AMHVoices: You cannot monetise failure through bond notes

THE Zimbabwean citizen craves a policy blunder-free week. The previous weeks and days have not been different, a quick reminder that policy blundering is part of President Robert Mugabe and Zanu PF’s DNA.

Jacob Mafume,PDP Spokesperson

First is the issue of bond notes. Reserve Bank of Zimbabwe (RBZ) governor, John Mungudya announced in his mid-term monetary policy presentation that a further $300 million worth of bond notes would be injected into the economy.

As a matter of fact, the ones injected into circulation under the initial $200 million facility did not solve or ease liquidity crunch.

Counting the costs and questioning the benefits 14 months later, the PDP notes that the scheme has caused no good, but damage.

The bond notes have displaced the few United States dollars that had remained in circulation. Zanu PF had been warned that Gresham’s Law of bad money displacing good money would apply, but as usual they ignored.

Companies are now failing to import. Instead they now have to refer their clients to companies across the borders. Ads

The introduction of bond notes also sent wrong signals into the economy, resulting in price hikes including on basics like cereals and cooking oil. Some shops display different prices for the US dollar against the bond note, a sign that the claim by both the governor and the President that they have powers to determine exchange rates through a statutory instrument is in itself a fallacy.

Extending the bond note agenda means an unrepentant violation of the country’s Constitution, which states that the State can only borrow through Parliament. The debt relating to the bond notes will now stand at half a billion, money borrowed without Parliament’s approval. The debt crisis in the country is visibly beyond the capacity of the Finance ministry, digging a bigger hole is irrational.

The term sheets for the bond are also not available for anyone to see, as we highlighted in our previous statements our reservations on the existence of the bond in the first place.

Fundamentally the illusion that you can monetise your failures and flaws through a fake scheme is just, but a waste of time, creating a lie and then believing the lie is a sustainable economic plan.

The government must face it and pay back the money stolen from RTGS balances at the RBZ.

What is needed is an active policy scenario focusing on supply side solutions, as at the end of the day a currency is a reflection of a country’s exports against its imports.


  1. I agree Mr Mafume that bond notes have’t solved the cash shortages. But I’m sure you also agree that they are working. Which currency do you have right now in your pockets Mr Mafume? Don’t you think you are just repeating the usual stale book theory when you say “What is needed is an active policy scenario focusing on supply side solutions”. What’s needed are practical solutions. Though inadequate, bond notes look like an innovative practical attempt to address our challenges.

    1. bwe, the only cash I am holding is my bank card. I cant get cash from anyway.

  2. Do we need bond notes or we need to create employment so we can start to export and build up foreign currency reserves to address our Import cover. Surely we witnessed all this I 2008 . It’s just a repeat of what we already know. Policies that scare investors have to be avoided and anything that increases the level of sovereign risk should similarly be avoided. Extravagance by government ministries and lack of follow-ups on audits plays into the hands of white collar criminals!

  3. Wish Gono is back as a Governor for RBZ. Declaring that all bond notes are no longer working with the effect from tomorrow. Because people who have them in their houses need to be punished!!

  4. It’s not their fault that they hold cash in their homes. It’s a wake up call to the foolish authorities who have become cluelessness about running such a small economy!

  5. I agree with what Mungudya said months ago: “the fundamentals are not yet in place for the return of the Zim dollar”. This was a truism Mr Mungudya. The same true logic however, can be applied to pumping even more bond notes into the economy. No doubt the short term benefits will not go unnoticed but the long term effects will be devastate an already devastated economy. It’s a little bit like injecting cortisone to ease the pain of a sports injury. The cortisone will help you to continue playing the game but if you perpetually put off “invasive, reconstructive surgery” the long term effects will be devastating. The Zim economy needs to undergo surgery sooner rather than later; we need for our economy to return to a production base that is broad enough, and competitive enough to allow our own local currency to return. Until then all efforts to improve liquidity and jump start the economy is disingenuous window dressing.

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