By Desmond Kumbuka
COME month end, you dash off to the bank for your pay. That is, of course, is if you’re fortunate enough to still have a job.
At the bank nowadays, unless you want to deposit money or conduct some other non-cash business, cash withdrawals are routinely done on the ATM (Automatic Teller-Machine) outside the banking hall.
So, you slot your card into the machine and punch the appropriate keys. Upon completing withdrawal formalities, out pops the requested amount (“Thanks for banking with us,” chimes the metallic voice from the machine) – but wait a minute – it’s the dreaded new bond notes.
You’re aghast.
You expected the usual US dollar denominations.
So what do you do next?
Do you storm the banking hall and present the unwanted bond notes back to the first available teller with the request, nay demand, that these be exchanged forthwith for preferred US$ dollar notes.
You can try, but here is how I see the situation unfolding.
Upon presenting your case to the bank official, with the customary politeness of a social worker ministering to mildly retarded child, you will be told that the notes in the ATM are all that the bank has to offer.
This, the bemused teller may even add with what suspiciously looks like malicious glee. is in accordance with the dictates of the Reserve Bank of Zimbabwe (RBZ) regulations.
The regulations, you will be told, include that only those who can furnish authentic and written proof that they will be travelling outside the country or need US dollar denominations to transact their business are permitted access to precious US dollar notes.
Never mind that it is your money which you banked in US$ dollar denominations and want it back in the same form.
But wait. Don’t’ panic – yet.
Because this is, of course, is an entirely hypothetically contrived scenario – Perhaps.
After all, was it not the Reserve Bank Governor, John Mangudya himself who assured the nation that no one would be forced to accept bond notes if they don’t want them?
According to Mangudya, the primary purpose of introducing the curiously named “Bond (paper) notes” is purely as an incentive to exporters and not as an alternative currency to the multi-currency system.
In spirited efforts to allay anxieties among nervous Zimbabweans still haunted by memories of the hyperinflation 2007 – 2009 period, Mangudya has repeatedly stated that bond notes are strictly an export bonus scheme aimed at stimulating production while maintaining and sustaining the multi-currency system which has remained in force since 2009.
Strictly too, vows Mangudya, the bond notes will be backed by a US$200 million African Export and Import Bank (AfreximBank) nostro stabilisation and export finance loan.
Not a dollar more of the “bond notes”, swears Mangudya ad infinitum, will be printed outside the cover of the US$200 million limit.
However, it is the part to do with easing cash shortages that many people are concerned about despite the assurances by Mangudya, including, the ill-advised pledge to resign if the bond notes scheme goes awry.
“The (central) bank has heard and taken note of the public’s concerns, fear, anxiety and scepticism of bond notes which all boils down to the general lack of trust and confidence within the economy. The bank is addressing the concerns by planning to introduce smaller denominations of bond notes of US$2 and US$5.
“In addition, the bank has proposed the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy,” Mangudya told media recently
However, critics of the scheme, among them concerned citizens, opposition parties and independent economic analysts, are not entirely convinced that given the magnitude of the cash crisis bedeviling the country, Mangudya will have the zeal and back-bone to withstand pressure from President Mugabe and Zanu PF to exceed the US$200=00 million limit.
Does Mangudya have the balls to stick to his guns when told in no uncertain terms, by the highest office in the land, like his predecessor Gideon Gono before him, that it is in the national interest to bring more bond notes into circulation to avert the imminent collapse of the government.
His choices are limited: capitulate and continue to enjoy Zanu PF patronage including retaining his cushy job and privileges as the central bank boss. Or stand his ground and be damned – a prospect anyone who has had dealings with the ruling party knows is too ghastly to contemplate.
Mangudya’s predecessor Gono, perhaps far more assertive and garrulous, apparently required little persuasion to keep the Fidelity cash printing presses rolling to finance government’s ever insatiable craving for cash.
This led to unprecedented hyperinflation that reduced the Zimbabwe dollar, equivalent to the British pound and almost twice-the value of the US dollar at independence in 1980, to one of the lowest valued currency units in the world. It was redenominated three times (in 2006, 2008 and 2009), with denominations of up to a $100 trillion dollars.
Mangudya’s promise to resign if his bond notes scheme backfires is unlikely to convince anyone to trust government’s sincerity in keeping to the US$200 million terms of the surrogate currency.
In any case, who dares trust a government in which cabinet members routinely make contradictory public statements on important policy matters.
In fact, in the bigger scheme of things, no one will lose any sleep because Mangudya, whom I understand runs a thriving farming operation somewhere, resigns from his job.
Mangudya is small fry compared to finance minister Patrick Chinamasa who has been forced to eat humble pie, not once but twice, when he attempted to enforce austerity measures that President Mugabe and his Zanu PF comrades considered inimical to their political interests.
Embarrassingly Chinamasa has twice been forced to back down on proposals to suspend bonuses for civil servants and trim the bloated public service and cut salaries of top officials to bring down an unsustainable salary bill.
Yet Zimbabweans everywhere can not grasp what it is about Chanamasa’s valiant efforts to contain a situation where salaries gobble 97 cents of every dollar of revenue the government collects Mugabe and his acolytes don’t understand.
How is it that supposed stakeholders in a nation of intelligent people like Zimbabwe can have such irreconcilable definitions of what constitutes national interest?
But, I digress.
Back to the bond notes.
My point is that it is extremely unlikely, almost impossible, that members of the public will have the choice of whether to accept or reject bond notes – never mind Mangudya’s pontifications.
What will happen is that banks will simply feed bond notes into their ATM machines. When and If challenged over Mangudya’s promise that no one will be forced to accept them, in their typical detached nonchalance, bank officials will remind their customers that all the cash comes from the RBZ and any complaints about denominations should be directed to that authority.
And anyone who has visited the forbidding RBZ edifice along Harare’s Samora Machel Avenue knows how unfriendly and inaccessible the occupants of that august domain are.
So once one has been forced to accept the bond notes and to use them in daily transactions, there is no going back, to borrow a favourite Zanu PF refrain.
At the supermarket, the till operator will offer customers change in bond notes. Public utility services – ZESA, ZIMRA, Municipality will accept the bond notes as legitimate currency. Before we know it, Zimbabwe will have a new currency – Right. Bond notes.
Exactly what vice- president Emmerson Mnangagwa was saying the other day.
He told luncheon guests to mark the official opening of the Fourth Session of the Eighth Parliament of Zimbabwe last Thursday that those who think band notes are a bad dream had better start getting used to living their nightmare.
“Let me assure you that it is not a dream. It is going to be reality. We are going to live with it. Those who can easily realize that reality should begin to accept that bond notes will be with us,” Mnangagwa said.
“We are in the middle of crafting legislation to introduce bond notes.” he said.
State media self-proclaimed protagonists of the bond notes deceit have argued, disingenuously, that the same spirit with which Zimbabweans embraced the bond coins , should prevail in the acceptance of bond notes.
Economist Clive Mphambela had this to say in a recent Facebook post:
“Economics of notes and coins are very different. The premise upon which bond coins were introduced is very different from the point of view that bond notes are being proposed.
“I’m am an economist by the way. I was involved directly in the bond coins introduction and the subsequent campaign for their acceptance. I even predicted that they would drive out the rand coins and they did.’
“The fundamental difference with bond notes is that they are, as President Mugabe put it, surrogate money; they are a placeholder, a temporary instrument.
“Now, economically, you can not assign sustainable value to a temporary instrument. The RBZ is trying to force bond notes to have a value of 1 Bond=$1 US. This value has no basis in economics.
“Initially, I also thought this was OK, but the more the RBZ tried to explain away the bond note as not being currency, I have come to a realisation that bond notes are nothing but a cheap fraud.”
Mphambela believes “It is actually better for the RBZ to be brutally honest and tell people they are introducing a Zimbabwe dollar and then do that properly and honestly.”
That perhaps says it all.
Now, let’s look at the downside of this surreptitious introduction of a new Zimbabwe currency called bond notes.
Already, the grapevine is abuzz with worrying hints of black market barons sharpening their talons to dig into the promising new Eldorado.
Admittedly, mine is a rudimentary understanding of economics but I do appreciate that money is driven by its own intrinsic dynamics that seldom respond to predetermined trajectories. That is why currency markets are such a veritable gamble.
Against the valueless bond notes, the US dollar will become increasingly scarce and its value will quickly eclipse that of the nondescript bond notes, which according to the official line, are “not money” after all.
One does not need the wisdom of the ancestors to appreciate that cross-border traders and other Zimbabweans who travel outside the country frequently will, if they can not obtain the US dollars they need for their businesses legitimately from the banks, inevitably resort to the black market to meet their cash requirements.
But even more distressing is the distinct possibility that cash strapped Zanu PF, in its desperation to find the resources to oil its election machinery as we approach the 2018 plebiscite, will unleash its own cash barons onto the market to mop up all the US dollars they can lay their hands on.
This has happened before.
During the hyperinflation era Gideon Gono deployed money-changers on the black market to capture the US dollars in exchange for the useless Zimbabwe dollars he was churning out like confetti. The result of this economically catastrophic adventure is there for all to see today..
Sadly, and tragically, we seem to be headed down the same slippery slope.
No matter what the spin doctors say, it is worrying in the extreme that government seems to have learnt nothing from past blunders.
Future generations will look back at this period and wonder how their forebears could have been so stupid as to repeat the same mistakes that would bequeath such a terrible legacy of mindless incompetence on their shoulders.
Many may even spit and curse at the graves of the departed.
Desmond Kumbuka is a freelance journalist and media consultant and can be reached on [email protected]
