Mboweni used a recent address to the Cape Town Press club to launch a thinly-veiled attack on the lack of respect for property rights in Zimbabwe.
Mboweni said: “If people are convinced that they have got their private property rights secured, they will invest because they know that their investment will not be taken away. We know that if there is a disciplined fiscal policy regime, investors will respect it."
Mboweni said the observance of the rule of law underpinned stability, and without it, investors lose confidence and withdraw their investments. He said he had spoken to Gono in recent weeks over the “difficult situation” in Zimbabwe.
"I think my colleague in Zimbabwe is in a very difficult situation,” Mboweni said. “He has tried to maintain the highest standards of a central bank. He has indicated from time to time where he disagrees with the government. It has been very brave on his part."
Gono differed sharply with government ministers in his mid-term monetary policy announced last week. Gono's fury was directed at the Indigenisation and Empowerment Bill passed by parliament two weeks ago.
The bill, which now awaits the president's signature before becoming law, seeks to force foreign-owned companies, including mines and banks, to cede majority shares to local blacks.
The proposed law, which is vague in a number of clauses, hints strongly at nationalisation. The bill states that white Zimbabweans must first prove that they did not benefit from colonial policies to avoid seizure of their companies.
Gono's attack on the bill, which was approved by President Robert Mugabe's cabinet and a parliament dominated by his ruling Zanu PF, signalled that Mugabe might not sign the it into law as it stands.
In the past Mugabe has refused to sign some controversial bills and referred them back to parliament. Gono, Mugabe's right-hand man on the economy, was almost certainly reflecting the thinking of the president.
Describing government's indigenisation policy as a “grab all and run strategy”, Gono said that it was well-intentioned but could spell further economic disaster.
“Local-foreign ownership thresholds must be taken and implemented as down-the-horizon targets, as opposed to excitable but impractical overnight conversions of events,” Gono said.
“Our view is that the gradual approach promotes fair valuation, reasonable return on initial investment outlays by investors, as well as a smooth transition from old to new shareholders.”
Quoting President Thabo Mbeki on the need to exercise caution on issues of indigenisation, Gono said that foreign investors must not be stampeded into surrendering control of their companies as this would have negative effects on the economy.
“Where foreign investors bring in clear long-term benefits to the country, a reasonable degree of flexibility ought to be exercised in allowing investors to hold, at least in the initial stages, majority shareholding so as to deliberately accord them escalated dividends,” he said.
“Beyond pre-agreed time thresholds foreign shareholding can be diluted on a gradual win-win basis in line with the otherwise noble objectives of indigenisation and empowerment.”
Gono said indigenisation should not be allowed to be hijacked by a clique of politically powerful and well-connected individuals bent on primitive accumulation of wealth in a “greedy but irresponsible” manner at the expense of the majority.
Mboweni said he was impressed by Gono's stance. It was critical, he said, that citizens voice their disapproval of any legislation before it became law.
"There is nothing as bad for the economy as some thinking … you have a piece of property. [You] plant avocado trees and tomorrow someone would come and take them. That is a bad idea. I would not invest in a situation where it is uncertain whether this investment belongs to me," Mboweni said.
Turning again to Gono, he said the Zimbabwe central bank had conducted itself most honourably in upholding the conditions of its account with the SA Reserve Bank. The account was "fully paid up" at the start of every financial year.
“We have never had a situation where we had to remind them that they owe us," said Mboweni, noting that "good people showed themselves in action and not words", another clear reference to Gono.
Article courtesy of NewZimbabwe.com
