HomeOpinion & AnalysisColumnistsEconomic turmoil: We said it before, now it’s here

Economic turmoil: We said it before, now it’s here


IT happened so fast; so fast that no one can honestly claim they saw it coming.

BY Learnmore Zuze

Just between Thursday and Friday the impact was everywhere.

Shops felt it.

The transacting public was hardest hit.

Suppliers were caught off guard.

Even the central bank stood astounded.

Yes, it seems we are there again!
I recall with vividness how I highlighted in an article, when bond notes were first released into the market that we were going to the same place despite fervent denials by the Reserve Bank of Zimbabwe governor, John Mangudya.

I penned: “It is not a mystery, neither is it something demanding the wisdom of soothsayers to predict where we are going: The bond notes may hold for a time, but as sure as day follows night, the surrogate currency will not last the distance.”

It was bound to happen and the nation is now caught between the Red Sea and the devil.

It would not be an exaggeration to assert that bond notes were literally forced down the throats of Zimbabweans against a wide public outcry.

And indeed, at the time, so high was Mangudya’s faith in the surrogate currency that he offered his very job as a sacrifice should one of the following things happen to the notes: rating of the notes against the United States dollar or use of bond notes as trading currency by the person on the street.

The latter came earlier and no one bothered much about it.

Today, bond notes are being rated against the strong American currency and terribly so.

The impact is adverse and the parallel market is staring the nation with its red blood shot eyes.

This, Mangudya, is exactly what the people feared and frantically tried to stop, but for some reason you and the government remained headstrong.

I interviewed former Economic Planning and Investment Promotion minister and also Hatfield constituency legislator, Tapiwa Mashakada, sometime last year, and most people sceptically dismissed him as “oppositional” when he slammed bond notes.

In hindsight, Mashakada was on the money when he said: “Quite frankly speaking, the market has absolutely no confidence in bond notes.

“In the minds of the people, they see the return of the Zimbabwean dollar with all its chilling problems.

“People are not convinced on the 1:1 parity between the bond notes and the US dollar.”

And true, what the events of the last few days reveal is that Zimbabweans have no confidence in the currency, which had been given feeble legs to stand on against the robust American currency.

In fact, the government, from its initial conduct, actually dragged its feet knowing fully the infeasibility of its plans.

By some inexplicable design, when the first notes where unveiled, Zimbabweans instinctively knew that trouble was around the corner despite government assurances.

There was resistance and the distrust and fear Zimbabweans had was not unfounded.

Zimbabweans still suffer from the trauma of 2008 when everyone watched helplessly as the Zimbabwean dollar plummeted to record lows.

What has happened, whether real or made up by some people, may prove to be the straw that will break the camel’s back.

Zimbabweans may be set for a time of suffering, which, as is threatening, will trigger all manner of vice.

Zimbabweans naturally feared the back-door return of the Zimbabwean dollar through bond notes.

Legal applications were filed against the notes at the highest courts in the land, although this was in vain.

Demonstrations were held in protest.

Indabas took place to ward off the threat of bond notes, but ultimately, the government bulldozed the policy against the wishes of the majority.

For some time, bond notes did the trick and humbled “detractors”.

It was as if to say the government had been vindicated with the notes, presumably, standing at 1:1 with the United States dollar.

Fuel shortages showed up at one time as a result of depletion of nostro accounts due to lack of confidence.

The beckoning reality, however, is very scary; the country may be well on its way to the forgettable year of 2008.

Mashakada’s sentiments came flashing in my mind in view of the fresh wave of the cash crisis.

Cash has become something next to gold because of the crisis.

This country, literally, has no money.

To further quote the former minister: “The Reserve Bank is very sincere, but they are just a pawn in the economic crisis game.

“All the technical arguments about export incentives are not good enough to convince the ordinary person that they will continue to get their US dollar.

“Yet the biggest mischief is capital flight, externalisation and run down on US dollar deposits – all due to lack of confidence.

“I don’t think the introduction of bond notes cures this mischief.

“We, therefore, ought to see a paradigm shift in terms of the policies of government.”

Indeed, a paradigm shift was and is necessary in government policies.

The country made world news for printing its own notes and imposing the same rate with the American dollar.

The consequences are becoming dire.

Despite the hype about plastic money, it is clear that it cannot be used everywhere and Zimbabweans are bearing the brunt of the ill-fated notes.

The government, on its part, is trapped and clueless.

Bond notes have taken us to the very unenviable situation, which many had feared.

It was crucial to have given an ear to those who raised a red flag on the notes. It is unfortunate that in Zimbabwe people are quick to brand those with divergent views as opposition.

There simply was no politics in resisting bond notes.

It was a genuine cry of people who know and have witnessed suffering wrought by similar policies in the past.

Look now, Mr Governor, we said it before, now it’s here.

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