Editorial Comment : The ghosts of 2008 are gone

30 Oct, 2016 - 00:10 0 Views
Editorial Comment : The ghosts of 2008 are gone

The Sunday Mail

Reserve Bank Governor Dr John Mangudya is in an unenviable position right now. He faces the Herculean task of introducing bond notes when some sections of the Zimbabwean population are yet to understand his good intentions. Mistrust, fear and anxiety meet his otherwise grand motive, and those negative emotions are being blown out of proportion without due regard to what it is he is actually doing.

Granted, there is a history that requires treading with care on this emotive terrain. But the year 2008 is gone, never to come back, and yet some people still view the apex bank with suspicion after the hyperinflationary era and the Zanu-PF Government’s multi-currency system masterstroke.

We have two options as a nation: we either hold onto those bitter memories and perish, or we soldier on and allow Dr Mangudya to do the job he has dedicated himself to. It really is a no-brainer. We must take the latter option and appreciate that the good doctor’s prescription is the only remedy on offer.

It is senseless to follow the lead of those who are trashing bond notes without offering any economic alternatives, sound or unsound. As October 2016 winds down, we prepare to enter an era that promises much for our nation.  November, the month of the goat, will bring with it a new trajectory for Zimbabwe through bond notes backed by a US$200 million African Export-Import Bank facility.

Releasing the bond notes in November is symbolic. On this side of the equator, November marks the period of regeneration following the first rains.
And so it shall be, not just with our flora and fauna, but with the economy as well. All it requires on our part is a little trust and confidence.

Yes, trust is earned. It is not handed over on a silver platter. Dr Mangudya’s sobriety, passion and dedication have paid for that trust more than once over. We owe it to him and ultimately to ourselves and our collective future to give bond notes the best shot we can give. In 2014 when the economy was reeling due to a shortage of loose change, Afreximbank put up a US$50 million facility to back the minting of bond coins.

Immediately, the naysayers said Government was trying to sneak the Zimbabwean dollar back into circulation. That presented Dr Mangudya with an opportunity to prove that he is a man of his words.

According to the 2016 budget statement, the RBZ had minted bond coins worth US$14 million at the end of December 2015. The central bank expected to produce a further US$6 million in 2016, bringing the total to less than half of the facility backing bond coins.

Clearly, bond coins are only being issued in response to demand; nothing more, nothing less. So why doubt him now when he says bond notes will be issued as per requirements?

Dr Mangudya has said time and again that he has no plans to reintroduce the local currency, at least not until “the fundamentals are right”.

Currently, production is low and other macro and micro-economic fundamentals are not looking good. Why then would he bring back the Zimbabwean dollar now?

He was proved time and again that he can be trusted, so let’s trust him on bond notes as well. Zimbabwe is using US dollars as its main medium of exchange, which presents a huge challenge as the green back is coveted by all our neighbours.

Finance and Economic Minister Patrick Chinamasa summed it up thus: “For as long as we are using a currency which is appreciating when we have neighbors that have currencies which are depreciating, we become a mopping house.

“People come to mop up our US dollars. Any US dollars we bring, (they) will still vanish as people want USD as a store of value.”

So why the insistence on solely using US dollars that we do not have?

Zimbabwe is importing more it is exporting. This means more US dollars leave the country than those that come in. Surely this requires export incentives. And this is exactly what Dr Mangudya is doing with bond notes.

While money is both a store of value and a medium of exchange, in our circumstance where we bear the cost of importing it from the United States of America, a medium of exchange should be our number one priority. With the bond notes, we are assured that the cash will stay in Zimbabwe; no one is going to externalise it.

We need to trust our own initiatives

 CARTOONbigwig-2

Share This:

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds