Zim’s pseudo-cur­rency blues

Af­ter crip­pling short­ages of US dol­lars, the broke Zim­bab­wean govt has in­tro­duced a pseudo-cur­rency

African Independent - - NEWS - BREZH­NEV MALABA

T HAS been a dra­matic week for Zim­bab­weans fol­low­ing the launch of the coun­try’s 2009. lo­cal cur­rency since 2009, elic­it­ing emo­tions of both hope and fear in one of Africa’s worstper­form­ing economies. Named the “bond notes”, the pseudo-cur­rency has sparked mixed re­ac­tions from a pub­lic that has suf­fered se­ri­ous short­ages of US dol­lars in the past six months. Desperate pen­sion­ers and ru­ral folk have been sleep­ing in bank queues as the bit­ing short­ages spi­ralled out of con­trol. While some cit­i­zens ex­pressed hope the new cur­rency would solve the cash crunch by in­ject­ing much­needed liq­uid­ity into the trou­bled econ­omy, oth­ers were fear­ful of the pos­si­ble re­turn of hy­per­in­fla­tion, which dec­i­mated the now-de­funct Zim­babwe dol­lar seven years ago. On so­cial me­dia, blog­gers com­plained that shop cashiers were giv­ing them change in bonds, yet they had paid for goods in US dol­lars, which has been the main cur­rency used in the coun­try since The Re­serve Bank of Zim­babwe has re­leased the first tranche of 10 mil­lion bond notes, which it said are equiv­a­lent to $10 mil­lion. How­ever, cur­rency deal­ers on the streets of the cap­i­tal Harare told African In­de­pen­dent the bond notes were in­fe­rior to the dol­lar and, there­fore, can­not trade at par. On the day of the sur­ro­gate cur­rency’s in­tro­duc­tion, the wheeler-deal­ers were al­ready of­fer­ing an ex­change rate of $1 to three bond notes. There was chaos when many shops, in­clud­ing ma­jor su­per­mar­kets, turned away shop­pers in­tend­ing to use bond notes. How­ever, some of the out­lets later be­gan ac­cept­ing the pseu­docur­rency. Tim Worstall, a fel­low at the Adam Smith In­sti­tute in Lon­don, says the new bond notes show how badly Pres­i­dent Robert Mu­gabe has de­stroyed Zim­babwe’s for­merly thriv­ing econ­omy. Tellingly, the bond notes are be­ing dis­pensed by banks to all and sundry and are cir­cu­lat­ing in the broader econ­omy – con­trary to the Re­serve Bank’s em­pha­sis that the sur­ro­gate cur­rency is a 5 per­cent “ex­port in­cen­tive”, strictly re­served for ex­porters. There has been no short­age of news since the par­al­lel cur­rency’s in­tro­duc­tion. Two days be­fore the of­fi­cial launch of the bond notes, pic­tures cir­cu­lated on so­cial me­dia show­ing stashes of the new cur­rency in a bank vault. There were also closeup pic­tures of the notes. Within hours, so­cial me­dia was abuzz with fren­zied chat­ter, as peo­ple dis­cussed the pic­tures. On launch day, the Re­serve Bank is­sued a state­ment re­veal­ing the cul­prit be­hind what it de­scribed as a se­ri­ous se­cu­rity breach. In a swift move, the central bank fined the Peo­ple’s Own Sav­ings Bank, a state-owned fi­nan­cial in­sti­tu­tion, $500 000 for the breach. The im­pli­cated em­ploy­ees, have been fired im­me­di­ately. Zim­bab­weans have not made it a se­cret that they lack trust in the central bank and the govern­ment’s abil­ity to re­sist the temp­ta­tion to print bil­lions of dol­lars’ worth of bond notes.

PHOTO:REUTERS

UN­HAPPY: Pro­test­ers hold plac­ards dur­ing a demon­stra­tion against the new bond notes

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