Wednesday, 16 November 2016

BOND NOTES : MY VIEW

By Advocate Fadzayi Mahare
Protesting against the proposed introduction of bond notes is a waste of time, so the argument goes.

Section 59, as read with section 67 of the Constitution, guarantees all Zimbabweans the right to demonstrate and collectively challenge or influence any policy of government.

With the impending introduction of bond notes, Zimbabwe is on the cusp of another economic disaster (well, disaster for the common man; the political elite and their connections will ensure they have access to real money). Following the economic and hyper-inflationary crisis of 2008, Zimbabweans do not require a fortune teller to divine on the meltdown that is to come. We have lived it before - cash shortages, a parallel foreign exchange market, food shortages, fuel shortages and a thriving black market for the provision of various goods are the natural side-dish when our government arrogates to itself the power to print cash.

Our position is compounded by our banking institutions who have been extremely economical with the truth. The information asymmetry that exists currently as between banks and their customers is fuelling the effective expropriation of the value of depositors' funds. The refusal by the banks to come clean with depositors concerning inter alia the root cause of the cash crisis and what is going to happen to deposits held in US dollars upon the introduction of bond notes is alarming. Requests for information are met with resistance or feigned ignorance - consistent with a desire to keep the public in the dark so that when the bond notes land, it will be too late for the public appropriately to react. The conduct of the banks is partly explained by the fact that the Reserve Bank Governor is their regulator which means they may be afraid to stand up to him for fear of losing their licenses. While that fear may be real, the grass that will undoubtedly suffer is the ordinary person on the street who will suffer the vagaries of the maladministration by all involved.

It therefore goes without saying that the complicity of the banks in covering the grand fraud on the public by the Reserve bank deserves censure. The culpability of the banking sector arises primarily from their refusal to come clean with the banking public as highlighted above. Additionally, the banks seem unwilling to interrogate the legality of the numerous directives issued by the Governor - the cumulative effect of which has been to erode the nostro accounts held by the banks to the detriment of depositors who are now unable to retrieve funds deposited with the bank "on demand" as required by banking law.

It is an entrenched principle of banking law that the relationship between bank and customer is one of debtor and creditor. Any deposit made into a bank account is so deposited 'on loan' to the bank. The customer is a creditor who is entitled to retrieve money deposited with the bank 'on demand'. Most of the major banks in Zimbabwe are foreign-owned and would certainly understand that the banking service they are providing in Zimbabwe is manifestly unfair, unlawful and makes severe inroads into the banker-customer relationship.

And so to protest is to make a bold statement rejecting the idea that the status quo is in any way normal and acceptable. We must protest the fraud on our money. We must protest the lies. We must protest the complicity and duplicity of the banks. We must show solidarity with the forgotten men and women of this country who have to sleep in queues to access money they have earned. Bond notes may temporarily solve this - but they will create a deeper problem - the masses will have access to valueless money.

But do you have a solution, an alternative? Why of course. According to the Governor and his monotonous (and expensive) jingles and adverts, the problem is that we need to incentivise exporters. Well, if they were genuine, all that would be required here would be a tax break. Such a solution would avoid the run on the banks, the proliferation of the black market and the general disruption of our peace and banking relationships. Mind you, the Afreximbank facility alleged to be "backing" the bond notes seems not to exist. By the way, section 300(3) of the Constitution requires the Minister of Finance to cause any guarantee involving the Government to be published in the Gazette - obviously that has not been done. Forgive us for drawing the irresistable inference that no such loan exists. And that it was all a ruse designed to lull us into a false sense of security and believe that there is some method to the madness. There is none.

It is a matter of regret that instead of seeking sustainable solutions to our economic malaise (boost productivity? introduce land tenure? respect property rights? admit the failure of "indigenization" and remove accordingly? curb government spending? stop lying?), they opt instead for the double-edged quick fix - for the manipulations it will afford them in the beginning and because they have decided that we are powerless to effect any meaningful change.

Driven by passion for country, I will protest because I reject the suggestion that any of this is normal. History must record that I believed it to be otherwise. I refuse to smile at my abuser(s) and be a willing victim. Much like that property-owner who is confronted by an intruder ready to steal, I choose not to hide or remain silent. At the very least, I will scream "thief!" Doing so, for myself, for my national pride and for those unborn generations is never in my books a waste of time

 

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