Gift Phiri 5 March 2017
HARARE – There is renewed fear among both businesspeople and ordinary
Zimbabweans that the country’s economy may soon hit the disastrous lows of
2008 – as bond notes continue to lose their value against the United
States dollar, with the coveted greenback now almost completely
unavailable on the open market.
This comes as economists have also warned of a fresh round of sharp rises
in the prices of basic goods, including foodstuffs – as the US dollar
continues to vanish from the market, leading political analysts to
forecast renewed civil unrest.
However, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya
(pictured), is adamant that the value of bond notes is not tumbling –
asserting to the Daily News on Sunday yesterday that the surrogate
currency was still trading at par with the dollar.
He also dismissed strongly recent State media reports that the
under-pressure central bank would soon introduce $10 and $20 bond notes to
ease the country’s severe cash shortages – claims which fuelled suspicion
that Mangudya was about to flood the market with the surrogate currency.
But long-suffering Zimbabweans who spoke to the Daily News on Sunday said
bond notes were “definitely devaluing”, adding that many shops around the
country were also beginning to reject them.
It was also established yesterday that some garages were giving preference
to motorists buying their fuel in hard cash – particularly those paying
in US dollars.
An informal foreign currency dealer who plies his trade around Africa
Unity Square also said he was selling one American dollar in hard cash to
the equivalent of $1,30 in bond notes, meaning that the surrogate currency
had lost value to the tune of 30 percent.
Economic expert Prosper Chitambara said bond notes were losing their value
while US dollars were disappearing from the market because importers
needed greenbacks to replenish their stock – and given the scarcity of the
dollar and the demand for it, a premium was now placed on the American
currency, with an inevitable parallel market emerging.
“What is causing all this is that the bond note is not internationally
tradeable. If you are a business that relies on imports, you can’t use
bond notes to import, which has affected their value.
“Value in this case is determined by market forces of supply and demand,”
Chitambara told the Daily News on Sunday.
Another economist, Witness Chinyama, said the economy was now dominated by
bond notes, which the market perceived as “bad money”.
“The good money (dollars) has been driven out of circulation by the bad
money, as bond notes can’t be used to import goods.
“While at official level the currencies are still at 1 to 1, for the
importer, the bond note is weaker. The dollar is now the reserve
currency,” Chinyama said.
But Mangudya vehemently denied that the value of bond notes had tumbled.
“Have you seen twin-pricing in OK (supermarket) or other major outlets? We
can’t talk of backdoor shops … Go to the formal market, there is no
weakening of value there … we can’t talk of out-layers,” he said.
Asked about some supermarkets which are charging three to five percent
more for goods bought using debit cards, Mangudya said: “Thank you for the
information. We will use it to assist the market. It’s important what you
are telling me. It’s good information”.
Former Finance minister, Tendai Biti, was among those who also said
multiple exchange rates were now in existence in the market, adding that
the government was effectively running “a Ponzi scheme” – a form of fraud.
“You have four sources of the Ponzi scheme. First is dollar bank balances
sitting in the bank, with depositors unable to get their money. Depositors
have been transacting through RTGS (real-time gross settlement) and debit
“Wherever you use debit cards, it’s just transactional. We are circulating
hot money, and it’s huge. We need an audit of how much money has been
created through the circulation of hot money,” Biti told the Daily News On
“The second challenge is money being deposited into exporters’ accounts.
The RBZ is crediting accounts with RTGS balances. The real money is not
coming out. That money is being recycled and rechannelled.
“Government has been borrowing, issuing treasury bills and using them as a
source of currency. Take the RBZ debt of $1,5bn – all of it was paid by
“We now have billions worth of treasury bills, some of which will be
redeemed as late as 2028. Meanwhile, importers have queues ranging
between one month and six months. And applications for import permits are
not being processed.
“We need a change in government to restore trust. We need to start
producing … factories, mines have to start working. We need a whole raft
of reforms which Zanu PF is not capable of,” Biti added.
Many economists and businesses have been pushing for the adoption of the
South African rand to avoid the country plunging into an economic crisis.
President Robert Mugabe also backed Zimbabwe’s greater use of the South
African when he spoke in an interview with the ZBC to mark his 93rd
birthday a fortnight ago.
The nonagenarian has also since said that bonds notes are a temporary
measure to mitigate cash shortages in the country.
“Bond notes are just a temporary thing. We want you to bear with us. We
want you to bear with us. We wanted to adopt them for a short period,” he
Meanwhile, opposition leader Morgan Tsvangirai’s MDC says bond notes were
“always going to be a disaster”.
“Bond notes were always bound to flop. It’s just a matter of time before
the bond notes experiment blow up in our faces. We don’t see these bond
notes holding sway until July this year,” MDC spokesman Obert Gutu said.
“The economy is in free-fall and our export earnings continue to decline
at an alarming rate. Essentially, bond notes are nothing more than useless
pieces of very cheap paper,” he added.
Cape Town-based think tank, NKC, has also said that the shortage of US
dollars on the market were fuelling price spikes.
“Upward price pressures could potentially be driven by the rise in the
cost of goods and services (mainly bread, cereal, seafood and oils) as a
result of US dollar shortages,” it said.