Bond notes ready, out next week

Livingstone Marufu—
THE Reserve Bank of Zimbabwe will by next week have injected US$75 million in bond notes upon completion of finer security features and national public awareness campaigns of the new legal tenders.The tender, which has already been fenced with supporting legal instruments, is meant to incentivise exporters and ease cash shortages.The apex bank governor, Dr John Mangudya, told The Sunday Mail that all required procedures and legal instruments were in place ahead of the roll-out of exporters’ bonus incentives.

“The central bank is going to avail bond notes by November 30 this year and there’s no going back to that,” said Dr Mangudya.

“All the processes – which include designs, logistics and legal

Bond notes ready, out next week instruments – are already in place to roll-out the bonus incentives in the form of bond notes to motivate our exporters to produce more.

“The main reason of bringing the bond notes is to bring liquidity into the economy and make transacting easier, hence we are encouraging more exports to help the country to get out of this cash crunch.

“Exporting is the only way of getting cash into Zimbabwe. Without exporters, we won’t have physical US dollars. That is why we are pushing our exporters to produce more so that we can have more cash.”

Bond notes derive their value from the Nostro Stabilisation and Export Finance Facility provided by Afreximbank. The facility caps the total amount of bond notes to be issued at US$200 million.

Bond notes will be released in denominations of 2 and 5 and will be pegged at 1:1 with the United States dollar.

Dr Mangudya said the central bank had held back introducing bond notes as a strategy to conscientise the public first.

“The delay has been necessitated by the need to ensure that the public is made aware of the features of bond notes before they come into circulation,” he said. “There are other logistics related to the distribution of bond notes to banks according to exports realised so far, as well as the banks’ distribution of the same to different parts of the country.

“There is no way the Reserve Bank can issue bond notes in excess US$200 million and we cannot issue bond notes when there are no exports.”

Exporters are expected to start benefitting in coming days from about US$75 million worth of bond notes.

Economists say the total US$200 million worth of bond notes, translating to exposure of an average of US$19,23 per person, was too insignificant to trigger inflation.

The central bank came up with the bond notes as a way to guard against money laundering, and capital externalisation and flight. Dr Mangudya said bond notes were not a surrogate Zimbabwean dollar, but a financial instrument issued at par with the US dollar.

The US$200 million export incentive will remain in existence as long as the facility guaranteeing their existence is in place. Small-scale tobacco farmers and miners will get a maximum of a five percent bonus incentive; whereas their large-scale counterparts will receive a 2,5 percent boost.

Tobacco exporters are set to get US$30 million in export incentives.

Last week, Government gazetted RBZ Amendment Bill 2016 that empowers the central bank and Finance and Economic Development Minister to issue bond notes exchangeable at par value with the US dollar.

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  • Reuben Mukondiwa

    So why do want to give those bond notes to the public yet u are saying they are meant for exporters?Are all Zimbos exporters?

  • Handid Hangu neZita Rangu

    But seriously how can you run an awareness campaign of something you do not have a sample for. Its like me selling you something that I cant show you but at the same time convincing you that you cant do without it. Typical of conmen

  • Ray Mbada

    Someone is not doing his work somewhere because farmers are engaged in a lot of trial and error with most of their produce sinking through the dirty fingers of the middle men where some offices could have sourced a viable market to encourage these hard working farmers. It’s known that officers in our agricultural sector have joined the scramble for land and they are busy with their pieces of land found through corrupt ways triggering more corruption as they are now receiving government salaries for no specific work done.

  • John Kachasu

    John Panonetsa Mangudya finally gets his own signature on a currency pegged at par with the ‘overrated’ USD. Gono must be turning in his grave, I mean bed, listening to his chickens at his farm. Dr Mangudya will forever be remembered as the best RBZ governor of all time.

  • nelson moyo

    Zimbabwe’s central bankers never learn – Bond note
    United States based economics professor, Steve Hanke, who was one of the biggest critics of Zimbabwe’s bearer cheques during the country’s hyperinflationary era ( 2008), wrote on Twitter this week: “I warned Kupukile Mlambo of RBZ in May that Zimbabwe bond notes would create chaos. The RBZ is learning the meaning of chaos.”
    Mlambo is one of the two deputy governors at the RBZ.

  • nelson moyo

    Sir Thomas Gresham’s ( 1519-1579) law of currency is about to be tested in Zimbabwe :–
    Gresham’s law states that any circulating currency consisting of both “good” and “bad” money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the “bad” money. This is because people spending money will hand over the “bad” money rather than the “good” ones, keeping the “good” ones for themselves. Therefore the bad money (bond notes) will drive out the good money(US dollars) and a US dollar will become extinct inside Zimbabwe.
    To summarise – In Zimbabwe a US dollar and a soon to be issued ZW Bond note are equal value according to the Reserve Bank of Zimbabwe and Doctor John ‘Bond’ Mangudya.
    The market place of Zimbabwe and the world are, any minute, about to be tested to see if GRESHAMS LAW of CURRENCY is still valid after 400 years

  • Jonasi

    Bond note ronzi riri equivalent ne US dollar mune shuwa nazvo imi?Makuita economics dzema humbwe manje.

  • George Mutasa

    These bond notes have created a lot of anxiety to the public.nhai governor upon cash withdrawal from a bank can one get bond notes only or a combination of both USD and bond note?if only the bond notes can be dispensed then it’s a good bye to the USD.The ordinary person cannot have the USD in the formal way….and then money changers come in.If so then the 1:1 ratio falls off.

  • merlin masterchief

    what people don’t see here is the RBZ brass is making sure people are desperate and tired enough to eventually just accept that they do not have an option but to embrace the bond notes, its purely psychological. The country is being run on a take or leave it basis i don’t think the governor even feels the effects of the cash crisis in any way. Lets see how his notes impact the country but this is just a move to force people to accept without having a say in this matter.