Man­gudya’s bond genius

Chronicle (Zimbabwe) - - Opinion/feature - Spec­trum Jo­ram Ny­athi Man­gudya’s genius

My point then was to sup­port the in­tro­duc­tion of bond notes. I in­sisted then as I do now that for me “bit­ing the bul­let” should be more than tak­ing a pal­lia­tive, like adop­tion of the South African rand. For me, bit­ing the bul­let should mean, to bor­row Dr Joseph Kanyekanye’s id­iom, “a cruel ne­ces­sity”. What they would call in mil­i­tary par­lance “burn­ing bridges” Han­ni­bal-style. Ir­rev­o­ca­ble com­mit­ment to a course of ac­tion, like the land re­form. It’s a point of no re­turn, com­monly called cross­ing the Ru­bi­con.

Zim­babwe has been with­out a cur­rency of its own since 2009. For some weird rea­sons a lot of our econ­o­mists have tried to ra­tio­nalise and nor­malise this anom­aly on the ba­sis of dis­torted his­tori­cism about what hap­pened in 2008.

I am not an econ­o­mist. But I want to believe coun­tries have own cur­ren­cies not solely for sov­er­eign pride. There is an el­e­ment of us­ing money to in­flu­ence the pace and di­rec­tion of na­tional devel­op­ment. So-called “quan­ti­ta­tive eas­ing” is one such.

Our in­dus­try is hob­bled be­cause there is no money. Govern­ment can only give so much un­der Di­maf. That hasn’t helped. Di­maf comes is US dol­lars, a very ex­pen­sive cur­rency and there­after we are un­able to ex­port. That means more beg­ging for a scarce re­source, a bor­rowed one. That can’t be the op­ti­mal way for fi­nanc­ing a na­tional devel­op­ment agenda. That is why there isn’t much for all the prom­ises of ZimAs­set. That’s why much of the land ac­quired since 2000 re­mains “dead cap­i­tal”. No amount of US dol­lar earn­ings at the cur­rent rate can push Zim­babwe’s devel­op­ment agenda.

Dr Kanyekanye is for the rand. And he in­sists the hour is now. There will never come what are of­ten de­scribed by our econ­o­mists as the “right con­di­tions”, he says. Where I dif­fer with him is on adopt­ing the rand. He should in fact be ad­dress­ing our au­thor­i­ties. There shall never come a time when “all the fun­da­men­tals” are right for the re­turn of the Zim­babwe dol­lar. Bit­ing the bul­let means cre­at­ing those “right con­di­tions”. At the mo­ment there is pal­pa­ble fear of what hap­pens if we take the don­key to the river and he re­fuses to drink. Which is the sub­ject of to­day’s Spec­trum.

My views on bond notes have been con­sisted, even if in­formed by ig­no­rance of eco­nom­ics. The zeal and pas­sion of the ig­no­rant. I am happy the bond notes are fi­nally drip­ping into the economy. More than that, they are be­ing lapped up like honey, more than most of us feared. Thanks Dr Man­gudya for fi­nally tak­ing the plunge.

We were wor­ried. And the Re­serve Bank gov­er­nor seemed so un­sure him­self. For a good rea­son. Op­po­si­tion to the bond notes was over­whelm­ing, from ev­ery quar­ter. (No moral haz­ard for out­siders like I push­ing for bond notes. But when it comes to the crunch, it is Man­gudya who must bell the cat, to take the don­key to the river and live with the con­se­quences of re­jec­tion.)

For Man­gudya in­tro­duc­ing the bond notes meant chal­leng­ing or­tho­doxy: brush­ing aside the coun­sel of the Eco­nomic In­tel­li­gence Unit and its ob­ses­sion with demon­stra­tions; it meant ig­nor­ing the Solomonic wis­dom of John Hop­kins Univer­sity’s Pro­fes­sor Steve Hanke. Like Gono be­fore him, but more dar­ing, it meant burn­ing eco­nom­ics books to meet the ex­traor­di­nary chal­lenge. This was, is, terra incog­nita.

But Man­gudya’s genius lay some­where. (If that was the prod­uct of the delays and con­sul­ta­tions, they were worth it.) The small bond note de­nom­i­na­tions and with­drawal lim­its. Every­where one went, peo­ple talked lustily of how they would rav­age the bond notes in a mat­ter of days of their re­lease at Road­port, the mon­ey­changer’s haven in Harare. The de­val­u­a­tions were cat­a­strophic. Ev­ery­one wanted to de­fend con­tin­ued use of “our Amer­i­can dol­lars”. Bond notes were bond paper. Never mind that a ma­jor­ity of us don’t ex­port any­thing to earn “our US dol­lar”, nor the oxy­moronic in­fat­u­a­tion.

The small de­nom­i­na­tions make car­ry­ing a lot of cash for the mar­ket a dou­bly risky affair. But money chang­ers have al­ways been risk tak­ers. That’s where the with­drawal cap came in. You can with­draw only 50 bond notes a day. That should be enough for small pur­chases, kombi fare, veg­eta­bles and bread. Fam­ily gro­ceries you use your bank credit card. Sando dzako John! And Chi­na­masa’s sharp le­gal mind.

But be­fore you two gen­tle­men go par­ty­ing, re­mem­ber that our economy is still highly-in­for­malised. We buy a lot of items and ve­hi­cle spare parts from Siyaso and other such mar­kets. That should partly ac­count for the long queues for cash. It’s not nec­es­sar­ily re­sis­tance to plas­tic money. So don’t be too stingy; don’t make the women de­spair about the ef­fi­cacy of the bond note, lest you lose it.

The big risk, as the POSB fi­asco showed us, is the cancer of cor­rup­tion, peo­ple helping them­selves to stash of bond notes from bank vaults and un­leash­ing them on to Road­port to earn “our US dol­lars”.

This is where the law must be ap­plied un­tem­pered by mercy.

That war can be won if we all be­come whistle­blow­ers for the na­tional cause, and for­get our parochial po­lit­i­cal lenses. That in­cludes ex­pos­ing shops and ser­vice sta­tions which set their own rules and rates around use of the bond notes. Some even have the au­dac­ity to dis­play three prices, and pre­tend they are of­fer­ing dis­counts for cash!

The point is, Zim­babwe is big­ger than the govern­ment of the day. The fate and fu­ture of this na­tion is in every­body’s hands, and mind. For­get about regime change-in­spired scare­mon­ger­ing about bond notes. Trust and con­fi­dence is us. We can­not pur­chase those val­ues else­where. We have to believe it’s none but our­selves who can save us.

Brother Kanyekanye says we must adopt the South African rand. He doesn’t have trust or con­fi­dence in us but in South Africans. Once we adopt the rand then we can be reined in eas­ily. In his own words: “I strongly believe the dis­ci­pline re­quired un­der SACU might be worth the ex­pected loss of flex­i­bil­ity (in han­dling our own cur­rency pre­sum­ably!)”

That’s for Man­gudya to pon­der but off the cuff I am in­clined to ask why we are deemed lesser be­ings to ex­er­cise flex­i­bil­ity with our own cur­rency and are happy to sur­ren­der the same to the Gov­er­nor of the Re­serve Bank of South Africa? This is a sim­ple, prac­ti­cal ques­tion. Noth­ing to do with sovereignty at all.

Let me salute Dr Gift Mugano. His ar­ti­cle in the Her­ald Busi­ness yes­ter­day was ti­tled sim­ply, “Let us em­brace bond notes.” In it he states rue­fully, “Life is not al­ways fair…(T)here were cer­tain quo­tas (sic) in­clud­ing my­self who were to­tally against the in­tro­duc­tion of the bond notes.”

If only this coun­try had more men of in­tegrity like Dr Mugano to not only ac­cept but openly de­clare that “I lost, let’s move on” this coun­try would not have dol­larised and there would have been no need for bond notes. Once we had our Zim­babwe dol­lar. Now we have to go through a painful “ne­go­ti­a­tion process” to bring it back, with the at­ten­dant risk of fil­i­bus­ter­ing mas­querad­ing as con­sti­tu­tion­al­ism.

PS: Now that Zim­bab­weans across the board have tasted and love the bond notes, what’s go­ing to be the mo­bil­is­ing cause for the next “mother of all demon­stra­tions”?

Dr John Man­gudya

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