‘Bond notes not a solution to cash woes’

The $300 million bond notes set to be introduced by Reserve Bank of Zimbabwe (RBZ) will suffer a similar fate as those released under the export incentive facility due to the absence of behavioural change among Zimbabweans, a top banker has warned.

BY BUSINESS REPORTERS

George Guvamatanga
George Guvamatanga

In a diagnosis of the cash shortages, Barclays Bank Zimbabwe managing director, George Guvamatanga said the low confidence has seen retailers and wholesalers failing to bank cash and some depositors queuing at banks to get the cash for sale on the black market.

“If our behaviour does not change, we will not see this $300 million. It will come, we give to civil servants they go to wholesalers and retailers. Civil servants cannot go to the bank and demand money because they have not exported,” he said.

“Until such a time we address the bigger fundamentals, the $300 million will disappear the same way the $200 million has done. If that behaviour doesn’t change, we might have $1 billion of cash and it will change nothing.”

Guvamatanga’s warning comes after the cash shortages have seen no signs of abating despite the introduction of bond notes. To date $175 million in bond notes have been issued under the $200 million export incentive scheme. RBZ governor, John Mangudya recently said a $300 million facility has been secured to incentivise exports.

Guvamatanga said banks have managed the crisis better, adding that without mobile money “there would have been riots in the streets”.

The banker said some of the people queueing at the banks could have been doing so for rent-seeking behaviours such as selling cash.

“You used to complain about charges, we reduced them, so why are you queuing at our banks. At the current level of charges it is still viable to be able to use these alternatives [plastic money],” he said.

Guvamatanga’s warning comes as a research firm said the additional $300 million bond notes would not solve the liquidity challenges plaguing the country unless there is a tap into the informal sector and a halt in the externalisation of cash.

In its analysis of Mangudya’s review, IH Securities Research said the gap between real time gross settlement (RTGS) balances with the externalisation of both foreign currency and bond notes would widen.

“The extension of the export incentive, adding $300 million will incentivise exports, but until measures have been put in place to stop the externalisation of the bond notes and tap into the informal market, this measure will not cushion liquidity challenges currently prevailing in the country,” IH Securities said.

Bond notes are being sold in Musina in South Africa, Manga (Mozambique), Livingstone (Zambia), and Francistown (Botswana).

Also, cash hoarding has spiked in recent months, as evidenced by the increase in buyers approaching parallel market dealers on a daily basis seeking cash.

The central bank recorded $1 billion dollars, which is supposed to be in the market, but average circulation is estimated between $200 and $250 million.

IH Securities Research said the banking sector was sound, benefitting from the proliferation of plastic money, but remained concerned with the creation of money through non-cash-backed RTGS balances.

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20 Comments

  1. “…so why are you queueing at our banks…” – the arrogance of privilege. The last thing we would expect to hear from a bank boss. If we deposit money into our bank accounts we have the right to withdraw those amounts in the most convinient tradeable form of our money. Guvamatanga do you know who is the boss of a bank? When you get well schooled in customer care the boss of a bank are its customers and you can’t ask them why are you coming to our banks because the bank is theirs without their businesses there is no Barclays to talk about.

    1. What does he mean “Why are you queing at our banks”? Such arrogance from a person with sush a position. Pride will bring you down George if you dont deal with it. Its your banks yes, but its our money…how can you say such words kushaya courtesy, so proud just like politicians in Zimbabwe

    2. He is merely saying open your eyes and see. Banking can still be done without going for that queue to waste your time and get $30 bond coins.

    3. `WHY CAN T THEY EAT CAKE……EXTREMELY ARROGANT. AS IF HE DOESN T LIVE IN ZIMBABWE. THE FACT THAT HE HAS ACCESS TO CASH DOES NOT QUALIFY HIM TO ABROGATE SOLE INTELLIGENCE TO HIMSELF.

    4. Georgina Guvamatanga

      “If we deposit money into our bank accounts we have the right to withdraw those amounts”. It depends on whether you deposited hard cash into your bank because most people are depositing money via RTGS which is basically virtual cash so the problem is if you now go to the bank to withdraw cash you will be basically asking for some else’s hard cash since the Reserve Bank does not have enough cash to supply to your bank to cover your RTGS deposit.

      “in the most convinient tradeable form of our money”. This where George is saying lets change our behavior and trade in other available forms of transacting such as ‘plastic money’ instead of always opting for hard cash which is in short supply. Hope that makes sense.

  2. Guva behavioural change needs to start with you bankers…or maybe start with the ruling politicians first then followed by you bankers…Can you show cause why a person comfortably ensconced in the informal sector would currently want to bank their money? The mattress does not exert usurious bank charges, what you bank is what you find waiting for you when you want it.

  3. What about the externalization by the president? When is it going to stop? How does he feel going out of Zimbabwe with vast amounts of cash and not care about his useless nd endless travels? Ko vana cake vanowana kupi Mari yekudakwisa nekurasa zvavo? Kurova imbwa makaviga mupinyi!

  4. Ruramai Mutemasaka

    Just another George who needs to be reprimanded. Iwe George, mwanangu, usadaro!

  5. Yaaaaaah, sorry George.“You used to complain about charges, we reduced them, so why are you queuing at our banks. At the current level of charges it is still viable to be able to use these alternatives [plastic money],” ? Seems like you don’t want people to bank at Barclays Zimbabwe anymore. As a banker, you must be advising Mangudya to make sense out of his monetary policy measures. what we want is cash, the use of plastic money should be optional and not mandatory.

    Ma bankers mava kutijairira, ende munogara muchitijairira.

    1. The good is George is telling it like it is. It ain’t gonna change, why should we spend 8 hours at the bank. Let’s all negotiate with each other to find other sources of payment to do business. Bank still make huge profits, and they leave pretty. It’s us who must accept change, toita madhiri pama phone than cash isingabatiki.

  6. the tone of Guvamatanga is out of line but support his view that adding 300 million bonds will not solve the problem at all. The RBZ is dealing with the symptoms of a problem instead of dealing with the root cause of a problem.

    1. GONOISM APPROACHING

  7. RBZ issue the $300million…and after a Year change all notes to a NEW look…do that for at list 3 Year on continuous service…..the notes will stay in Market…..renewing the NOTES will help Financial problems……………

  8. George the arrogant banker is a stooge and a…creeper of ZanuPF. I have ALL my earnings deposited into Barclays, monthly, but George’s bank will only allow me to withdraw Bond$50 PER WEEK, and then I am charged $5 per card transaction!!! I cannot change banks now, because no new bank accounts are allowed to be opened. I employ 3 workers, but they do not have bank accounts – how will I now pay them at the end of the month? The sooner this place (or one individual) collapses, the better. The informal sector is not full of fools – they are very street savvy and financially so as well, so if you try and tax them they will kill you. As for the externalizers of the US$ – we all know who they are, don’t we? We aren’t fools, either, George. So WHAT are you proposing to do???????

  9. “Bond notes are being sold at Musina, Livingstone and Francistown”. kkkkkk imwe iri paEastgate nepaRoad port.

  10. Guvamatanga is right. Please understand his statement. bringing in more bond notes will not change anything. we still go back to zero because its going back to the streets

  11. there is no reason for anyone to go the bank because all the money was withdrawn and taken to the streets.

  12. I agree with Guvamatanga, bring in more bond notes is not a solution to the cash crisis, there is need to look into the issue holistically than in isolation.

  13. The solution is to allow investors to come and create employment so all can earn a decent living wage. No one will venture in the streets once opportunities for employment ate there. Go back to 2007 and find out why we made sudden improvement after GNU. Kasi maakukotsira here? Do away with indigenisation . What do you indigenize when you have nothing? Ngatishandei chete and earn what we realize!

  14. This is why Barclays is for sale to that Malawi outfit.

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