Mudenda, business reject bond notes

HARARE - Speaker of the National Assembly, Jacob Mudenda, yesterday hauled Finance minister Patrick Chinamasa over the coals, sledging the Treasury chief's $1,8billion arrears repayment strategy to multilateral financial institutions, and scoffing at the country's plans to introduce bond notes onto the market.

And in a further blow to the government's desperate efforts to deal with Zimbabwe's deepening cash crunch, business people have rejected the bond notes, arguing that the move is not a lasting solution to the country’s cash crisis.

Mudenda told delegates at the ongoing Zimbabwe National Chamber of Commerce (ZNCC) annual congress in Victoria Falls that Chinamasa’s move to pay $1,8 billion towards arrears to the International Monetary Fund (IMF), World Bank (WB) and African Development Bank (AfDB) was not the best option the country could take at the moment.

African Development Bank (AfDB) was not the best option the country could take at the moment.

“When honourable Chinamasa manages to raise $1,8 billion to pay for the interest outstanding, if we take that $1,8 billion and buy more gold, we will have our Gold Bank and that money will create for us not less than $4 billion from which we can then start paying the interest we owe,” Mudenda said, admonishing business for not helping  the government in its decision-making processes.

He said if business had been performing its advisory function to the government, the country would not have been taking “ill-conceived” decisions.

Chinamasa last year proposed an arrears repayment plan at the IMF/WB annual meeting in Lima, Peru where consensus was reached with creditors on a repayment strategy which entailed the clearance of the country’s $1,8 billion arrears by September 2016.

Multilateral financial institutions are currently not extending loans to Zimbabwe because of the country’s outstanding debts, with clearance of the arrears anticipated to pave way for new lines of credit.

Zimbabwe, saddled with an external debt of more than $7 billion, owes the IMF $124 million in arrears accrued since 2000, and an additional $1 billion in debt to the WB. To honour these arrears, Harare is borrowing from Afrexim Bank, and utilising drawing rights of about $130 million from the IMF.

But Mudenda argued that the complex debt substitution route would plunge the country into more debt.

“Instead, why not just buy gold and self-finance the interest payments? Not only will we guarantee ourselves a way of making more money, it will also bring in some much-needed cash in the country,” he said.

Turning to the Reserve Bank of Zimbabwe’s recent decision to introduce bond notes through a $200 million facility from Afrexim Bank, he said the decision was another poorly-hatched idea.

“I do not want to comment a lot about the bond notes … but if I had been given the chance from that $200 million from the Afrexim Bank, I would have taken that money to buy gold and with that $200 million, you can raise $1,5 billion.

“So why honestly would you use that $200 million to print money when you can create $1,5 billion? So where is business to advise government?” he said.

Mudenda added that business had also failed the country by failing to advise the government on the controversial Indigenisation and Economic Empowerment Act.

“One area where we want business to also assist is the area of indigenisation.

“I am aware that business has raised questions about the Act, but what has surprised me is that after His Excellency corrected the policy inconsistencies through the presidential policy statement on indigenisation, I have not seen an uptake from industry,” he said.

Mudenda said business needed to look at the law and advise on ways of improving the legislation further.

Enacted in 2008, the indigenisation policy, which compels foreign-owned companies to cede 51 percent of their shares to black Zimbabweans, is largely blamed for the low foreign direct investment inflows into the country which stood at $543 million this year compared to $12 billion and $5 billion that went to South Africa and Mozambique respectively.

Meanwhile, commerce and industry bigwigs meeting in Harare yesterday rejected the introduction of bond notes, arguing that the move was not a solution to the country’s cash crisis.

Zimbabwe Investment Authority (Zia) chairman, Nigel Chanakira, said the bond notes were “not a confidence booster”.

“The message I am getting from investment conferences, business meetings and other fora … is that people don’t want the bond notes and I hope that the central bank governor (John Mangudya) takes peoples’ perceptions seriously,” he said at a financial markets conference in the capital.

Chanakira added that it would be difficult for Zimbabweans to save for future investment when they had no confidence in their economy.

“If the bond notes will contribute only three percent of the total money in circulation, do we really need all the trouble that they have brought to the country? The monetary authorities should deal with more important issues to revive the economy than bond notes,” he said.

First Mutual Holdings chief executive, Douglas Hoto, also wondered whether the government’s insistence on introducing bond notes would ignite confidence in the local market.

“Export incentives are not the domain of monetary authorities.

“Why was there no proper consideration from the fiscal authorities to announce bond notes?” he asked, adding that it may have been more prudent to introduce tax breaks to encourage export firms.

Comments (12)

zanu pf munoudzika chinhu here imi mudenda dont blame bizness hama dzako dze zanu hadzidi kuudzwa

Tichafara Madamombe - 1 July 2016

zanu pf munoudzika chinhu here imi mudenda dont blame bizness hama dzako dze zanu hadzidi kuudzwa

Tichafara Madamombe - 1 July 2016

ZANU does not listen to anyone. From Gukurahundi, Murambatsvina, pre-2009 crisis...ukatovaudza vanotoita hasha and come with force and violence instead of dialogue. Mugaba agara munhu ane humbimbindoga even when he is wrong he just does not accept any kind of criticism which is why his ministers just say yes...then go back and loot while still in power coz they cant change that devil's path to self destruction! Vhunzai ini Dhonato ndakakura naye.

Dhonato - 1 July 2016

I agree Ticha! Try educating the Honourable Kasukuwere or Zhuwawu and you will see that ZanuPf is a lost cause. Even intelligent leaders like Honourable Mnangagwa have to pretend to be stupid in order to tow the party line.

Tekere - 1 July 2016

..feja feja or is it casino economy. Zanu pf gvt must fix the economy or the economy will "fix" zanu pf. The country's problems are well documented and are known, There is just no will from zanu pf gvt to do anything positive or right. Mudenda a zanu pf member is not making any sense at all, in his utterances.

X-MAN IV - 1 July 2016

Mudenda is not being honest, he knows very well that ZANU PF does not take advice from non-ZANU PF members. How does he expect ZANU PF business people to bite the hand that feeds them. The opposition as far back as Tekere has been advising and warning government ministries. ZANU PF doesn't listen.The president is the chancellor of all state universities. Has he ever asked for advice from the professors and doctors there? Or has he ever asked for research to be undertaken in the various sectors of the economy to ascertain what is going wrong? Chinamasa and Mudenda were told not listen to anyone except the teacher while the teacher listened to the white and yellow men. The teacher and his students have since failed the exam, it is time to go home!!

ADF - 1 July 2016

With due respect Mr Speaker,your government does not seek advice from the formal business structures,but from fraudsters like Chivayo etc formal business is perceived as carrying a regime change agenda, so they are simply side lined. As long as decisions affecting the country's economy are made in informal structures which are dominated by fraudsters and international criminal drug barons and syndicates ,the country won't move anywhere economic wise.

Gen. Spinola - 1 July 2016

Whatever anyone suggests, its what Mugabe wants that goes ahead. Even Zanu ministers have come up with good ideas but Mugabe can easily reverse them if he doesn't want them like the civil servants bonus issue. Its a waste of one's time to suggest anything to this government, they listen to nobody.

Inyika - 1 July 2016

Chinamasa and Mangudya have to have their heads thoroughly examined by a serious psychiatrist! Mangudya has to further on have his academics thoroughly scrutinised..otherwise we have a serious case of negligence in which under qualified riff raffs employed in positions of significance! This would come out as a farce!

frankly - 2 July 2016


Ballista - 2 July 2016

Mangudya,, dai kwaive kare mapurazi achiri mapurazi taiti zvimwe akabva kumapurazi, He has no clues whatsoever of what the role of the mother bank. He has failed to plot his own route, but tracking Gonos path that leads to nowhere but to disaster.

Sunshine Salisbury - 2 July 2016

The root of the problem lies with greed and corruption, and those guilty have now dug their own graves. Let them bury themselves, because the Zimbabwean people have had enough. They must now pay the price for their dishonest crimes against the people. Let them bring their bond notes, and they will die even fatter because the people will feed those notes to them one by one.

realtruth - 5 July 2016

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