Mangudya’s bond 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