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Bond Notes: Re-tracing lack of public confidence in the State

By Vivid Gwede

The Zimbabwean government has a noticeable headache these days of not only whether a certain economic policy will work out or not, but whether the policy will get public buy-in. The authorities are wondering how this is so.

Reserve Bank of Zimbabwe governor John Mangudya
Reserve Bank of Zimbabwe governor John Mangudya

Here I submit, the analogue of a Christian minister, who suddenly fails to dispense holy communion to a resisting church. This is despite the fact that the riotous congregants would normally wish to receive the holy communion given it is holy and spiritually nourishing.

The reason they resist such a good thing as holy communion, as it turns out is the problematic image of the pastor. I would try to show how the issue of dirty hands relates with governments, especially looking at the introduction of bond notes in Zimbabwe, and conclude that a government with image problem has a genuine need to reform.

The ruling party, bond notes & the Pastor’s dilemma

When a government in a country loses trust, it is hard to regain the trust. People will always view that government with mistrust. This is the story of the Zanu-PF led government in Zimbabwe.

Recently the Reserve Bank of Zimbabwe Governor, Dr. John Mangudya announced that the government will introduce bond notes purportedly to stop externalization of foreign currency. The bond notes will be backed by a US $ 200 million loan facility from the Africa Export Import Bank.The public has shellacked the move largely because of a precedent.

The fact of whether a certain monetary policy will work out or not always is a matter of lively debate and confusion among economists. So I will not delve into that, except to acknowledge an obvious point that the bond notes might not solve a fundamental economic issue in Zimbabwe which is lack of production.

It could worsen the issue of little public confidence in the workings of the formal economy given that it now looks like an imposition. The issue of production will largely depend on recapitalization of industries.

I wish to deal with another matter, which is the actual reason the bond notes are being resisted rather preemptively even though ordinary people might have a limited understanding of the complex arguments to do with monetary policy.

The precedent is that in about 2008 Zimbabwe recorded very high inflation for a country which was not at war and the Zimbabwean dollar became useless, people lost lifetime savings.

The Reserve Bank of Zimbabwe (RBZ) policies were blamed for that, especially corrupt quasi-fiscal activities of the Bank and overprinting of money. The other causes of mistrust, are falsified election promises by those in power and lack of accountability in the political arena.

The case of broken trust

The Bank could now be suffering the Pastor’s Dilemma of dirty hands, resulting in the serious public outcry over bond notes. Whether the anxiety will die down as in the case of bond coins, or remain is an uncertain matter.

But the moral of the matter is that it is unhelpful for any government to think at one point it does not care, or seem as if it does not care, about public sentiment like the Zimbabwean government has done over the past years.

Neither is the current headstrong plunge into bond notes without public buy-in, or disdain towards public reservations advisable. By so doing, a government loses the goodwill and trust required for the social contract to work. It will be, in colloquial language, like a broken marriage. In such a set-up, even a kiss can mean offense much as a slap!

Knee-jerk rejection

The truth is even before expert knowledge, for instance from Former RBZ Governor Kombo Moyana was available on bond notes, the public had returned a knee-jerk adverse verdict. Thus the crisis of confidence is a big part of the Zimbabwean crisis, and it needs to be addressed. There is need to fight corruption, and respect the rule of law, good governance and human rights. What is also clear is the importance of the urban constituency although the ruling party has been modelling itself as a rural party, and its land based economics.

This is because suburbanites are closer to policy makers and their first customer chit-chat about any new rumored, earmarked or enacted government policy is important for policy buy-in. This is more so in the context of new mobile communications technology and social platforms like Whatsapp.

So whether or not, the introduction of bond notes makes economic sense, there is no doubt this urban populace does not trust the government on the score. Yet many an urban area is where a big part of modern economic and financial transactions happen. Thus on the basis of its rural following the ruling claimed past election victories, but it could always face durable challenges in public policy buy-in without gaining trust broadly.

Self-fulfilling prophecy of failure

It is, the way things stand, as if the government has a problematic image. It always becomes the conclusion by most citizens that many an administrative action, or policy measure taken by the actor/functionaries with dirty hands flows from ulterior motives.

At times when citizens do not have the sophistication to judge which policies might work or not, they play the safe game of rejecting all such proposals. It becomes a self-fulfilling prophesy that public policies suggested or implemented by that distrusted actor/government fail.

The same actor may eventually feel frustrated and sabotaged, an attitude that will lead to aggression, political violence and arrogance as well as charges of selling out-ism against the ordinary majority by that ruling class. As a direct consequence of this, citizens will seek to replace the failed administration with a trusted one, which they think they can support in failure, or success as long as they will have trust in it.

Conclusion

A government that tries to implement new policies with image problems from previous actions/ legacies may see its policies like the introduction of bond notes in Zimbabwe suffer automatic resistance or criticism, stemming from a knee-jerk rejection of the wholesome system. Such a government will have to implement meaningful reforms in its governance systems as a solemn way of correcting its problematic image so as to restore public confidence in order to achieve policy buy-in.

Vivid Gwede is an independent social and political commentator. He writes in his personal capacity.

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