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Bond notes, due to start going into circulation next month, are now to be little more than small change after the Reserve Bank of Zimbabwe decided to limit denominations to $2 and $5 and stressed yet again that the amount in circulation will be tied directly to exports and will not exceed the $200 million backing from a facility of the African Import and Export Bank.
RBZ Governor Dr John Mangudya, during his mid-term Monetary Policy Statement on Thursday, very bluntly recognised “the public’s concerns, fear, anxiety and scepticism of bond notes”.
He still believes they are needed to increase the amount of currency in circulation without seeing the export incentive facility being packed into suitcases and illegally exported.
But he limited denomination sizes so that they are little more than an extension of bond coins that have been accepted after initial doubts, and promised to set up an independent board of representatives of a wide range of stakeholders to monitor the issue of bond notes and ensure that never more than $200 million worth were issued. Both measures should calm fears.
It is obvious that he expects bond notes and foreign bank notes to circulate together, although there is the problem that the foreign notes have an intrinsic value that few will see in bond notes. But keeping bond notes as small change should minimise the likelihood of the banknotes being withheld from circulation and hoarded.
The small denominations also fit the rapidly changing attitude to plastic money in the Zimbabwean economy as most Zimbabweans now join those in many other countries in embracing the security and ease of using plastic.
A large number of smaller shops have managed to acquire PoS machines over the last couple of months, as have most bars. A majority of service stations now let drivers use plastic to buy fuel.
Even kombi drivers and many vendors accept payments through phone transfer systems. Most Government departments that accept payments from the public have now been equipped with PoS machines. So it is becoming easier and easier to go without using banknotes.
In fact there are only a few small retailers still insisting on banknotes. A significant number of minor landlords and small providers of services still want notes, possibly because they do not want Zimra to see their full earnings. Criminal elements, such as drug dealers, and the prostitution business still appear to use banknotes, to keep everything under cover.
Zinara still wants banknotes or bond coins at tollgates, although it offers a pre-paid toll system that can be paid electronically, leaving the police traffic patrols as the last Government holdout against plastic money and so joining some rather un- savoury other groups.
But most people, no matter how convenient plastic becomes, still prefer to use notes and coins for tiny purchases: A bus ticket, a beer, a newspaper, a couple of onions and such like.
For these sort of purchases small denomination bond notes and bond coins are likely to be acceptable, at least if that independent board issues daily statements of amounts in circulation.
Dr Mangudya last week went out of his way to minimise distrust and maximise benefits from bond notes. And as people can continue to use banknotes and plastic, we think he should at least be given a chance.
Online Reporter
dyton mupawaenda