US embassy cable - 04HARARE767

UNCLAS HARARE 000767 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR AMANDA HILLIGAS 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EAID, BTIO, EINV, PGOV, PTER, ZI, Economic Policy 
SUBJECT: RBZ Governor Addresses U.S. Firms 
 
Ref:  Harare 682 
 
1. (U) Summary: Reserve Bank (RBZ) Governor Gideon Gono 
met May 6 with 30 representatives from U.S. 
multinationals.  He offered few insights beyond his April 
21 policy statement, but underscored RBZ vigilance in 
policing commercial activity.  End Summary. 
 
2. (U) In this session organized by the American Business 
Association of Zimbabwe, Gono said the following to U.S. 
companies: 
 
- He will need to make more frequent policy statements 
than the two-per-year that had become typical under his 
predecessor.  (April's address followed his first by only 
four months.) 
 
- Gono is prepared to interfere in any sector for the 
sake of Zimbabwe's economic health.  This generally means 
selectively chasing down corruption.  He appears to be 
turning from the financial to insurance sector. 
 
- The RBZ will continue to allow anyone to sell foreign 
exchange through authorized banks at the auction (or 
floor) rate.  However, the RBZ will investigate sales of 
US$10,000 or more.  Gono expressed fear exporters would 
under-invoice clients abroad to dodge Zimbabwe's 25 
percent retention requirement, then exchange proceeds in 
anonymous cash transactions.  The governor also raised 
concerns about money laundering to finance terror or 
other nefarious activity. 
 
- Gono continues to pin hopes on tapping into transfers 
from Zimbabweans abroad, claiming one-third of the 
population has emigrated.  He stated that foreign 
exchange redemptions were about US$1.5 million per day in 
the first days of the no-questions-asked policy. 
 
- Once forex inflows improve, Gono would like to offer 
more than US$8 million at twice-weekly auctions.  For the 
time-being, the RBZ would continue to direct "inflows to 
priority sectors." 
 
- The RBZ governor reiterated his desire to restore 
relations with the international community, especially 
the International Monetary Fund.  He expressed gratitude 
for U.S. food and HIV/AIDS assistance. 
 
- He praised the African Growth and Opportunity Act 
(AGOA), explaining he had been following AGOA since its 
embryonic beginnings in 1997.  (Note:  In recent months, 
Post has made a concerted effort to raise the profile of 
AGOA, making Zimbabweans aware of what they are missing 
out on.) 
 
3. (SBU) In private conversations with the Ambassador, 
Gono claimed not to know of the GOZ cabinet decision two 
days prior to cancel an FAO crop assessment and said that 
he knew the likely maize crop was closer to 800,000 
metric tones than the 1.7 million claimed by the 
Agriculture Minister.  He also padded his reputation as 
all-purpose fix-it man by claiming to have intervened 
successfully against the Ministry of Education's shutdown 
of many private schools due to unapproved fee hikes. 
Further, he said he was considering an appeal by Vice 
President Msika to secure presidential intervention 
against the Government's seizure of Kondozi Farm (ref). 
 
Comment 
------- 
4. (U) The GOZ is still fighting market forces, 
particularly on currency exchange.  Unwilling to face 
market realities, it shut several dozen private schools 
this week over increased fees.  The GOZ's predisposition 
to dictate rates and prices to the private sector still 
makes an economic rebound unlikely. 
 
Sullivan