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Saul Gwakuba Ndlovu
THE shortage of cash in Zimbabwe is being experienced by a large number of people, and the unfortunate situation is characterised by long queues at every commercial bank.

The Government is encouraging the public to use plastic money for its everyday purchases of goods and services.

Whether or not that is a practicable solution to the crisis is debatable, particularly for those who live in the rural areas and that is where most of Zimbabwe’s 14 million–plus people are found. It had been hoped that the introduction of bond notes and coins to the value of $200 million would solve the shortage.

That has, however, not been the case as the United States dollar which was predominant before the surrogate bond currency was introduced last year is now becoming less literally daily.

In common commercial discussions, a bond is merely an instrument issued by a government or a corporation to enable it (the government or corporation) to borrow money.

If a corporation needs funds to carry out its work, and does not want to issue more stock, it may issue bonds payable at a specified date, with a stated interest rate, and the corporation may authorise the sale of the property for the maintenance of which the borrowed money is to be used, should it fail to meet the agreed conditions.

Government bonds are, in fact, equivalent to interest-bearing notes, which means that they are, in effect, promises by the government to pay stipulated sums of money on or before a date stated in the bond at the agreed interest rate.

In law, a bond is a written promise or obligation to do or not to do some specified thing. It may be a simple or a conditional promise.

In the Zimbabwean case, the Governor of the Reserve Bank of Zimbabwe states on the two dollar bond note: “I promise to pay the bearer on demand two dollars for the Reserve Bank of Zimbabwe,” then follows his signature. If the note’s value is five dollars, the promise says so accordingly.

That legal technicality apart, it is important to point out that national liquidity is determined by national economic productivity.

The Zimbabwean economy is currently in the doldrums as a result of which the country is short of cash, that is to say its liquidity is low, reflecting its relatively low export earnings.

Attempts to correct the situation in the past by printing more money unmatched by industrial productivity led to sky-rocketing inflation.

That was corrected by the adoption and use of a multi-currency regime, with the US dollar being the dominant currency. That currency has been pushed out by the surrogate bond notes and coins.

What can and should Zimbabwe do to rectify this condition?

The solution lies in the adoption of a relatively stable regional currency such as the South African rand, a suggestion that has been made by a number of people, including the Minister of Tourism and Hospitality Industry Dr Walter Mzembi.

The advantages of such a step are Zimbabwe does more trade with South Africa than with any other country, more South African tourists come to Zimbabwe than from any other country, the majority of Zimbabweans in the diaspora are in South Africa and adopting the rand would facilitate and expand Zimbabwe’s regional market share in the Sadc bloc as South Africa is a prominent member of that grouping.

Statistics indicate that 70 percent of Zimbabwe’s exports go to South Africa, and if the country’s export earnings are in rands, this can very much lessen the prevailing cash shortage.

Adopting the rand can enhance the Sadc region’s economic integration campaign, and reduce Africa’s micro-nationalistic tendencies whose socio-economic disadvantages are quite obvious.

Inter-Zimbabwe-South African investment opportunities could be greatly enhanced by Zimbabwe’s adoption of the rand, and that would create the same economic situation that exists between South Africa on one hand and Namibia, Swaziland and Lesotho on the other.

Large as the number of South African tourists to Zimbabwe is presently, it would increase tremendously further if Zimbabwe adopted the rand, a move that has been repeatedly proposed by Dr Mzembi.

The measure could also encourage and facilitate investment and tourism between Zimbabwe on one side and the other three Sadc states; Namibia, Lesotho and Swaziland.

Remittances by the three or so million Zimbabwean residents in South Africa could be easier if Zimbabwe adopted the rand to replace the US dollar.

During the 2008 to 2009 economic crisis, it was significant that the rand usage was openly common from Beitbridge and Plumtree border posts up to Gweru. That regime should be made national.

If Zimbabwe adopted the rand, the entire Southern African region could become its open market for its goods and services, a very big advantage even for its informal traders.

The move would frustrate those who presently smuggle currency out of Zimbabwe in the form of US dollars to bank it abroad.

Unlike the US dollar, the rand is not easily convertible in Dubai, Abu Dhabi, Singapore, or even in China.

Meanwhile, it is very, very important for the Government to note that cash shortage affects the lives of people in the rural areas much worse than those in urban centres where technology is more advanced as is the case in supermarkets.

Shops out at Cesucele, Gwaranyemba, Tizora, Hingwe, Jotsholo, Bambadzi and elsewhere, as well as the teachers, the villagers, the bus-operators need cash and not plastic money to survive, and the word is “survive”.

The Government’s socio-economic decisions should always take into consideration that most people are out there in the rural areas, where lives depend on hard cash.

Saul Gwakuba Ndlovu is a retired, Bulawayo – based journalist. He can be contacted on cell 0734 328 136 or through email. [email protected]