By Portia Sigauke
As the debate around the introduction of bond notes seems not to end with mixed reactions recorded amongst ordinary citizens, business community, policy makers and government officials I decided to add my voice towards this matter as it seems to have confused many with yours truly included.
In May this year, RBZ Governor John Mangudya announced that the bank would introduce bond notes worth $200 million under a facility guaranteed by the African Export Import Bank.
The facility, he said, would give a 5% export incentive meant to boost exports. Following his announcement the country was introduced to bond coins which replaced the South African rand which were widely used even today we still struggle not to mention them when in search of coins as it had become our official currency.
The introduction of bond coins was met with mixed reactions but as time went on we are now used to them perhaps the same could be for bond notes once in circulation.
The public outcry against bond notes according to my observation could be that there hasn’t been any information or media campaigns so far held by the RBZ to educate citizens on how the bond notes will work and how the business community is going to survive during the use of bond notes given Zimbabwe rely mostly on imports by informal traders.
The business community has added their voice citing that the Reserve Bank of Zimbabwe (RBZ) has not done enough to educate people on how the bond notes will work.
Contributing during the question and answer session at the 2017 pre-budget consultative forum organised by the Zimbabwe National Chamber of Commerce (ZNCC) in Bulawayo on Friday, participants said there was no adequate information in the public domain with regards to the bond notes. As a result of this, they said, most people were living under the illusion that bond notes are coming in to ease cash shortages.
“I must say that the level of information dissemination by the central bank has not been good. All this time I thought that the bond notes were coming in to address the cash shortages,” said Mr Velile Dube, a ZNCC member.
Other participants concurred saying the central bank should embark on awareness campaigns to explain the use of bond notes. With the industry experts skeptical about the introduction of bond notes some people have alleged that the bond notes were in fact Zimbabwean dollars being introduced through the back door.
Now that the major issue is that, will the RBZ be honest and print only what it is supposed to print? Zimbabweans want to avoid a scenario whereby they will be stuck with bond notes and cannot access the US dollars for other transactions that require the currency. The other scary scenario is that bond notes will be over printed and people will end up giving it away for the US dollar at discount there fueling inflation levels. Remember what happened during the hyper inflation period of course you wouldn’t blame their thinking.
There are also allegations that the bond notes will be used to replace the hard currency and result in emptying of shelves in shops and “burning” of money. In dispelling public fear towards bond notes, Dr Mangudya said the RBZ had taken note of public’s concerns, fear, anxiety and skepticism, hence the proposal to set up an independent board to oversight the performance of bond notes on the economy.
As we all know Zimbabwe has many not so independent boards established before and well written policies that have failed the country the question that arises at this point in time is that what assurance is the RBZ going to give to the banks and depositors?
October end is fast approaching and bond notes in denominations of $2 and $5 are expected to start circulating, and by year end $75 million worth of bond notes would have been in circulation.
As we wait for the official release of bond notes what are your thoughts on this issue? Can bond note resurrect Zimbabwe’s dying economy?