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IF there was a time when Zimbabweans needed to unite and work with the Government in turning around the economy, it is now. We need to do away with speculative tendencies and be realistic about our situation as a country and the measures we adopt to transform the economy.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya said it openly on Thursday that bond notes are coming next month and there is no reverse gear on that.

While he acknowledged public fears and concerns over introduction of bond notes, he emphasised on the understanding of its merits to the overall economy.

The reality is that the Zimbabwean economy is suffering from subdued domestic production across all the key sectors and that is manifested through a widening trade deficit of around $2.5 billion annually, said the Governor while presenting his Mid-Term Monetary Policy Statement. “At the rate at which the country is exporting and based on statistics . . . we anticipate that bond notes equivalent to around US$75 million will be in the market by the end of December 2016.

“The bond notes, which will start to circulate by end October 2016, will be at par with the US$ (that is; one to one) and will be used and treated in the same manner as bond coins,” said Dr Mangudya.

We concur with Dr Mangudya that the present economic situation requires a substantial policy reset to promote exports in view of lack of competitiveness of local exports.

The country needs to do things differently and “walk the talk” to transform the economy by changing the narrative from consumption to production, he said.

The reality of global shocks such as the strengthening of the US$, the decline in global commodity prices and general international liquidity troubles justifies the adoption of pro-active policy measures like bond notes, especially for Zimbabwe, which does not have its own currency.

We support the RBZ’s position of bringing sanity in the management of foreign exchange in order to promote local production and reduce import dependence. Doing nothing about this ballooning trade deficit does not do the country any good hence we need not be overly pessimistic about measures that seek to salvage our economy from further ruin.

It is against this background, Dr Mangudya said, that the central bank has introduced the performance related export incentives or bonus scheme to be awarded to exporters of goods and services so as to address challenges of low production.

We strongly support the RBZ stance that this country needs more exports to liquefy the multicurrency system that was adopted in 2009.

“In simple terms exporters will receive the incentive proceeds in US$ and the incentive will be credited to their US$ accounts in US$ currency. An exporter will then transact through RTGS, makes foreign payments for imports of goods and services and transact freely within the multi-currency exchange system. It is also important to note that bond notes shall not be forced on people who do not like them,” said Dr Mangudya.

The Governor said the issuance of bond notes has a self-control mechanism in that when there are no exports there will be no bond notes. As such, he said, the bond notes would be gradually released into the economy in tandem with export receipts through normal banking channels up to a maximum ceiling of the facility of US$200 million.

The ceiling would be attained when total exports are around US$6 billion, he said. We also applaud the apex bank for putting in place measures to deal with externalisation and or capital flight as well as the inefficient distribution and utilisation of foreign exchange.

Zimbabweans need to have confidence in Government assurance that the coming in of bond notes does not mark the return of the Zimbabwe dollar through the back door.

As Dr Mangudya said, the macro-economic fundamentals or conditions for the return of the local currency are not yet right to do so. Among other safeguards, Dr Mangudya has proposed the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy.

We back the calls by the Central Bank to address the more than 90 percent public sector wage bill, which continues to undermine development projects.

Indeed we need national sacrifice, sincerity and integrity now and the ability to share the adjustment or transformation burden across the board and between the fiscal and monetary policies. This is the Governor’s appeal. We feel this is a strong message from the Central Bank that should be complemented by a positive attitude from every Zimbabwean and conscious steps towards transformation.

Incentivising inflows from the Diaspora and private unrequited transfers, the proposed $215 million Nostro stabilisation facility, the US$20 million package for small scale gold producers as well as the $10 million horticulture facility, are some of the positive pointers from the RBZ.

It is also encouraging that confidence in the banking sector is growing as evidenced by a 5.2 percent growth in total deposits by June 30, 2016, to 45.9 billion. We urge banks to complement this by charging reasonable interest rates, which Dr Mangudya said should not exceed the agreed 15 percent threshold. Businesses and individuals should also support the Central Bank in promoting financial inclusion and adoption of cashless payment systems such as the use of plastic money through point of sale (POS) machines, on-line banking, transfers and other electronic banking systems to ease demand for cash.

We, however, urge the Central Bank to urgently address the persistent cash shortages, which have seen depositors including the elderly spending days at banking halls to get their money.