Bond issue: You are missing the point

By Professor Ken Mufuka

My supreme brother, Tarisai Manungu, has sent me some “powerful” information on the bond issue. He says, “Ken, please write.” I think the discussion has been beating about the bush, and missing the point entirely.

Here, I think is the real story. Two legal giants, Tawanda Nyambirayi and Fadzayi Mahere contradict each other as to whether the governor of the Reserve Bank of Zimbabwe (RBZ) can issue bond certificates to be used in general circulation in lieu of paper money.

Clearly, in terms of clarity, Mahere has the more convincing argument.

By definition, and in common parlance, a bond certificate is a piece of paper issued by a municipality or an authoritative body promising a certain “allurement” (interest) payment as compensation for lending that organisation some money.

I hold a bond certificate from Ford Motor Company at five percent interest.

Surely, I cannot go to Chrysler and offer my Ford bond certificate as payment for their car.
If that were the case, I would be using the bond certificate as legal tender (money).
I can return the bond to Ford, after its maturity date and get back my US$1 000 plus five percent interest.

Put simply, a bond is a form of borrowing money. That is where the trick is. The RBZ wants to borrow money from the public in a dishonest way, by trickery and fraudulent means, without explaining that they are doing so.

But that is only part of the story.

The real story is that the government has scandalously failed to husband the Treasury, and with it, the economy itself by chasing away anybody and everybody who lays the golden eggs.

Credibility stupid!

Further, government has to use tricks in order to borrow money from the public, because it lacks credibility. The argument is that if you have no credibility in small things, you have no credibility in big things.

Let me give you an example that seems absolutely irrelevant, and you will all say, “Ken is mad.”

Webster Shamu and I have been friends since I was at the University of Zimbabwe in 1968 and he was a radio anchorman. Hedzino nhau dzichiverengwa naWebster Shamu.

I was due to have lunch with him the day he was dismissed from the party by ZANU-PF. His politics did not interfere with our friendship.

My story is that if you think that with a budget of US$7 000 a year, Shamu was stealing money from ZANU-PF or that Shamu was planning a coup against President Robert Mugabe, you are worse than a nzungu (American- nutty).

A lead story in The Herald of May 13 says that “white farmers who lost their land in 2000 have started receiving compensation.”

It further states, “in actual fact, compensation … has already started, especially where evaluations were completed.”

If any of our readers comes across a white farmer who has received compensation, I will pay for their lunch.

Furthermore, in the same paper, there is a report of railway workers who have not been paid for six months.

In fact, “arrearages” (a fancy word for non-payment) is used.

You will find somewhere hidden within the papers that President Robert Mugabe, who had just returned from India, and his daughter from Malaysia, has flown to Kampala for Yoweri Museveni’s inauguration.

White people have told me that they don’t mind paying taxes but it is disconcerting to find that their taxes are used without consideration to probity.

One white friend has just sent me information on the Zimbabwe Revenue Authority (Zimra) scandal. Be reminded that Zimra officials are not guilty until a judge says that they are. The story is that, these men, chosen as men of high character, to superintend our revenues, allegedly resented paying the taxes which they assiduously enforce on others.

The connecting thread in all this is that money and economies are based on trust. All governments do shady deals. The difference is that our government does not pretend to hide its bad deals. The diamonds were stolen in broad daylight.

There is a report that Zimbabwe Iron and Steel Company managers authorised the black market sale of surplus iron. There is another report that one of eight specialised trucks ordered for Hwange Colliery disappeared between Durban and Hwange after the trucks had been cleared from customs.

Railway fees were collected in broad daylight by authorised crooks on the Botswana-Zimbabwe route. With this kind of history behind government husbandry of national resources, we are now being asked to lend money (that is what a bond means) to authorised criminals in broad daylight.

It is a question of credibility, stupid.

I wonder if the governor of RBZ will keep a bunch of bond certificates in his investment portfolio. We know from experience that the tax officials were reluctant to pay the stupid taxes they stalwartly impose on others. We know from experience that RBZ officials converted their own savings into United States dollars before the dollar crashed.

We know from experience that our politicians make wild accusations against mild-mannered gentlemen like Shamu.

The issue behind this hullabaloo bonds is that of the re-introduction of the Zimbabwe dollar. While we use the Zimbabwe dollar, they swim in US dollars.

People with college kids in South Africa will have to seek permission from RBZ to send US dollars. Ha! Ha! We know what happened before. They will charge processing fees for applications and they will get filthy rich by selling the US dollar. Stupid!