Business rejects RBZ's bond notes

HARARE - As Zimbabwe’s economy continues to die, the business community has joined ordinary citizens in rejecting the government’s imminent introduction of the much-distrusted bond notes, advocating instead greater use of the South African rand.

In its contribution to ideas for the 2017 national budget, the influential Confederation of Zimbabwe Industries (CZI) revealed that its members had rejected the surrogate currency in toto.

“The announcement of bond notes has caused widespread panic...While the bond notes make sense as a technical solution we have completely failed to sell the concept to our members.

“Confidence is too low for the introduction of the bond notes in the meantime and we therefore recommend the cancellation of the plan and have them replaced with the rand.

“We also suggest that the minister of Finance starts presenting his budget in rand instead of United States dollars . . . Business will encourage its members to use rand,” CZI vice president Sifelani Jabangwe said.

This latest rejection of the surrogate currency by a key constituency, comes as the Zimbabwe Revenue Authority (Zimra) has also warned that bond notes will further destabilise the country’s battered economy.

To worsen matters for Zimbabwe, the World Bank and the International Monetary Fund (IMF) have also recently painted gloomy outlooks for the country’s economy for the next two years, as citizen unrest grows.

The Reserve Bank of Zimbabwe (RBZ) has said it will be introducing bond notes worth $75 million next month, in a move aimed at providing incentives for exporters and easing the country’s severe cash shortages.

However, the central bank has also in the meantime warned that the current cash shortages will worsen in the next few months.

Addressing delegates at last week’s National Economic Consultative Forum (NECF), RBZ deputy governor Kuphukile Mlambo warned that the end of the tobacco season and the depreciation of the rand and British pound would further exacerbate the current cash shortages.

“We are no longer an economy that is dependent on manufacturing exports. We are totally dependent on four commodity exports — tobacco, gold, platinum and chrome,” he said.

“But these minerals do not always perform well or deliver all the time. For example, the tobacco season has just ended now and between now and February we have no tobacco money. This does not really improve the situation.

“Remittances are also in trouble now because someone who was sending money back home to their parents, say R1 000 ... the money is now coming in at say $60 … so, although the rand amount is the same, the dollar value has fallen.

“It’s the same as those in the United Kingdom where the pound has also fallen. So in view of all these dynamics, everyone should do all they can to spare cash because the money just isn’t there,” Mlambo added.

The pending introduction of the bond notes has caused panic among ordinary Zimbabweans and traders alike, who have been swamping banks in a bid to withdraw their savings.

Last week, Speaker of Parliament Jacob Mudenda also waded into the bond notes debate by launching yet another thinly-veiled attack on the RBZ.

“We really need to clean up our policies even though it’s now (legality of bond notes) water under the bridge. It is the duty of the Reserve Bank to assure people that the bond note is not a dangerous animal.

“There is no law to back them, and if there is no law how can they become legal tender?” Mudenda thundered during an address to parliamentarians.

Zimra chairperson Willia Bonyongwe has said the planned introduction of the notes had brought uncertainty and worsened cash shortages as consumers held onto their dollars.

“The advent of the bond notes has brought some uncertainty into the economy, and this is exacerbating the existing liquidity challenges because everyone wants to keep their US dollar cash. There is a serious confidence issue on this matter,” Bonyongwe said.

Meanwhile, the government’s quest to introduce the much-distrusted bond notes continues to face challenges.

After seeing her urgent application challenging the introduction of bond notes at the Constitutional Court (Con-Court) thrown out on a technicality, former Vice President Joice Mujuru has since escalated her objections to the surrogate currency by asking the RBZ to reveal the law it will use to back their introduction.

Harare businessman and well known industrialist, Frederick Mutanda, has also filed a High Court suit challenging the procedure and legality of the bond notes.

Zimbabwe’s economy is dying on the back of what analysts say are bad policies and gross corruption by the country’s leaders.

Recently, the World Bank downgraded the country from its list of improved economies to the unflattering tier of struggling countries, while the IMF said Zimbabwe’s economic growth would slide back further to a negative 0,3 percent this year, before shedding off more in 2017 where it is projected to fall to a further negative 2,5 percent.

Comments (24)

Mangudya, must head to the captains of industries. The rejection is not political but economical as the surogate currency is not accepted outside the borders of Zimbabwe. There is no where they can trade, or be exchanged for value except to exchange the Bond notes with the current $USD, meaning there will be an exchange rate of the surrogate currency with other currency. That is futile effort.

amina - 20 October 2016

The bottom line is bond notes will actually fuel inflation and as a result shops will become empty and the us dollar will just disappear in a flash.The only

Janana wa Bikaz - 20 October 2016

Vanhu vezim mbwende dzevanhu....Bond notes ndizvo sei muchikara zvinonaka.......what are trying to say we have a sitting(substantive) president ...imi moti hatida zim $ siyayi mabasa acho endai kuri kuenda vamwe kwese kwese.....siyayi isu tipinde mabasa iwayo.....moda ku Hora foreign currency muri kuzim ...munopenga here....it was just a previledge......Va president pamberi nema bond notes.....pasi nevanokara tea......tese tofanirwa kuhora before 25 of each month...saka vamunoda kuti atambire musi wa 8 every month ndiyani wacho.........pasi neku shandisa foreign currency ....pamberi nekuzvitonga kuzere...pasi nevanoda zvisi zvawo....pasi nevanoda kuguta wega.....BOND NOTE NGARIUYE IKOZVINO TARISAI MAQUES......RANDI Ramunoda imari yenyu here.....pasi nemufungire wakadaro

dofo - 20 October 2016

@ Dofo ...ko akamboisa USD yacho tisu here kana kuti ndiMugabe? why did he not continue with zim dollar? handiti akanga aona kuti angova matuzvi chete emari? Kana ane zvivindi...why not just bring back zim dollar without sugar coating it calling it a bond (equal to dollar)? why equal to a US dollar and not just have its own value? Why is Mugabe so obsessed with USD such that he things his uselss toilet papers will be equal to the dollar? why not rupee, Yen, Shilling, kwacha, or Dinari?

Pondo - 20 October 2016

I believe bond notes will ease the cash crisis in Zimbabwe and I commend Cde RG Mugabe as he has said on many occasions that he rejects bookish economics. I believe the bond notes will create wealth and people must be patient. Zimbabwe cannot use the hated imperialistic US dollar anymore.

Julien Moore - 20 October 2016

Its so sad to see old folks ,pensioners puting up for the night at bank entrances ,just be 1st the next morning.This has been going on for the past 6 months, why mr mangudya?All those meetings yu still have no solution to this crisis?Its not an easy task bt yu supposed to be the man.Are yu up to the task or its too much for yu.What I know is when men sit down to plan ,they come out wth solutions that are implimented emidiately for remedy.Im now dubiouse of yo capabilities.Yu have no solution to this problem.Yo actions are a mimic of Gono.Boxers throw in the towel when going gets tuff.

viola gwena - 20 October 2016

lets bet moore! bond notes will make our fellow Zimbabweans beggers... (Make us wealthy) Are you fucking joking!

Young Zimbo - 20 October 2016

Bond notes are another,but this time worse,2008 in the making.There is absolutely no difference except that bond notes have replaced Zim. dollars.

Chikata - 21 October 2016

dofo uri dofo

murambatsvina - 21 October 2016

Uyo anonzi Dofo, idofo chokwadi. Ko kungobvunza Mugabe kuti sei akambouisa USD racho.

Madhora - 21 October 2016

Financial literacy is the point of departure. What is the general's level of understanding when dealing with these economic dynamics

Prince Marezva - 21 October 2016

Financial literacy is the point of departure. What is the general's level of understanding when dealing with these economic dynamics

Prince Marezva - 21 October 2016

Dofo sei kudofoka kudaro! ndanzwa tsitsi nehudofo hwadofo

Ndazvitaura - 21 October 2016

@murambatsvinana@madhora......muri vasveta simba kana uri a zimbabwean mufoanirwa kutambira ZIM $ RENYU.....kana muchida foreign currency endai mese munoshanda ikoko motambira foreign yenyu....ikoko motumira mhuri dzenyu kumusha......makatsva focus modakutambira foreign currency muri muzimbabwe hamunyari.....munokuwadza wamwe.......izvozvi mari haaichatendereri plus a lot of fowal plays /corruption.........iwewe usingadi ma bondi notes wakamboba mariisu titaurire tizwe......kana uchida weath creation bond notes ndizvo....isu mabhiziness edu vanhu hachatengi hakuna mari,vanhu havana mari...unofunga kuti kana riri bond note zvinhu zvinomira kuti dzororo kumira kudaro....makawata.....hapana economics dzinoshanda dzamunoda kuti udza you shallow minded few........kana uchida Us$ enda unoshanda ku America kana uchida randi enda UNO Shanda kusouth AFRICA.......pamberi nekuzvitonga kuzere....pasinewanoguta wega...pamberi nekushandira nyika......even forty years working free no pay for your country is better than your mind .....have unity of purpose start that by depending on yourself....moti pedza mweya mheni let go for zom bond notes

dofo - 21 October 2016

ngarichiuya haro government already invested in it no going back.

Bond - 21 October 2016

It's time to stop beating around the bush with this bond note nonsense and adopt the SA Rand as the primary currency of the country. If we had done so in 2008 we wouldn't be in this sorry state we are in now. The rand may have lost value over the past few years and we thought we were lucky with our strong US dollars but the folly of this approach is now obvious to everyone as there are no more dollars to be had. The weakness of the rand compared to the US $ is nothing to what the weakness of the fake bond notes will be if they are ever introduced. There may be 15 rand to the Dollar now rather than 8 a few years ago but there will soon be 20 bond note dollars to a real dollar, then a hundred then a thousand, then a hundred thousand (sound familiar). If we do go through this bond note nonsense the economy will completely collapse (what is left of it) and we will be left with no choice but to adopt the rand anyway so why go through that hell first. Lets just make an agreement with the South Africans (our supposed friends who have offered this in the past) to release some liquidity into our economy. False pride will not help us at this stage. If this very unlikely sounding Africaexim bank facility actually exists it can be used to support the introduction of rand. All transactions and prices in shops should also be priced in rand so we forget this failed love affair with the US dollar as quickly as possible.

Peter M - 22 October 2016

Bond notes are an unmitigated disaster. If you must incentive imports, please do so with a Bond Dollar which stands on its own, finds its own value. Anything else is daylight robbery. Must you leave us holding useless paper while you guard our 200 million US DOLLARS in some form of protective custody. Our trust for the ZANUpf regime is razor thin - based on proved performance since the Gonomonics era. While we love our President can someone tell him that all Zimbabweans whether MDC, NDU, NCA, ZANUpf, ZAPU or apolitical hate the bond note with passion. Any imposition is political suicide.

Viva Unidade - 23 October 2016

I won't honor idiocy by commenting on stupid contributions from people who use adjectives that describe their low IQ. Why is the govt. willing to bulldoze these "bondage" notes even with no legal basis? This is where the international organisations find the whole issue untenable. The country got into the current quagmire by going along with nonsensical "programmes" that were chaotic, illegal and undemocratic. This is a bankrupt "govt" in all aspects people. Watch the crescendo of idiocy in the "govt" media as insanity overtakes common-sense in the months ahead.

Sagitarr - 23 October 2016

Where is Thsumba and Moyana? These were the real RBZ Governors. Not this clerk Mangundya who claims to be learned. He seems to be failing to understand the basic fundamentals of economics. It looks like these new boys are competing to bring to the fold some papers but with no value. The tea boy Gideon brought bearer cheques and now we have this guy who has his own idea of bond notes. Zimbabwe has been turned to a circus night club where any clown can do what they want to amuse the outsiders at the expense of the locals. Give us a break gentleman.

nhamoinesu - 26 October 2016

Where is Thsumba and Moyana? These were the real RBZ Governors. Not this clerk Mangundya who claims to be learned. He seems to be failing to understand the basic fundamentals of economics. It looks like these new boys are competing to bring to the fold some papers but with no value. The tea boy Gideon brought bearer cheques and now we have this guy who has his own idea of bond notes. Zimbabwe has been turned to a circus night club where any clown can do what they want to amuse the outsiders at the expense of the locals. Give us a break gentleman.

nhamoinesu - 26 October 2016

Please note, if you want to do anything without the blessing of all the stakeholders or those affected, you are wasting resources and energy. YOU WILL FAIL. This is word of advice. Take heed.

nhamoinesu - 26 October 2016

Hey Zim people please lets support this idea of bond notes intro since it will inrease the velocity of money in the country hence the purchasing power parity (ppp) of us Zim people will increase.Guys lm an undergraduate at MSU and l know how this crisis is affecting us as scholars .We are starving to an extent that we are no longer able to purchase a meal zvayo 1 because our purchasing power is low and this will enable scholars to engage into prostitution which will affect the society .All this is because the velocity of money is low.Please people l encourage you to let the gvt produce these notes may be it will work hey

Passmore - 29 October 2016

Hold on! Hold on! Honourable Minister. First let us put through the requisite legislation through our Parliament. Let the MPs consult their various constituencies and if approved wallah...we have a new form of money to compete with other currencies in the normal manner. The bond notes should and must be paid as such notes. If you generate exports valued at USD 20 000.00. Your bank credits the export proceeds to your US dollar account. You get a voucher of 5%, issued by the bank enabling you to get your bond notes in cash ie note from from the Reserve Bank of Zimbabwe or its agency. In this way investment is not threatened. Planning is not disrupted and ZANUpf will as usual rule by the rule of law and not through some emergency temporary measures dreamt up by some lazy bureaucrats. If I am not an exporter let me meet the Bond Dollar in the market. My transactions with my bank remains as they were during the hugely successful GNU.

Viva Unidade - 5 November 2016

what currency do people in Zim want to use we are a multicurrency economy. those with rands use them, use any major currency you can get it is accepted. you refused to use rand last year now crying for the same thing you rejected. are confused where is the confusion coming from. lets be honest this is honest we are doing what is good for us. there are sharks out there waiting for your hard earned US dollar and you think you are making life. they talk loudest and you believe them. they talk loudest to disuade you and make you their tool bring the bond RBZ governor it is too long we need localised currency. di not take long to introduce the ZIM dollar. all countries around us are using their currency. why not us. we are not dump we think. this is good for us.

martin - 11 November 2016

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