Placing the Zimbabwe of Zimbabwe under curatorship long over due

The Reserve Bank of Zimbabwe has been grabbing news headlines for all the wrong reasons with its assets being seized and sold off at an alarming rate. At the centre of the crisis are debts accumulated during the now infamous Quasi Fiscal activities when the Reserve Bank was transformed into some mega-distributor of all things to all people as long as they fit into a particular political patronage network. In the process the Central bank accumulated massive debts exceeding US$ 1 billion with little to show for it. The challenge now is how to pay off this debt and allow the Central Bank to focus on its core mandate of stabilizing Financial markets and keeping inflation under check.

The Minister of Finance has suggested the placing of the Reserve Bank of Zimbabwe under curatorship as a way to help resolve the situation. This is a noble idea which should be pursued or modified versions of it being adopted. After some serious research we couldn’t get a precedent of where a Central Bank has been placed under curatorship. It is normally supposed to be the other way round with the Central Bank placing private Banks and Financial Companies under curatorship .But being Zimbabwe stranger things have happened and continue to happen so this world first doesn’t come as a surprise. It should be expected when the Central Bank is entrusted to individuals based on political patronage and not proven competence.

Whilst the RBZ situation looks bad and hopeless it must be noted that the RBZ has debts and it has assets which include debtors who owe huge sums of money to the RBZ. The challenge is to trace all these debtors ,who they are and how they came to owe the RBZ ( which normally should not deal directly with the public or private entities except through banks).

Placing the RBZ under curatorship will allow a proper assessment of its true financial position reflecting the realistic balance sheet ,cashflow, income statement and other measures which allow the Government to properly make an informed decision. The curator will be able to document all the liabilities and all the assets. Such an audit will assist in developing a turn around plan to clear these debts which are ruining the RBZ reputation and in the process making it almost impossible for the Central Bank to perform its legal obligations under the RBZ Act.
The unfortunate situation is that the RBZ has been politicized over the years and has lost focus which brought about these massive debts.

Given Zimbabwe’s political environment its unlikely a local curator will have the clout, muscle and expertise to do a proper job given how the RBZ was now converted into a mega wholesale competing with the likes of Jaggers and Mahomed Mussah wholesalers. This calls for the appointment of an International firm of either lawyers or accountants or an Investment Bank of international standing to perform an Audit ,Due diligence and prepare all necessary reports to prepare for the curatorship. Local firms may not have the resources or expertise required to carry out the task as political pressure maybe brought to bear during the requisite investigations and assessments.

The immediate challenge would be to compile the list of RBZ debtors who are mostly believed to be senior political figures or businesses linked to them. These debtors must be encouraged and forced to come forward with plans or proposals on how they intend to settle their debts to the Central Bank.

This article appears as courtesy of GMRI Capital ( http://www.gmricapital.com ) prepared for 3MG MEDIA

Gilbert Muponda is a Founder and CEO of GMRI Capital ( http://www.gmricapital.com ). He can be reached at;

Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda

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