Bond notes: Trading facts for politicised narratives

Chris Chenga Open Economy  —
Too often in Zimbabwe, it is hard to hear facts over very loud politicised noise. This has been a prolonged unfortunate circumstance for us. Facts have now become an inconvenient hindrance to our otherwise preferred politicised narratives, whether they are supportive or disparaging of Government discretion in various scenarios.

This has not served us well over the years. Perhaps as a nation, we should re-acquaint ourselves to facts. Facts are a product of thorough research, academic or professional.

Facts make conversations much more precise to potential outcomes in terms of risk and opportunity. When facts are inaudible, let alone completely disregarded, what remains is fear, hysteria, emotive disagreement, and in economic terms, continued uncertainty.

The dearth of facts, or continued disregard for their thoroughness in Zimbabwe, has made our economic outlook precisely that — uncertain. Yet, compared to other more complex economies and volatile societies, Zimbabwe is a nation that should rarely face uncertainty. We are a simple economy with an otherwise simple society at its core values.

However, since the moment we perhaps subconsciously traded facts for politicised posture, we have made uncertainty an ever present reality within our midst.

Consider the topic of bond notes, for instance. They have caused a substantial amount of fear, hysteria, and especially emotive disagreement. Much of these sentiments are superficially attributed to our monetary history with the hyperinflation of the Zimbabwe dollar.

However, I’d like to offer a competing context in that much of the sentiment around bond notes has little to do with the hyperinflation of the Zimbabwe dollar.

Dare I say many Zimbabweans, though still badly scarred, have actually progressed from the experiences of hyperinflation. Instead, much of the sentiments around bond notes are festered by politicised narratives more than anything else.

It is the discounting of actual facts as to the functionality, macro-economic intentions, and the probability of risk versus opportunity that have made fear, hysteria, and emotive disagreement prominent.

My first reference as to why I proclaim the discourse around bond notes to be of a politicised nature is the passiveness, if not adamant disregard of academic or professional input to the public’s understanding of bond notes.

Much of the public’s understanding is drawn from the interpretation of political entities or civic movements, which, through numerous press statements, reveal political discontent more than academic or professional contestation of bond notes.

Since they were announced six months ago, hardly any political entity or civic movement has factually discredited the functionality, macro-economic intentions, or technically weighed the risk-versus-opportunity of bond notes.

Granted, open assumptions such as fuel and food shortages are inevitable risks of any bad policy. Drawing such assumptions to bond note failure does not present any astute critique on the functionality, macro-economic intentions, and outcome probability of the notes.

For instance, this is the superficial path that Mr Tendai Biti decided to walk in a shallow critique of bond notes which sounded more of an impassioned personal attack on Finance and Economic Development Minister Patrick Chinamasa.

He made no precise critique of bond notes, merely waffling in economic jargon that had nothing to do with the functionality, macro-economic intent, or outcome probability of bond notes.

Other prominent personalities such as Dr Shingi Munyeza drift towards scaremongering as they do not elucidate any of the limitations in the functionality, macro-economic intentions, and outcome probability of bond notes.

Regardless, he foresees doom! Now, indeed, there is nothing wrong with opposing bond notes. It is a citizen’s right and duty to be wary of the discretion of incumbents.

However, such opposition would be of greater progressive value if it opposed from a position of respecting academic and professional facts behind what is to be critiqued.

My position here is not to be interpreted as one of unlimited support for bond notes. My personal gripe is that they are an instrument which has not been assessed adequately within an academic or professional context for me to allow comfortable consent.

But that reverts to the slow progress we’ve made in quality critique of bond notes, there is so much we are yet to discuss in terms of outcome probability.

We are still at a fundamental stage of misinformation where popular misinterpretation is that there is no way that bond notes can be at parity with the US dollar and also that their functionality can be dissimilar to the Zimbabwe dollar.

Any well-researched and diligent financial analyst or economist would promptly clear this misunderstanding, yet it remains popular misconception.

When certain academic or professional fundamentals are misunderstood for so long without clarity, then perhaps our academics and professionals are culpable of intellectual complacency and passiveness from engaging in mainstream discourse.

At this point, numerous consultation papers should be guiding public understanding of bond notes. Unfortunately, no research analysis from agencies such as the Bankers’ Association of Zimbabwe can even be referenced to offer needed public clarity.

By the time bond notes entered the market, numerous papers from fund managers or financial institutions should have offered customised analysis of the instrument’s risks or opportunities within our particular economic outlook.

Concededly, private proprietors such as fund managers and financial institutions can perceive such topical issues as privy to their consultations with clients, but the notion that they can only engage pressing topics such as bond notes in professional confines shows the dearth of professional participation in public discourse.

Sure, Zeparu may have released research findings suggesting the use of instruments similar to bond notes, but without counterpart private participation in policy researches, such agencies like Zeparu are limited in terms of perception of impartiality.

So what we have today in Zimbabwe is a situation where the general understanding of a monetary instrument put into the market has not reached an adequate level to prepare us for its future.

By now, the facts around the functionality and macro-economic intentions of bond notes must already be widespread and comprehended. The narrative today around bond notes should be; having understood the functionality and macro-economic intent of bond notes, what are the outcome probabilities?

More importantly, what structures should be in place to enhance the opportunities of bond notes achieving their intent, and simultaneously reducing their risk?

This is where we should be as a country. However, presently, we have placed ourselves in a situation of unwarranted uncertainty. Much of the fear and hysteria in the economy right now would be allayed if there was widespread understanding of the facts of bond note functionality and macro-economic intent.

Yet, only a small percentage of the population has a vague idea as the majority has only been informed by politicised narratives. Instead of the emotive disagreements we see so commonly, public discourse would be astute contestation on issues such as what measures would guide desirable outcomes from bond notes.

We would be working towards reduced uncertainty in an instrument that would be widely comprehended in its functionality and intentions. It is only the society that comprehends facts which can walk forward in certainty. If one can concede that we have elevated uncertainty today in Zimbabwe, perhaps then one can concede that lack of facts in our discourse.

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