Business rejects RBZ’s bond notes

By John Kachembere and Ndakaziva Majaka

As Zimbabwe’s economy continues to die, the business community has joined ordinary citizens in rejecting the government’s imminent introduction of the much-distrusted bond notes, advocating instead greater use of the South African rand.

In its contribution to ideas for the 2017 national budget, the influential Confederation of Zimbabwe Industries (CZI) revealed that its members had rejected the surrogate currency in toto.

“The announcement of bond notes has caused widespread panic…While the bond notes make sense as a technical solution we have completely failed to sell the concept to our members.

“Confidence is too low for the introduction of the bond notes in the meantime and we therefore recommend the cancellation of the plan and have them replaced with the rand.

“We also suggest that the minister of Finance starts presenting his budget in rand instead of United States dollars . . . Business will encourage its members to use rand,” CZI vice president Sifelani Jabangwe said.

This latest rejection of the surrogate currency by a key constituency, comes as the Zimbabwe Revenue Authority (Zimra) has also warned that bond notes will further destabilise the country’s battered economy.

To worsen matters for Zimbabwe, the World Bank and the International Monetary Fund (IMF) have also recently painted gloomy outlooks for the country’s economy for the next two years, as citizen unrest grows.

The Reserve Bank of Zimbabwe (RBZ) has said it will be introducing bond notes worth $75 million next month, in a move aimed at providing incentives for exporters and easing the country’s severe cash shortages.

However, the central bank has also in the meantime warned that the current cash shortages will worsen in the next few months.

Addressing delegates at last week’s National Economic Consultative Forum (NECF), RBZ deputy governor Kuphukile Mlambo warned that the end of the tobacco season and the depreciation of the rand and British pound would further exacerbate the current cash shortages.

“We are no longer an economy that is dependent on manufacturing exports. We are totally dependent on four commodity exports — tobacco, gold, platinum and chrome,” he said.

“But these minerals do not always perform well or deliver all the time. For example, the tobacco season has just ended now and between now and February we have no tobacco money. This does not really improve the situation.

“Remittances are also in trouble now because someone who was sending money back home to their parents, say R1 000 … the money is now coming in at say $60 … so, although the rand amount is the same, the dollar value has fallen.

“It’s the same as those in the United Kingdom where the pound has also fallen. So in view of all these dynamics, everyone should do all they can to spare cash because the money just isn’t there,” Mlambo added.

The pending introduction of the bond notes has caused panic among ordinary Zimbabweans and traders alike, who have been swamping banks in a bid to withdraw their savings.

Last week, Speaker of Parliament Jacob Mudenda also waded into the bond notes debate by launching yet another thinly-veiled attack on the RBZ.

“We really need to clean up our policies even though it’s now (legality of bond notes) water under the bridge. It is the duty of the Reserve Bank to assure people that the bond note is not a dangerous animal.

“There is no law to back them, and if there is no law how can they become legal tender?” Mudenda thundered during an address to parliamentarians.

Zimra chairperson Willia Bonyongwe has said the planned introduction of the notes had brought uncertainty and worsened cash shortages as consumers held onto their dollars.

“The advent of the bond notes has brought some uncertainty into the economy, and this is exacerbating the existing liquidity challenges because everyone wants to keep their US dollar cash. There is a serious confidence issue on this matter,” Bonyongwe said.

Meanwhile, the government’s quest to introduce the much-distrusted bond notes continues to face challenges.

After seeing her urgent application challenging the introduction of bond notes at the Constitutional Court (Con-Court) thrown out on a technicality, former Vice President Joice Mujuru has since escalated her objections to the surrogate currency by asking the RBZ to reveal the law it will use to back their introduction.

Harare businessman and well known industrialist, Frederick Mutanda, has also filed a High Court suit challenging the procedure and legality of the bond notes.

Zimbabwe’s economy is dying on the back of what analysts say are bad policies and gross corruption by the country’s leaders.

Recently, the World Bank downgraded the country from its list of improved economies to the unflattering tier of struggling countries, while the IMF said Zimbabwe’s economic growth would slide back further to a negative 0,3 percent this year, before shedding off more in 2017 where it is projected to fall to a further negative 2,5 percent. Daily News