‘It’s about trust not bond notes’

By Guthrie Munyuki

As government prepares to introduce bond notes, jittery ordinary Zimbabweans — including a large cross-section of impoverished women —say the Reserve Bank of Zimbabwe (RBZ) has a herculean task of winning over the doubting public.

The RBZ will be introducing $75 million worth of the distrusted bond notes in smaller denominations starting at the beginning of November in a bid to mitigate the severe cash shortages.

Vocal feministic civic group — Women For Women which was part of Civic Society Organisations (CSOs) that met with RBZ boss John Mangudya in June this year — says the apex bank could have handled the cash shortages and leakages differently had it consulted widely.

“It all comes down to the issue of public confidence in the central bank. The central bank must first work to restore public confidence and the first step is to demonstrate that it is independent from undue political interference,” Women For Women co-ordinator  Maureen Kademaunga told the Daily News exclusively.

“To begin with, the RBZ did not do a thorough and accurate diagnosis of the cash crisis, which is fundamental in developing befitting solutions.

“This policy change like the majority of government policies is reactionary and not informed by critical analysis or public engagement.

“The introduction of a surrogate currency will not ensure the independence of the central bank or stop undue political interference with monetary policy. Introducing bond notes will not stop illicit financial flows and corruption. The RBZ has also not articulated how it will deal with the possibility of a forex black market, which is likely to emerge,” added Kademaunga.

Presenting his monetary policy statement (MPS) last month , Mangudya confirmed that the country would start using the bond notes this month — in a move that sent shivers down the spines of ordinary citizens who fear the return of the much-despised Zimbabwe dollar and the attendant hyper-inflation that was witnessed a decade ago.

This was despite the fact that the RBZ had in August appeared to indicate that it was having second thoughts about bringing the bond notes into circulation soon, while responding to a lawsuit filed by former Vice President Joice Mujuru — saying then that the surrogate currency was still at “a planning stage”.

“It is important to note that bond notes shall not be forced on people who do not like them.

“The bank is addressing the concerns by planning to introduce smaller denominations of bond notes of $2 and $5.

“In addition, the bank has proposed for the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy. It is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar through the back door.

“At the rate at which the country is exporting and based on statistics…, we anticipate that bond notes equivalent to around $75 million will be in the market by end of December 2016,” Mangudya said during the presentation of his MPS.

Government is yet to craft a law supporting the bond notes.

Panicking Zimbabweans have been swamping banks bidding to withdraw their savings ahead of the bond notes’ introduction.

Mujuru and well-known industrialist Frederick Mutanda have filed lawsuits seeking to stop the introduction of the bond notes.

Kademaunga said the opposition to bond notes was informed by the period of hyperinflation which wiped out savings as a result of policies she said were insensitive to people’s rights.

“Also, RBZ has zero credibility in its ability to fight inflation or guard against the almost guaranteed reality that the government will direct the bank to overprint the bond note to finance its budget deficit.

“Lack of policy consistency and an inability to protect the bank from predatory tendencies within government is concerning. Imagine with historical examples such as the changes of the 2008-09 era where people with FCAs (Foreign Currency Accounts) lost their forex due to an RBZ directive conversion to ZW$. We are victims of the past, and wounds are still fresh,” said Kademaunga.

Zimbabwe has for the past few months been reeling from severe cash shortages that analysts blame on gross mismanagement by the Zanu PF government and the country’s dying economy.

President Robert Mugabe, the only leader Zimbabweans have known since the country gained its independence from Britain in April 1980, is battling to save his long political career as citizen unrest escalates over the ever-deteriorating quality of life locally, which they blame squarely on his misrule. Daily News