THE CONFUSION AROUND BOND NOTES

I have noted that there is still a lot of confusion regarding bond notes. First of all the Zimbabwe Reserve Bank governor, Dr. Mangudya has denied that the now hated Zimbabwe dollar (ZWD) is back disguised as bond notes. I can only take his word for it. It would be financial suicide if that is the case. Depositors experienced their worst moment at the peak of the hyper inflationary period leading to the introduction of the United States Dollar (USD), around the year 2008. Some people lost decades of savings overnight and only a few people benefitted from the chaos. 

I remember some people selling their stands and houses only to lose all the money to hyperinflation. This is what the people remember about ZWD. They cannot accept it back by whatever name it is given and people are not buying the explanation that bond notes are an export incentive of 5% of imports revenue to be given to net exporters of goods and services. The plan is to stimulate and reward local production. The 200 million dollar bond notes scheme is another effort to stem the externalisation of currency as it is legal only within the Zimbabwe boarders but is equivalent to the USD. 

If you have 100 dollars in bond notes, you can expect to get USD100 from any bank in Zimbabwe. The bond dollars have been pegged at 1:1 to the greenback. This is where the people have more questions than answers. They fear that the exchange rate will change quickly due to demand for the USD. Experience tells us that you could turn up to a bank and get USD80 or less for your 100 bond notes as the black market for currency takes off, invoking the bad memories of 2008. The governor and his team have been trying to allay those fears with little success. The citizens have held peaceful demonstrations advising the government that bond notes are not welcome. 

Whether the bond plan will work or not is not the issue, the challenge is for the government to understand that the currency of trust is more important than paper money itself. Not only has the government not properly introduced and explained the bond notes facility, they have since lost the economic credibility to steer Zimbabwe out of this mess. ZANUPF has lost credibility to run the Zimbabwe economy and has become the elephant in the room. 

My advice to ZANUPF at this point, is to engage the nation and agree to a transitional authority to be run by competent and trusted Zimbabweans across the globe as the country prepares for credible, free and fair elections. Zimbabwe is no longer governable and we have seen protest after protest from all demographics including mothers, unemployed graduates, and ordinary unemployed citizens. Protesting has become an occupation and the government has responded violently through the riot police.