Zimbabwe launched a “bond notes” currency which held its value against the US dollar on Monday, despite warnings that it could cause hyperinflation and suggestions it could bring down President Robert Mugabe.
Formal businesses were told they had to accept the new notes as legal tender. Most did so though Zimbabweans circulated one cell phone video clip of a teller at South African supermarket chain Pick n Pay refusing to accept a $2 bond note.
There was no immediate comment from the company.
At independence from Britain in 1980, Zimbabwe was regarded as one of Africa’s most promising prospects.
But its economy has nearly halved since 2000 after the violent seizure of white-owned commercial farms and disastrous printing of money.
The secrecy of the Reserve Bank of Zimbabwe (RBZ) around the release of the notes, including its failure to publish security features or say where they are being printed, has heightened fears it will print more than a stated $200 million issuance limit.
On Sunday, before the notes were introduced, pictures of them were already circulating on social media – a leak that the RBZ said came from the Post Office Savings Bank (POSB), a state-owned lender that it fined $500 000.
“The employees of the POSB who took, publicised and distributed the images on social media have been dismissed with immediate effect,” the central bank said.
It first announced plans to introduce the bond notes in Mayto address the chronic cash shortages and supplement the dwindling US dollars that have been in circulation for the past seven years.
However, the announcement was followed by a run on the banks as Zimbabweans tried to empty their accounts of hard currency. “People are sceptical because of what happened to our old currency in the past when the money lost its value. That is why they think it could happen again,” said 36-year-old street hawker Tennison Tigere, after withdrawing $50 of bond notes.
On Monday, Prosper Mkwananzi, spokesperson of social media movement #Tajamuka, which has organised some of the protests against Mugabe, was arrested while speaking to journalists about the bond notes. “We believe that it is ill-conceived and will not resolve the crisis in the country. It is actually daylight robbery,” said Mkwananzi, before being whisked away by a dozen anti-riot police at an open space in central Harare.
Even if they do not depreciate in value, many economists say the bond notes will serve only as a sticking plaster for an economy with a $250 million-per-month trade deficit. In addition to weak exports, Zimbabwe has had to deal with a devastating drought that has left millions facing hunger and boosted the need for food imports.
Zimbabwe is $1.6 billion in arrears to the World Bank and African Development Bank, outstanding debt that prevents Harare from securing any extra financing from the two institutions or the International Monetary Fund.