By Tendai Kamhungira
The Reserve Bank of Zimbabwe (RBZ) says it is satisfied by the impact bond notes have had on exports which grew up by 17 percent last month although its critics on the other hand, accuse the monetary authorities of failing to stop cash shortages.
RBZ governor John Mangudya said bond notes were not introduced to deal with cash shortages but to boost the exports.
“The bond notes have not failed. Bond notes are payouts for the export incentive scheme and not for dealing with cash shortages.
“We are quite satisfied by the impact of the export incentive scheme on exports which grew by 17 percent by end August 2017.
“Those who think bond notes have failed are not exporters and should be forgiven as they know not the source of the forex that they are using under the multiple currency system,” Mangudya told the Daily News yesterday.
The RBZ introduced the bond notes at the end of last year as an export incentive scheme backed by a $200 million loan facility from Afreximbank.
Zimbabwe has so far used more than $170 million worth of bond notes, prompting Mangudya to open negotiations for the release of more bond notes worth $300 million.
While exports have peaked 17 percent according to the RBZ, the bond notes have vanished from the market together with the coveted United States dollars due to widening cash shortages and growing parallel market.
Dealers this week put a premium of 48 percent on all Real Time Gross Settlement (RTGs) transactions — a move which forced manufacturers and retailers to hike prices of goods — as demand for US dollars soared.
Mangudya, however, said it was wrong to relate the RTGS premiums to the bond notes as the surrogate was only transacted in cash terms.
Zimbabwe has currently four methods of payment, bond notes (cash), RTGS, swipe and multiple currencies, anchored by the US dollars.
Most companies and shops rely on RTGS and as a result of the current premiums, have been forced to pass on the costs of getting the US dollars on the parallel market to the consumers.
“There has been a surge in prices of most goods owing to the cost of money on the parallel market. Most manufacturers and importers are resorting to the illegal market for foreign payments for raw materials and other critical goods.
“The cash premiums of an upwards of 30 percent are seriously causing price distortions on the market. This is hurting the economy and the consumers are most affected as business has simply passed on the cost of money to the customers,” Confederation of Zimbabwe Retailers president Denford Mutashu told the Daily News this week.
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said companies were left with no option but to increase prices given the high premiums charged on the parallel market.
“Businesses are raising prices to avoid closing down due the US dollar premium being paid for on the black market. This is an unbudgeted cost that is eating into the small margins of most,” Jabangwe told the Daily News.
Most companies that import raw materials have abandoned the RBZ route where approvals of their foreign currency applications are now taking between one month and six weeks for approval — depending on the availability of US dollars and priority.
Meanwhile, opposition parties accuse Mangudya of having failed to stop the slide of the bond notes.
“Firstly, he promised the nation that bond notes were secured by a $200 million Afriexim bank facility and that no more than $200 million worth of bond notes would be printed,” MDC spokesperson Obert Gutu said.
“This was a huge lie because already Mangudya has announced plans to print an additional $300 million worth of bond notes.
“Mangudya promised that bond notes would exclusively be an export incentive. The liquidity crisis has gotten out of hand and bond notes have virtually disappeared from the formal market.
“You can actually get more bond notes at Park Station in Johannesburg and Heathrow Airport in London than you can get from all the commercial banks in Zimbabwe,” claimed Gutu.
“The situation has spiralled out of control and Mangudya is now just a bystander. He has been completely and utterly overwhelmed, “added Gutu.
The Tendai Biti-led People’s Democratic Party (PDP) accused Mangudya of failing to turn things around and blamed the currency shortages on him.
“The PDP has always argued that exchange rates cannot be controlled by totalitarian pieces of legislation.
“The PDP advises against the injection of a further $300 million worth of bond notes as this will deepen the crisis,” PDP spokesperson Jacob Mafume said.
The Welshman Ncube-led MDC said the bond notes had failed to address the cash crisis and Mangudya was at fault.
Party spokesperson Kurauone Chihwayi told the Daily News that the depreciation of the bond notes was giving rise to a parallel economy in the illegal black market which has caused a spike in prices of basic commodities, a situation he said was similar to the one witnessed during the 2007-2008 era.
“Zimbabweans cannot be subjected to such a nightmare once more, hence we demand the immediate resignation of the RBZ governor.
“Millions of Zimbabweans continue to suffer under the harsh economic crisis as solutions to those problems remain elusive with the governor seemingly having completely run out of ideas.
“Bank queues continue to be the order of the day and people who survive on cross border trading are rapidly forfeiting in their businesses as foreign currency continues to anonymously vanish from the market,” said Chihwayi.
Zimbabwe is currently in the grip of a serious economic crisis which has resulted severe cash shortages and disappearance of the US dollars from the formal market.
This comes at a time when the country is experiencing acute cash crisis due to a burgeoning government expenditure, huge import bill and alleged illicit financial inflows among other things