John Mangudya
Business Reporters
THE Bankers Association of Zimbabwe has welcomed the new Reserve Bank of Zimbabwe (RBZ) measures to address cash shortages and urged the transacting public to embrace them in support of economic turnaround efforts.
Zimbabwe will soon introduce bond notes, which are backed by a $200 million Afrexim Bank loan facility, in a bold move announced by RBZ governor John Mangudya last week to curb the cash crisis that has affected the entire country.
Newly elected Bankers Association of Zimbabwe president (BAZ) Charity Jinya yesterday said the new measures by the central bank would address cash shortages while simultaneously stabilising and stimulating the economy.
“The policy measures are in the main, meant to resolve the current cash shortages and ensure the efficient allocation and use of foreign exchange resources,” she said in a statement.
“These measures will also stem the unauthorised externalisation of currency, which has contributed significantly to the current cash shortages as well as strengthen the multi-currency system by increasing the availability, and the widening use of alternative currencies that are part of the multicurrency basket.”
The Ministry of Finance has also moved to allay public fears over the alleged imminent return of the local currency, which lost value due to hyperinflation.
The country adopted a multiple currency system in 2009, which embraced the use of the rand, the US$ and euro, among other strong currencies.
Jinya said the introduction of bond notes should be seen as an incentive to exporters.
Mangudya said five percent export incentives would be paid to exporters in bond notes as part of measures to enhance the competitiveness of exporting companies.
The measures also seek to incentivise the local production of goods and services in order to reduce the need to import those goods and services that can be locally produced.
Promoting the widespread use of electronic platforms for settling domestic transactions across all forms and sizes of businesses, for example through the use of point of sale machines to conduct all transactions in US$, euro and rand, is at the heart of the RBZ measures.
The move would also promote a savings culture by encouraging the payment of positive rates of interest on savings and fixed deposits made with banks for periods that extend beyond six months.
“It’s to be understood that bond notes are NOT being issued to replace or undermine the multicurrency system, but are being issued as an incentive to promote exports,” said Jinya adding: “Business will still be conducted on the basis of the basket of multi-currencies.”
The Bankers Association of Zimbabwe, she went on, “ . . . endorses these measures and would like to assure the banking public they have been introduced by the Reserve Bank of Zimbabwe, not only to deal with the current cash shortages in the economy, but also to stabilise and stimulate the economy through the promotion of exports”.
Meanwhile, the Consumer Council of Zimbabwe (CCZ) has urged the RBZ to roll out more awareness programmes to educate the nation about bond notes.
In a paper entitled “RBZ bond notes: A Financial Chemistry For the Liquidity Problem”, CCZ Masvingo regional chairman Jowere Mukusha said sensitisation of the public over the benefits of the bond note was critical to clear public misconceptions and ensure acceptance of the new notes.
“The proposed bond notes have raised a lot of suspicion among consumers. To deal with this economic uncertainty there’s need for the RBZ to cultivate and nurture public confidence in the use of the currency,” said Mukusha.
“It’s my suggestion that the RBZ should quickly embark on outreach programmes in all the 10 provinces of Zimbabwe disseminating honest and dependable information to consumers about the new currency regime.
“Critical stakeholders such as the civic organisations, the business fraternity and the general public should be major targets if the bond notes are to be received with least doubts. In addition, the government should take a keen interest in the way different institutions conduct themselves in balancing the skewed notes imbalance.”
The proposed notes are a version of the already circulating bond coins and would come in $2, $5, $10 and $20 denominations.