Bond notes uncertainty abetting cash crisis

ZIMBABWE is currently in the grip of a cruel cash crunch that has seen money disappearing from banks, winding queues forming, mobile money transfer outlets running out of cash and higher denominations of the United States dollar vanishing from circulation.

Source: Bond notes uncertainty abetting cash crisis – NewsDay Zimbabwe October 25, 2016

guest column: LEARNMORE ZUZE

The inconvenience is there for all to see. On the one extreme is the raging saga of civil servants’ salaries that has since become a grand event requiring proclamation every month.

Even more, it remains to be seen what will become of the 13th cheque, which again, was promised to the civil service by the government.

There are so many things that have gone awry in the Zimbabwean administration and the above-mentioned represents, but a tiny fraction.

A whole host of things have been mishandled by the government, but in all its dealings, a common factor has emerged that has served to prop up the crises facing this country, namely lack of policy consistency.

Barely a month after Finance minister Patrick Chinamasa had his cost-cutting measures shot down, we have the hanging issue of bond notes. Bond notes, in essence, have stirred trouble before their launch.

The uncertainty surrounding bond notes has, in essence, aided to the continued crisis; it is an open secret that the majority of people are holding onto the US dollar in the face of uncertainty.

The bond notes delay is presenting its own challenges and surely the government can do with a little decisiveness to avert the exacerbating crisis.

They should, by now, realise the evils wrought by the proposal to introduce bond notes and the subsequent delay.

It’s been sometime since Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya, spoke of bond notes.

In fact, according to initial pronouncements, bond notes, at this stage, should long have been in circulation, but it is apparent the government lacks consistency in policymaking.

They are not even sure themselves of what they seek to impose on the nation. But one thing that is undeniable is the disaster currently resulting from the proposed bond notes.

It would have been better, in my opinion, for Mangudya to have, with wisdom, held back and announce these feared notes shortly before allowing circulation.

What the government has successfully done now is to raise a suspicious awareness to the bond notes. The impact of bond notes, so far, has been negative.

One would think or expect that government, through its necessary structures, should give comprehensive attention to its policies before going out to the world with pronouncements.

Both Chinamasa and Mangudya are now caught between the proverbial rock and hard place.

The contradiction arising from differences in policy consistency are everywhere.

That should not be expected from a government, if anyone should take it seriously.

Again, away from the bond notes saga, it was only last month that Chinamasa, for the second time, had his bonus freeze proposals shot down after he had gone public with the announcement.

A whole minister, for the second time, had to put up with embarrassment after Cabinet, its leader President Robert Mugabe in particular, shot down the proposals.

While the embarrassment falls hard on Chinamasa, it also seriously reflects negatively and speaks of a disconnect within government.

Cohesion, shared vision and common purpose are apparently absent in the Zimbabwean administration.

The Finance minister had also announced that job cuts of the civil service were imminent and, indeed, rationalisation of the civil service had long been on the cards, yet all was blown away with the wind.

Chinamasa’s proposals to reduce salaries and allowances by between 5% and 20%, starting with deputy directors to ministers effective October 2016 and foregoing the 2016 and 2017 bonuses, were evidently in tandem with the government’s thrust to rationalise public spending.

The move would have reportedly saved Treasury $180 million per annum.

However, at the time, Information, Media and Broadcasting Services minister Chris Mushohwe poured cold water on the proposals, saying they had not been approved.

It is only logical to try and understand whether the Finance minister acts without consulting his boss Mugabe or whether the RBZ governor is not accountable to anyone.

Because, surely, these inconsistencies in policy are disturbing, especially when they induce more suffering to a people who have seen a lot like the generality of Zimbabweans.

These policy somersaults are not good at all for the nation, apart from revealing government confusion.

Inconsistency erodes teamwork and, above all, wipes away the little confidence that remains in this embattled government.

It really reveals that the government does not seem to take the citizenry seriously. The disconnect speaks volumes.

Are Zimbabweans governed by a caring government? Does the government recognise the people, who see the crisis in this country and are working in common purpose to end the challenges? Or we have an administration merely obsessed with power?

The efforts and energies spent on electoral campaigns should be the same energies expended on mending the economy.

The government has to find a better approach in reconciling contradictions.

Learnmore Zuze writes in his own capacity. E-mail: lastawa77@gmail.com

COMMENTS

WORDPRESS: 4
  • comment-avatar
    nelson moyo 6 years ago

    Sir Thomas Gresham’s ( 1519-1579) law of currency is about to be tested in Zimbabwe –

    Gresham’s law states that any circulating currency consisting of both “good” and “bad” money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the “bad” money. This is because people spending money will hand over the “bad” money rather than the “good” ones, keeping the “good” ones for themselves. Therefore the bad money (bond notes) will drive out the good money(US dollars) and a US dollar will become extinct inside Zimbabwe.
    To summarise – In Zimbabwe a US dollar and a soon to be issued ZW Bond note are equal value according to the Reserve Bank of Zimbabwe and Doctor John ‘Bond’ Mangudya.
    The market place of Zimbabwe and the world are, any minute, about to be tested to see if GRESHAMS LAW of CURRENCY is still valid after 400 years

    • comment-avatar
      Matabele Abroad 6 years ago

      Dr. Mangudya and Dr. Mugabe think that by creating Bond Notes they will become as good as James Bond overnight! Indeed, they will be the new Zimbabwe faces of Jemessi Bondi Nicikisi Nickisi Seven!! – with Jemissi Bond notes to prove it! Very soon the Bond notes will be worth Nickissi, Nickissi, Nickissi!

  • comment-avatar
    nelson moyo 6 years ago

    Zimbabwe Stock Exchange – most important happening here is that the price of Old Mutual plc (OML) in Zimbabwe is USD 3.20 and in SA and UK USD 2.45. So for the first time in about 6 years OML is trading at a premium in Zimbabwe compared to it’s share price in SA & UK.
    The premium is 30 per cent which means that Zimbabweans are paying a 30% price above the going rate to protect their USD’s.
    This means that the financial markets in Zimbabwe are predicting that the ZW Bond notes soon to be issued will lose at least 30 % of their value on day one of their issue when compared to the US dollar. Financial markets in Zimbabwe are never wrong.
    Fasten your seat belts comrades and hold onto your US dollars at all costs

  • comment-avatar

    bond notes bring us hyperinflation and lack of goods in the shops
    US$ brings us deflation

    so there we have it — a combination of hyperinflation AND deflation at the same time ..
    a first for any government anywhere in the world and at any time in history.
    its going to be very painful …

    please may we have a unity government and get rid of ….. well the list gets long