Bond Notes Divide Zanu PF

Zanu PF is reportedly divided over the move to introduce bond notes as a stop-gap measure to address the current cash crisis, with some legislators expressing fears that the move could trigger hyper-inflation and panicky cash withdrawals, as depositors fear a repeat of the 2008 economic meltdown.

Ruling party MPs and officials, who spoke to NewsDay this week, said the move was akin to addressing symptoms instead of the root cause of the cash shortages.

Parliamentary Portfolio Committee on Finance and Economic Development acting chairperson Terrence Mukupe, posting on his Facebook page, said: “We are addressing symptoms and not the root cause of our problems. We have a flight of the United States dollar out of our economy causing the cash shortages.”

Other Zanu PF MPs, who spoke on condition of anonymity, said it was hard to convince people to accept bond notes in view of the massive losses they suffered during the switch-over from the Zimdollar to the multi-currency system in 2009.

“We should have put in place measures to address capital flight way back and avoid reverting to bond notes because that is likely going to create chaos,” a Zanu PF MP, who requested anonymity fearing a backlash from the ruling party, said.

Another MP weighed in saying they would adopt a wait-and-see attitude, while also taking precaution on their savings.

“The way we operate in Zanu PF is that there is no room for divergent views. Although the bond notes are going to solve the immediate problem, they will, however, create a bigger problem and in no time the black market will be a thriving business,” he said.

“I think the matter should have been discussed at different levels in consultation with the people.”

Zanu PF activist and Harare provincial secretary for tourism Acie Lumumba said different sectors of the economy were likely to be affected.

“Imagine trying to explain to a tourist they must convert their US$ in exchange of bond notes – it’s a total mess,” he said.

“The Reserve Bank of Zimbabwe (RBZ) governor (John Mangudya) did the right thing to stop the bleeding and I feel for him, but the real problem is how we ended up here. Bond coins are a pain killer, but the real cancer is self-destructive management.”

But Zanu PF chief whip Lovemore Matuke said MPs and other ruling party officials who did not understand the policy measure should seek assistance from relevant authorities.

“We will try to engage the MPs on the matter and find common ground, (because) probably those who don’t appreciate that lack understanding,” he said.

Zanu PF secretary for finance Obert Mpofu was optimistic the bond notes would address the prevailing liquidity crisis.

“I know that whenever there is a policy change, there are sceptics who don’t believe the benefits that come with it,” he said.

“But let me assure the public that as Zanu PF, we have looked at this policy carefully and evaluated its benefits and non-benefits, if any. There is no governor of a county who would introduce such a policy which is against the public.”

While senior Zanu PF members were buoyant, informal sector representatives have threatened to mobilise their members to withdraw their money from banks and keep it elsewhere in protest.

But RBZ governor Mangudya told NewsDay that he had engaged banks to ensure that they tap into the unbanked money circulating within the informal sector.

“We are advocating for reasonable interest rates on their deposits, no bank charges and a guarantee for their deposits. This is aimed at instilling confidence and value to their money,” he said.

“The reason why most informal traders are not banking is about the benefits, which banks are no longer offering and we are working on that. Imagine you have $100 and you take it to a bank which when you demand it, they give you $90, that becomes a challenge for most traders.”

Mangudya said the apex bank was working on modalities to ensure the inclusion of the informal sector in the mainstream banking economy and for its members to access loans.

“We are attending to their concerns through the financial inclusion strategy. We are also putting in place a credit registry so that they can access loans from the banks easily,” he said.

Analysts said the government had a tall order in instilling confidence in the people that past challenges associated with the Zimdollar would not be repeated.