Financial sector rejects bond notes

The financial services sector has rejected plans by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya to introduce bond notes “as they are not wanted in the market”.

BY TATIRA ZWINOIRA

Reserve-Bank-Governor-John-Mangudya-speaking-at-the-Monetory-Policy-at-Reserve-Bank-Of-Zimbabwe-yesterday

Speaking at a Financial Markets Indaba yesterday, Zimbabwe Investment Authority chairman Nigel Chanakira asked the over 200 delegates in attendance to raise their hands in support of the bond notes, and no single hand went up. But when he asked the people to vote against the bond notes, all the delegates raised up their hands.

“If the bond notes are 3% of the monetary circulation, why go through all this trouble? Give us something else besides the bond notes.

“The market does not want them so if the Reserve Bank governor is a listening man, as he has said, please remove the bond notes. The foreign exchange is skewed towards the dollar, why not focus on the Japanese yen, South African rand, or Botswana pula?” Chanakira queried.

He said Mangudya had to listen to the market on whether to introduce the bond notes or not as it was clear that the development was not favoured by both the market and investors.

Mangudya announced the introduction of bond notes in May. He said the notes were expected to start circulating in October as the process takes four to five months.

Sources said Mangudya had found the response to the bond notes worrying and was about to go on a major drive to educate the public on the new currency.

RBZ deputy director of exchange control Farai Masendu, who was one of the two central bank officials present, said the problem was that the US dollar had moved from being a form of exchange to an asset.

“As a result of the dollar becoming an asset, if any new money comes into the market we are bound to lose and see it taken out,” Masendu said.

However, despite the massive spike of the cash back facility and bank withdrawals, RBZ deputy director of bank supervision Ruzayi Chiviri said deposits had “actually been increasing on a weekly basis”.

“I want to indicate that the RBZ must be an agent of government according to the Banking Act. Before the introduction of the bond note facility, discussions had taken place with the Finance ministry,” Chiviri said.

23 Comments

  1. Paper money in Europe came about because gold was risky to carry around. The goldsmith kept the gold in his vault and gave the owner of the gold a signed note indicating that he was keeping gold for him in trust. The owner of the gold could trade using the goldsmith’s note. This trading arrangement was possible because the people trusted the goldsmith. Precedence has shown that people don’t trust the Reserve Bank (Government) any more so the RBZ should give people gold not paper (bond note). Let us go back to the fundamentals of banking, Zimbabwe has plenty of gold, platinum and diamonds stop exporting these for fiat currency (paper) and give them to the people this is the real money they want. Let them carry their gold and the respective risk and rebuild financial/monetary confidence in the process.

    1. @ADF A very simple analysis which says it all. Those are the basics. Let’s go back to our basics. Its all about TRUST. The goldsmith was trusted why??? If Dr Mangundya can answer to that then our problems are solved. If Dr Mangundya had my TRUST then I wouldn’t have any reason not to accept his promissory note. You need to show me what you have in order for me to accept what you want me hold in lieu. We very much know that the Bond notes will be imposed upon us whether we like it or not but please bear in mind that people know what is happening and one day, and its only one day that you will learn not to take people for granted.
      People have been taken for a ride previously to the extent that some lost their lifelong savings. And some even died then you expect to take things this lightly??? Hameno. Imboitai.

  2. ADF u are spot on. People do not want worthless Bond Notes and Mangudya should keep the John Bonds to himself and Chinamasa. The only way to go is to join RMU whether Bob likes it or not. We have failed to manage our economy and so lets outsource economic and financial management of our economy to South Africa for the sake of our children. No to John Bonds!!

  3. Concerned Zimbabwean

    We totally reject the bond notes

    1. I agree hundred percent with both @ADF and @Banker. The entirety of the national stakeholders have openly demonstrated to both Chinamasa and his Reserve Bank Governor that there is absolutely no trust in their proposed financial solutions. In fact it is a wonder these two gentlemen felt so confident the nation would sheepishly trust them after the world record they set with hyper-inflation hardly 8 years ago! I can only presume their confidence was bolstered by the “success” they have had with their bond coins hence they felt the nation was now ripe for a “local currency” regardless of the fact that the economic fundamentals are skewed up and the economy is now in free- fall mode. As bitter as the medicine is, we have no option but to outsource our economic and fiscal management to those who are doing it better than us and in this case it has to be South Africa’s Pravin Gordhan and his Rand currency. Full stop.

  4. forex for zimbabweans and bond notes for john ‘dr bond note’ mangudya.

  5. So Says Nigel Chanakira…We all know his “BANKING SKILLS”….Where is Kingdom Bank? A Failed bank after he looted Depositers Funds and Zimbabweans reward him for being a great Banker…a country of clowns

    1. @Chimoio, maybe you were there or together when he “failed” as you say but don’t be that ignorant my brother. It doesn’t mean if someone failed Mathematics at “A” Level then the person can not solve 10 plus 10. As well, if you see an old rural folk with tattered clothes then you think they can not advise you, a graduate, on anything about life. Dig deeper next time please.

    2. His fall is a result of such policies and not his own making!

  6. Nigel Chanakira did a simple demonstration that people do no like bond notes, by a simple vote. 100% said NO. But, the problem with zim is that, if you repeat the same vote, but this time in the presence of Mugabe, 60% will say YES to bond notes! Food for thought.

    1. It simply means Zimbabweans say whatever is necessary to suit the person they are talking with. Simple.

  7. I am sorry lets not DayDream its only Mugabe who can reject Bond Notes. He was on TV and he told the whole nation that he has cleared them so the story reached a dead end then. Lets talk about other issues.

  8. It is only Bob who wants Bond Notes becoz he never felt the effect of hyperinflation in 2008. He made more money than ever b4 thru RBZ forex black market operations. Even Chinamasa and Mangudya do not want Bond Notes but they can’t say so in Bob’s face. The 2 know that joining the RMU is the solution for Zimbabwe but Bob doesn’t want to hear that. They can impose the Bond Notes but without trust people will reject them. Why are they not paying civil service salaries in Bond Notes? They are scared this might backfire on them.

  9. the problem is that the consultations are being done when already the Govt has already made a decision,the iron law of oligarchy at work here,why is it in South Africa,UK,Tanzania,Nigeria governments listen to their people,here this country is more like a personal tuckshop where one does what they feel anytime,we are unfortunately owned by a small group of clueless madalas masquerading as a govt.

  10. for long Hnr Tsvangirai has been championing a government for the pple by the people, look Mugabe at al are abusing the stolen legitimacy to do as they wish. We knew it for a long that, zanu pf has no capacity to revive the economy except gioing back to their looting spree.

  11. I have an idea, why not give James bond notes to ALL Zanu PF supporters (because they have a high affinity for freebies) and US Dollars to everyone who wants to WORK for money?

  12. Chihuta Chinemari

    Bond note ndariuye tiite mari, ZveUS$ pasi naro rine masanctions

  13. save our souls

    The problem with these madalas is they don’t know what to prioritise. They put focus on trival issues. For example they are making noise on the Lumumba issue instead of addressing this critical money issue.
    @ADF, you have just made it so plain. We don’t trust this gvt anymore. We are far much better without a gvt. I wonder what Magudya’s Financial Inclusion Policy will mean with his “John Notes”
    Mr Governor, please listen to the Zimbabwean citizens. We are in no support of your “strategy”.
    Have you forgotten what we went through in 2007-2008? And you want to take us there again? Have a heart you people.

  14. mutsvairo swinfan

    truth be told gentlemen, there is no difference between bond note and bearer cheque. plastic money is the way! we need sober minds in the financial institutions please.

  15. No to bond notes. Last time we lost everything, we worked for nothing under this so called people’s government. They are happy enslaving the population-vano utsinye. Look at everything run down-education, health, transport, pensions, infrastructure, agriculture etc,etc,etc.

    1. just as Micheal responded I am amazed that any body able to get paid $4334 in 4 weeks on the internet
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  16. Yes! With the proviso that they use the bond notes to pay the millitary and police.

  17. Most of our problems if not all are our own making. First, abandoning one’s own currency is a huge problem and Zimbabwe had no option. But, why adopt multiple foreign currencies. That just adds a layer of problems. Does Zimbabwe have the skills and infrastructure to manage multiple currencies? Who else uses multiple currencies where Zimbabwe could learn from? This bad notion of jumping into ideas and ideals we are ill-equipped to handle started at the very beginning when zpf chose the socialist path (the politibro, comrade nonsense). mugage moved from teacher experience to guerilla war leader to prime minister/president and champion of communism with zilch experience in communism. We inherited Western/Capitalist system and yet we experiment with communism while ill-prepared to do so.

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