Zimbabweans have expressed mixed feelings with the proposed introduction of bond notes by the Reserve Bank of Zimbabwe, with some saying it would ease the liquidity challenges while others are opposed to the move.
RBZ Governor Dr John Mangudya made the plans public on Wednesday but did not state when the bond notes would be introduced. Economic analyst Dr Gift Mugano told The Herald that the move was two-sided.
“I think to some extent the move by RBZ will ease the cash crisis and it will improve liquidity as we will now be having access to a variety of money but I doubt on the issues to do with public confidence.
“I think we need to take note that we have contractual obligations with a number of partners which were tied into the dollars as private sector. People are transacting every time. Take for example an individual who is in an agreement with FBC on a mortgage and then you have to pay monthly instalments using US dollars and now you have bond notes.
“The question now is that, obviously from a mathematical point of view, the bond note is 1:1 with the US dollar, so if the individual is going to pay the bank with the bond notes, are they taking it as the US dollar or they do not?” he said.
“So that is the kind of awareness that needs to be made to the public as it is very important.
“I think we witnessed that on the introduction of bond coins, how they have been able to tackle the issues of change.
“I think it may be a good idea but there is need for more consultation and awareness to manage the process if they want to achieve on that one.”
On the proposal by Dr Mangudya to have retailers pricing their goods using multi –currencies, Dr Mugano said: “I think that will be very difficult for retailers to price their goods in multi-currencies.
“Why would they do that when we have almost like 100 percent use of one currency?
“We do not have rands in circulation. It is insignificant.
“We do not have the Pula circulating. Why labouring them with that?
“The main currency that has been in use is the US dollar but if we had these other currencies like the Yen, the Pound, and the Euro it then becomes easier.”
Another economic analyst, Mr Brains Muchemwa said the measure was not a permanent solution to challenges facing the country.
“The introduction of the bond notes, will, to some extent, ameliorate the cash crunch although it does not cure the underlying structural challenges that have plunged us into this current crisis,” he said.
“The fact that the bond notes are a medium of exchange being issued by the monetary authorities means effectively that we have our own currency, which currency we have always had anyway since we started issuing the bond coins.
“The term “Zim-dollars” is so much haunted and invokes memories of hyperinflation and as such it has been very convenient, and rightfully so, for policy makers to avoid its mention when talking of new currency.
“After hyperinflation, the introduction of new currency was always going to be a challenge from a confidence perspective and creative ways have been employed to slowly build market confidence on new currency in the form of bond coins and indeed there is evidence in the market today that the SA rand is being shunned in favour of bond coins,” he said.
A Harare man, Kudakwashe Mbofana criticised the move.
“It is not a good move. Introducing bond notes is not the solution to the current cash crisis.
“Government should rather focus on ensuring that cash is not going out of the country and leaving our banks short of cash.
“The problem is also due to the dormant state of our industries. We should also monitor the operations of foreign industries and how they move their cash. We do not find many foreign people in our local banks. One wonders where the money their businesses make is going to.
“That is also contributing to the cash crisis. Let us work on our industrial production first before introducing these locally produced notes,” he said. A cross border trader Mr Yahwe Chiponda echoed the same sentiments.
“The introduction of bond notes will worsen our economic situation. Some of us are cross border traders. It is hard for us to carry out our businesses with the bond notes and coins because we then have to worry about changing the money. These bond notes are the Government’s way of slowly reintroducing Zimbabwean currency which will take us back to the period between 2006 and 2008 during which we had problems with our currency,” he said.
Others were optimistic about the move. “It is a good solution for the cash crisis. The queues in banks are hectic. People cannot fully pay fees for their children because of the cash limits at banks,” said a Harare man, Mr Pride Makamure.
Mrs Ruth Chihota said: “It is a good move. We now have three consecutive days coming to collect money at the banks.
“As long as the Government promises that the money will be of the same value with the US dollar, there will be no problem. We will be sure that we are not limited when we collect our salaries from the banks.” herald