ZIMBABWE is on tenterhooks over the pending introduction of a surrogate currency designated as bond notes. There is a lot of uncertainty and confusion about how the bond notes will work.
The government says the bond notes will have the same exchange value as the anchor currency, the American dollar, but will be used only in Zimbabwe as an incentive for exporters.
But there has been a spirited media campaign against the bond notes by opponents of the ruling Zanu PF party, who see the current cash shortage as a chink in its armour that might just cause it to lose power. And the government is ready to act.
On October 31, President Robert Mugabe promulgated Statutory Instrument 133 of 2016 giving legal effect to the introduction of the bond notes; the same day the central bank launched a nationwide campaign to educate Zimbabweans on the security features, intended purpose and exchange rate of the nominal currency.
Since the beginning of the year, there has been a cash crisis, especially of the preferred US dollar. The central bank asserts that this has been a result of illicit outflows of foreign currency, hoarding of cash by traders and exporters not repatriating earnings into the country.
The bond notes were initially expected to be launched at the end of this October, as the new trading currency with the American dollar becoming a reserve currency. That way people would not readily access US dollars to take out of the country.
But the past six months since May when the bond notes were first mooted have shown that Zimbabweans are suspicious of government intentions, and more conservative than they are ready to deal with the national challenge of cash shortage.
In a campaign orchestrated through the private media and civic society organisations, Zimbabweans have been told that through bond notes, the government plans to reintroduce the local currency, which was demonetised after it was gutted by hyperinflation in 2009. People lost life’s savings, hence once bitten twice shy. Instead of bond notes, analysts say Zimbabwe should shift from the American dollar to the South African rand as the anchor currency by joining the Rand Union.
The Reserve Bank of Zimbabwe has tried to mitigate the impact of cash shortage by encouraging people to use credit cards and electronic money transfers where large sums of money are involved. This was met with resistance at first. Perennial long queues outside banking halls testify to a people enamoured of hard cash in their pockets, particularly the elusive American dollar. This is despite a lot of retail shops, including bars, installing point-of-sale machines to facilitate use of electronic cash transfers.
But there is an even darker side to the whole cash crisis. Those opposed to the bond notes are traditional opponents of Zanu PF.
Traditional opponents have accused Zanu PF of rigging elections. When they lost again in 2013, they warned the party would not be able to rig the economy. This was followed by a massive withdrawal of US dollars from the formal banking system. Since then, there has been a sustained campaign against the government accessing foreign assistance, either bilateral or from multilateral financial institutions such as the World Bank and the International Monetary Fund.
It is, therefore, not far-fetched that the opposition and civic society organisations see the cash crisis as a blunt instrument with which to hit Zanu PF, hence their implacable campaign against bond notes, which would offer relief to restless Zimbabweans.
It is, however, a campaign they will likely lose after the central bank gets the message across. Those opposed to the bond notes have access to foreign currency and are in a minority. A majority of Zimbabweans want to get on with their lives regardless of the medium of exchange so long it is readily available.
Second, those opposed to the bond notes offer no credible alternative besides hawking fear of the unknown.