Many fear ‘bond notes’ will cause hyperinflation as protests grow against autocratic 92-year-old’s rule
Zimbabwe has launched a controversial new currency in a last ditch bid to inject desperately needed cash into its failing economy.
Many ordinary people fear the new “bond notes”, issued on Monday by the central bank in Zimbabwe, will trigger economic chaos, wiping out savings and causing massive hardship for millions.
Zimbabwe has been ruled by Robert Mugabe, 92, since 1980. Some observers have called the bond notes the autocratic president’s “last gamble”.
The central bank says bond notes will ease crippling shortages of currency, but there are fears their introduction could encourage rampant printing of cash, as happened in 2008.
Only the introduction of the dollar as the official currency in 2009 halted an economic meltdown.
In recent months there has been unrest after the Zimbabwean government was repeatedly forced to delay salary payments to teachers, doctors, soldiers and administrators.
The country is also suffering high unemployment, a severe drought and is threatened by famine in some parts.
The bond notes will be officially interchangeable 1:1 with the US dollar, and banking officials said last week they would be deposited directly into US dollar accounts, where they would be reflected as dollar balances.
Few appear reassured. “I just want to try to purchase something from one of the big supermarkets,” said Tennison Tigere, a 36-year-old street hawker, shortly after withdrawing $50 of bond notes from a bank in Harare, the capital.
“People are sceptical because of what happened to our old currency in the past when the money lost its value. That is why they think it could happen again.”
Pro-government newspapers announced the issue and said “the majority of people” were optimistic that the new notes would resolve “the cash shortages afflicting the economy”.
However, news agencies reported a run on the banks as Zimbabweans tried to empty their accounts of hard currency.
The prospect of the introduction of the notes has also fuelled some of the largest protests in a decade against Mugabe. This month, authorities arrested dozens who were planning to demonstrate against the move.
Those detained include Patson Dzamara, a high-profile opponent of Mugabe and the ruling Zanu-PF party, who was found at a local hospital 24 hours after his burnt out car was discovered.
Dzamara – who appeared to have been badly beaten with sticks, according to pictures posted on social media – was one of the coordinators of a coalition of opposition groups that had pledged to “shut down” major cities in Zimbabwe to protest against corruption, alleged human rights violations and the bond notes.
The UK and the EU condemned the arrests.
Observers say the pressure on Mugabe, Africa’s oldest leader, and the Zanu-PF party is immense. Ignatious Chombo, Zanu-PF’s administration secretary, accused western embassies in Harare and opposition parties of trying to cause anarchy.
Mugabe will seek re-election in 2018. Zanu-PF retained power after elections in 2013, which were tainted by allegations of vote-rigging.
Tendai Biti, an opposition politician, predicted earlier this month that the bond notes would be a disaster. He said: “We are already in a disastrous situation. We are in a deep recession. If you add bond notes there will be the return of the black market, hyperinflation. It will be a dog’s breakfast.”