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Minister Chinamasa

Isdore  Guvamombe Travel Editor

Zimbabwe is soon set to introduce bond notes and indeed there have been mixed reactions. The reactions come two-fold: First from people who totally do not understand what the bond money is and the second is from people who really know how exactly the bonded money work and as the grand solution to the current financial crisis, at least for now.

Those who do not understand what bond money is are often the group that links the bonded money to the bond paper on which the continuously devaluing bearer cheques of 2007 /8 came and ended up in insurmountable trillions.This group does not understand the difference between bearer cheques and bonded money and should seriously be forgiven.

The majority of ordinary Zimbabwean are in that category. They really need to do “a Doubting Thomas” experience.The second group and the centre of this instalment, is that which knows what bonded money really is and in that group are former Vice President Dr Joice Mujuru, former Finance Minister Tendai Biti, former Prime Minister Morgan Tsvangirai, among others.

This is a group of formers. Yes, former this and that, this and that. It is the group that is core to Zanu-PF opposition.This group in not opposing bonded money for the sake of opposing, but really knows what the money can do to transform the lives of Zimbabweans.Interestingly, this group knows that the people of Zimbabwe are suffering from a cash crisis and would want the hiatus to continue to further inflict damage to the people up to breaking point until the people protest en-masse and dislodge Zanu-PF before 2018.

It is, therefore, not in the interest of this group and its hangers-on to allow the economy to ease through the introduction of bonded money.The sole reality that the bonded money will not lose value and hence will ease the current cash crisis for local voters makes this group quake in their boots.Honestly, this group knows that bonded money will work wonders for the ordinary Zimbabwean and that outside this manufactured cash crisis, they have no election manifesto to talk about.

What is horrible about this group, and what is unforgivable is that it wants the people of Zimbabwe to continue suffering a crippling cash crisis for as long as it will promote their agenda of a people-centric uprising as a means to dislodging Zanu PF. They really don’t care about the people but their own interest, to seize power.

So cruel and cunning is this group that, while it pretends to stand by the poor people of Zimbabwe, it is actually doing the opposite as it wants the cash crisis to continue.It is sad now that Zimbabwe has a bunch of critics and no opposition political parties. Critics will always criticise things for the sake of criticism.

Opposition political parties, the world over, offer alternative solutions to national problems. They accept reality.You can see that this group of formers does not accept that the theatre of change should be in the ballot box in 2018.They want the theatre of change to be the streets of Harare, Bulawayo and indeed Beitbridge.

They wanted it yesterday and they want it now, not tomorrow, not 2018.They want the theatre of change to be in the burning and looting of shops of already suffering individuals.They cannot wait for 2018 as per dictates of the Constitution of this country, yet they claim to be democratic forces of Zimbabwe.

But that is subject for another day. For now it is important to unlock the issue of bond money.The “bond notes” will circulate alongside a buffet of foreign currencies adopted in 2009.It is a trite but true observation that the cash shortages are a combination of various factors that range from the widening gap between Zimbabwe’s exports and imports, that widened from about $400 million in 2006 to $2,5 billion by end of 2015.

In short, Zimbabwe is importing more than it is exporting, hence more money is leaving the country than is coming in. This is because of suppressed industry operations. Also the strength of the US dollar (the fastest in 40 years) against growing market currencies such as the rand and pula e.t.c has made the US dollar a much sought after world reserve currency.

So according to Finance Minister Patrick Chinamasa: “For as long as we are using a currency which is appreciating when we have neighbours that have currencies which are depreciating, we become a mopping house. People come to mop up our US dollars. Any US dollars we bring, it will still vanish (as) people want US dollar as a store of value.”

Because of uncertainties, many informal businesses, particularly small-to-medium enterprises, where between $3 billion and $7 billion is in circulation, is avoiding depositing their money into banks. Again as much as $1,8 billion in export sale proceeds and inflated management fees and payment for technical and professional services was milked out of the country in 2015.

But for the ordinary Zimbabwean, critical factors are knowing the bonded money. Basically every currency gets its value from a particular source e.g gold or currency reserves.

The current bond coins in circulation and are trading at one is to one with US dollar, derive their bond facility from the Afreximbank, which in 2014, put up a $50 million bond, a form of a loan, for bond coins introduced to ease the shortage of change in the economy. It is not known why our people cannot derive trust from the effects of the current facility.

Now the planned bond notes are tethered to a separate $200 million bond, also from Afreximbank.The bond coins and bond notes derive their name from the fact that they are guaranteed by a bond facility not that they will be printed on bond paper. Afreximbank will monitor the facility and RBZ cannot produce more notes or coins than what is guaranteed by the bond.

Many people have asked why Zimbabwe should not just introduce the $200 million into the market but if introduced, the money will disappear as fast as it is introduced because everyone in the world is looking for the US dollar.The whole idea of the bond notes is to make sure that cash stays in Zimbabwe.

However, the RBZ is right not release notes worth the equivalent of the whole amount of $200 million once off, but will more likely phase-in the notes depending on demand.The bonded notes only work in Zimbabwe and therefore it is cash that will stay in Zimbabwe.For Zimbabweans in the Diaspora, their remittances must not be converted unless they want to.

While this is not the return of the Zimbabwean dollar by any stretch of imagination, we cannot rule out that one day our own currency will be introduced.It is a prescription that many critics do not want, but it is prescription that will solve many problems.