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Golden Sibanda Senior Business Reporter—

BUSINESSMAN Philip Chiyangwa has thrown his weight behind the Reserve Bank of Zimbabwe’s recently introduced bond notes saying the instrument will empower locals and boost the domestic economy.Dr Chiyangwa told a press briefing yesterday that the country’s surrogate currency would be the panacea to the prevailing liquidity crisis, as this will enhance production and growth of exports. He noted that it was not proper for Zimbabwe to conduct small domestic transactions using foreign currency that is in critical short supply due to low inflows, externalisation and high imports.

“From what I know, the bond notes are a derivative of the export rebate. As the (foreign currency) account is bolstered, so will be the incremental introduction of more bond notes,” said Dr Chiyangwa.

“As you know, right now we are not selling tobacco, so we have to sell more, not only agricultural products, but other produce. That will result in more cushioning of the exporter.”

The RBZ says bond notes will lower costs for exporters. Bond notes are a financial instrument, backed by a $200 million facility from African Export and Import Bank, and are meant to monetise the 5 percent incentive to all exporters.

The currency is recognised legal tender only in Zimbabwe.

Its acceptance as a medium of exchange only in Zimbabwe will help curb the problem of incessant outflows, which has drained inflows, which amount to less than $3,5 billion annually.

The surrogate currency, Dr Chiyangwa said, has gained wide public acceptance with most businesses including the supermarkets, retailers and suppliers of goods taking payment in bond notes while queues have started getting smaller. He said it was critical to take note of the need to ensure that the growth of the domestic economy was based on increasing exports in order to grow the stock of hard currency.

The flamboyant businessman said it was also critical that after withdrawing bond notes from bank accounts, the surrogate currency finds its way back into the banking system.

“What may happen is that people will withdraw money and they do not send it back it into the system, that would be congesting the system because we need a currency for trading; people paying each other thereby creating liquidity.”

“If one withdraws the money and keeps it at home, they create a crisis for the banks; as such people have to bank the money.

We have to say to ourselves that we support this programme because it is empowering,” Dr Chiyangwa said.

The businessman said there was no rationale in rejecting the medium of exchange without proffering concrete reasons for not accepting them, especially by people with access to cash, when the majority of people were struggling for cash.

“What about people who made their deposits in POSB and other institutions who want to withdraw their money? What about that person who wants their money to pay medical bills and people with issues that are life threatening?”

Dr Chiyangwa refuted recent reports that he blasted the RBZ for introducing the bond notes saying interpretation of his remarks was wrong.

He clarified his position saying he had said if people in the diaspora remitted more of their earnings, there would be no need to introduce bond notes.

The businessman said bond notes will generate revenue for exporters, which will allow for expanded expenditure, resulting in more foreign currency inflows to ease liquidity crisis.