank’s functions, the Bill is sound. The scope for engaging in “quasi-fiscal activities” will be greatly reduced, and the Bank will be confined to its core functions: setting monetary policy and ensuring price stability. The Governor is reported to have welcomed the clarification, saying that it is noble for RBZ to focus on its core business.
C. Reserves
Similarly, the statutory controls which the Bill will impose on the reserves kept by the Bank can only benefit the country. The Bank will no longer be able to run down the reserves to nugatory levels. It should be remembered that they are not the Bank’s reserves: they are the country’s reserves and the country, represented by the Government, must have a say in how they are maintained.
D. Reduction of the Governor’s powers
The Governor’s powers will undoubtedly be reduced by the Bill. He will no longer be able to delegate powers to subordinates without the Board’s permission, and he, like the Board, will have to obey the Minister’s directives. This reduction in the Governor’s powers is no bad thing. While one may accept that the Bank itself should be independent, that is no reason for giving its chief executive officer overreaching powers within the Bank’s structure.
E. Corporate Governance
Some of the changes to the Bank’s corporate structure will be beneficial – that the Bank will be required to establish an audit committee is in line with international best practice; and the provisions that the Board should send its minutes to the Minister, to keep him or her abreast of what the Bank is doing, and that the Bank’s quarterly statements are presented to Parliament will increase transparency. On the other hand, the establishment of a committee to formulate the country’s monetary policy, to ensure price stability and to set interest rates, seems to leave the Board of the Bank with little to do. The committee’s three functions comprise the main functions of any central bank. If those functions are to be handed over to a committee, what role is the Board to perform? Similarly, the new oversight committee — which is really the Board chaired by the Minister’s permanent secretary — is unnecessary. Why should the Board have to reconvene itself into a committee, with a new chairperson, to consider reports from the Bank’s audit committee?
F. Seizure of shares
It is doubtful if the Government’s proposed expropriation of the Bank’s shares in subsidiary companies is constitutional. This clause may, therefore, attract an adverse report from the Parliamentary Legal Committee. It would have been better if the Bill had simply required the Bank to divest itself of the shares. [The clause’s unconstitutionality lies in the fact it makes no provision for compensation, or for notice to be given, or for an appeal to the Administrative Court, or for any of the other procedures required by section 16 of the Constitution. The proposed expropriation of shares would be permissible only if they were “held by a body corporate established directly by law for a public purpose in which no moneys have been invested other than moneys provided from public funds” [section 16(9)(b) of the Constitution]. The Bank is certainly a body corporate established directly by law for a public purpose, but according to the Governor it has been engaging in “retail banking”, accepting deposits from embassies, NGOs and parastatals, etc., and some of their money was used to purchase the shares. Whether the Bank was entitled to engage in such banking business is itself doubtful [the Reserve Bank of Zimbabwe Act does not seem to allow it] but presumably the Government expressly or tacitly permitted the Bank to do so. Hence it may be hard for the State to maintain that no money other than public money has been invested in the Bank, which it must do, if the acquisition of shares is to be brought within the provisions of section 16 of the Constitution.]
Conclusion
The Bill will undoubtedly improve the internal workings of the Reserve Bank. It will make the Bank more open and more accountable, and will restrict the Bank to its core functions. But it will also reduce the Bank’s independence. However, those who oppose the Bill on this ground have to face that independence can lead to the Bank and its officials becoming less accountable to the people, whom they are appointed to serve and that independence does not guarantee that the Bank will perform its functions competently. While the Bank was independent, its Governor and Board permitted Zimbabweans to suffer the highest level of hyper-inflation seen in modern times, and permitted the value of the Zimbabwean dollar to collapse to nothing. If Government oversight is the price we must pay for accountability and competence, it may be a price worth paying. The ideal would be to achieve a balance between independence and accountability
From the Ministry Of Finance Website: http://www.zimtreasury.org
Am Impressed By My Minister Of Finance
When the New Government was formed and ministers were first annouced (before being amended) in February 2009, I made two objections on Tvsangirai's pick of Ministers.
1)One was about people from Matabeleland where he had picked only one from MDCM. That was adjusted when he appointed Gorden Moyo and Sipepa.
2) The second objection was on picking Tendai Biti for the ministry of Finance, I thought it was not the best decision given there were people with financial background like Elton Mongoma, etc. Let me say I repent on that objection. I now understand that selection was a wise one.
The Minister of Finance Honorable Tendai Biti is doing a good job. He is refusing to be bullied by Zanu pf, Mugabe, Gono and anybody. I think he knows what he is doing and he has to be recomended for that. I know it was once publicised that he recieved a mail with a bullet inside meant to be a threat on his life. I pray God for his proctection. His stance on the Zim Dollar, IMF money and the current Reserve Bank Amendment Bill bieng introduced among other things are proof enough that he has to be trusted as a capable Minister of Finance.
1)One was about people from Matabeleland where he had picked only one from MDCM. That was adjusted when he appointed Gorden Moyo and Sipepa.
2) The second objection was on picking Tendai Biti for the ministry of Finance, I thought it was not the best decision given there were people with financial background like Elton Mongoma, etc. Let me say I repent on that objection. I now understand that selection was a wise one.
The Minister of Finance Honorable Tendai Biti is doing a good job. He is refusing to be bullied by Zanu pf, Mugabe, Gono and anybody. I think he knows what he is doing and he has to be recomended for that. I know it was once publicised that he recieved a mail with a bullet inside meant to be a threat on his life. I pray God for his proctection. His stance on the Zim Dollar, IMF money and the current Reserve Bank Amendment Bill bieng introduced among other things are proof enough that he has to be trusted as a capable Minister of Finance.
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