Chronicle EditorDr Gift Mugano—
The bond notes are finally here! When the Governor of Reserve Bank of Zimbabwe (RBZ) mooted the idea to introduce the bond notes I was one person who raised concerns about the bond notes.I did rightly so as an economist who has constitutional rights to make an expression in the democratic space which we have. In any way, every policy must be interrogated to help policy makers refine it bearing in mind the concerns of all stakeholders.
My problem had nothing to do with the bond notes but legacy issues of policy inconsistency and the fact that people lost their money, pensions and savings when then Zimbabwe dollar demised due to the factors we all know.
Because of this history, the history of policy inconsistency, the bond note was synonymous to bringing Zimbabwe dollar via the back door.
Quite encouraging is the way the Governor of the RBZ and his team engaged everyone on this matter. The stakeholders consulted on this matter were wide ranging with most of them were outside of the traditional stakeholders for policy making like the Tajamukas of this world and churches. This is quite commendable.
Life is not always fair. In dialoguing there is no guarantee that you win everything. By and large there were certain quotas including myself who were totally against the introduction of the bond notes.
What is refreshing is that the RBZ didn’t consult for the sake of consulting, they went on to take some of the key concerns of stakeholders into account prior to the introduction of the bond note.
Quite notable measures which I feel that were well noted and implemented by the Central Bank are the small denominations of the bond note, set minimum withdrawal limits specifically tied to the bond note and the managed quantum of the bond notes into the market. This is the foundation upon which my optimism is build upon.
Why we should embrace the bond notes
With the guarantee from the RBZ that they will confine the quantities of the bond notes to $200 million which is supported by the Afrexim Bank facility is enough assurance that our 2008 memories will not come back. I don’t think that the RBZ after all the assurances and the publicity which ensued would like to mislead the nation. This will be suicide! The Central Bank role is to restore confidence and trust with the generality of the nation. In this country, we don’t trust each other.
The citizens have every right to do so based on history. Every country grows on the back of trust. The bond notes is that policy instrument which can help us to once again find each other and work for the common good of our beloved country if and on if the RBZ passes the litmus test of not overprinting it. If the RBZ fails the litmus test we shall never forgive them and they will never earn our trust again. For the meantime, let us give them the opportunity to deliver us to the promised land.
In the spirit of building positive mind, since the assurance is given, let me put the fear aside and now focus on the quantum of the bond notes and evaluate if it can render us any problem. The $200 million of bond notes is around 3 percent of total cash in circulation. This means at some point especially in the beginning like now when we have around $10 million bond notes going into circulation, it means that we will have close to 0 percent of bond notes to total cash in circulation. One may want to look at it from the bond note per capita (individual). If we divide $200 million by 13 million people (our national population) one individual will have about $15 if we leave out the impact of the velocity of circulation.
What it therefore means is that the bond note cannot change my lifestyle even if it is bad but certainly 5 percent is a good margin for exporters. So, we have nothing to worry about.
One of the key issues which the RBZ has done well is to print bond notes in small denominations especially at their inception.
The $1 and $2 bond coin and note which respectively entered the market will not cause inflation and in the same vein will minimise the risk of the depreciation of the bond note against the United States dollar. This denomination makes it easy for the generality of the public to carry-out transactions like paying commuter fares or mazhanje as opposed to the use of the US$ (as repeatedly explained by the Minister of Finance Patrick Chinamasa).
In my view, the RBZ should keep these bond notes in small denominations to avoid risks of inflation and depreciation of the ‘local currency’.
One of the key issue the RBZ has reiterated over and over during the consultation stage is to set up a committee which oversee the logistics around the bond note. I see this move as a way of fostering transparency and accountability. This is an excellent move but the committee members should be made up of men and women of high integrity.
This oversight is necessary to restore confidence. After the establishment of the committee, subsequent communications from the RBZ should be made by the committee.
One will hopefully that the committee will report on amount of bond notes circulating and progress report on how the RBZ and law enforcement agents are tackling moral hazard.
As I conclude my discussion, I want to end by making reference to the teething problems which were witnessed from yesterday which may stay with us in couple of days to come.
As I go into these teething problems I want to start with an analogy I got from Mr Joe Mutizwa (former chief executive of Delta Beverages) at a workshop I recently participated. He said that the bottleneck is on the top of the bottle.
Just like the bottleneck which is on the top of the bottle, the leaders of various organisation are on the top of the organogram. What he meant was that leaders are in many cases the bottlenecks! He called on leaders not to the bottlenecks of transformational change. We are all leaders isn’t? We must not be the bottlenecks of the bond note. Who are the bottlenecks in this early stages of introduction of the bond note?
These are supermarkets refusing bond notes, money changers, banks and leaders of the social media, etc. One of the big supermarket was purported to have refused bond note (those on WhatsApp knows the supermarket).
Some banks are taking advantage of the daily withdrawal limit of the bond note (that is $50) as a ceiling without giving another addition of $50 for the day. There were unfounded rumours that $100 dollar (of bond note) was exchanged at $70. This is a serious moral hazard which must stop.
It is not good for everyone. Shops and banks, for example, want sales and sales can only be sustained if the economy begins to perform. The money changers should not be in the road in the first place.
They should be in factories and offices. In as much as the bond note will not give them jobs but the spirit of working as a collective unity starting with the bond notes and other policies to come can will guarantee us jobs.
Leaders of the social media has continued to attack the bond note.
The reality of the matter is that social media is very powerful. It can build or destroy. As Zimbabwean let us work around to build this country as a collective regardless of our differences. We must always endeavour to know when to disagree (when the policy is still at consultation stage) and agree even grudgingly (when the policy is now in place) for the sake of the country.
Together, let us give the RBZ the litmus test to show us that they can walk the talk and help us in building confidence and trust and build the Zimbabwe we want.
Let us not be bottleneck folks.
Together we make Zimbabwe great!
Dr Mugano is an Economic Advisor, Author and Expert in Trade and Competitiveness. He is a Research Associate of Nelson Mandela Metropolitan University. Feedback: +263 772 541 209 or [email protected]
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