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Reserve Bank of Zimbabwe Governor, Dr John Mangudya

BOND notes are an export incentive scheme meant to stimulate production and consolidate the multi-currency system and there is no need for people to raise unnecessary alarm and despondency regarding their pending introduction. Reserve Bank of Zimbabwe Governor Dr John Mangudya has bet his job on their success — emphasising the seriousness and confidence he has in their potential to ease the current cash crunch and assist in kick-starting economic revival efforts.

The notes are backed by a $200 million nostro stabilisation and export finance facility from the African Export Import Bank (Afreximbank) and Dr Mangudya has already allayed fears over their introduction later this month. Addressing captains of industry in Zvishavane recently, the Central Bank Governor said he was willing to lose his job and was staking his future on the bond notes.

His announcement was informed by growing scepticism around the notes and the resultant speculative behaviour on the market which is causing massive capital flight. The jitters on the financial markets are not good for business and already Zimbabweans have reverted to their default mode of hoarding and selling cash — a practice they learnt and perfected during the hyperinflationary period.

Said Dr Mangudya: “I know people went through difficult times in 2007-8 but this is different. On this matter (bond notes), the buck stops here. We don’t want this idea of giving people problems which I make myself.

“Give us a chance to do what is right for this economy, to put it back on track. If these policy measures fail, if bond notes do not work, I am willing to resign because I am genuine about getting this economy back on track”.

This is a bold statement of intent — one that speaks to the confidence the RBZ Governor has in the success of the bond notes. By putting his job on the line, Dr Mangudya is telling the nation that there is no way these measures will fail and we support him in this drive. We are, however, disturbed by an emerging culture of greed and sabotage on the market. Weekend reports indicated that some unscrupulous dealers are selling cash to desperate people and this is unacceptable.

Banks have reported a slump in cash deposits and a spike in withdrawals and this has adversely affected their operations. Clearly people are in panic mode but we aver this is totally unnecessary. Government has reiterated that it is not reintroducing the Zimbabwe dollar via the back door through bond notes because the country has some way to go to attain key enabling fundamentals.

We agree totally. Bond notes are just a manufacturing stimuli meant to improve liquidity. Monetary authorities have said the bond notes will not be forced on anyone and will constitute just three percent of money in circulation. An independent panel will oversee the issuance of bond notes worth $75 million in $2 and $5 denominations.

Speaking to our sister paper The Sunday Mail at the weekend, Dr Mangudya said: “Zimbabweans should understand that introduction of bond notes doesn’t mark the return of the Zimbabwe dollar through the back door. We can’t just say the Zimbabwe dollar has returned when we haven’t achieved the macro-economic fundamentals or conditions that allow us to use our currency.

“Key economic fundamentals or conditions for the return of the local currency involve balancing the export bill against the import bill for over a year. This means the economy has the capacity and ability to generate foreign exchange to meet its domestic and foreign requirements, development and promotion of foreign exchange revenue streams.

“Without this, there’s no way we are going to return to the Zim dollar. If Government has a balanced and sustainable budget, that way we will be able to return to our local currency.”

He continued: “We should attain sustainable interest rates as the current interest rates of around 15 percent are still too high for the market. The country should have high consumer and business confidence, and a sustainable level of inflation for it to have its own currency.

“A healthy job market is something we should have as a country then talk about the return of our currency. The country is still very far from attaining these economic fundamentals, hence, the Zim dollar will not return any time soon.” We hope this puts to rest all the speculation, half-truths and outright lies being peddled by prophets of doom regarding the introduction of bond notes.

The pessimism around these notes is corrosive and dangerous for a country seeking to extricate itself from the clutches of sanctions-induced economic challenges. We call on Zimbabweans to stop their speculative behaviour and focus on measures to stimulate production. We all need to embrace these bond notes as they might be the panacea to our economic troubles.