The Sunday Mail
Bond coins are money! Some have tried to be clever and argued that they are not money since they are not being accepted in some quarters, citing that money must be generally acceptable. But show me a currency which absolutely meets all the characteristics of money!
While Zimbabwe boasts of having the highest literacy rate in Africa, we have apparently broken another record, albeit unwittingly.
So here it comes – we now have the strongest currency in Africa!
The sad irony, nonetheless, is that nobody is po-po-po-po-popping that champagne bottle.
Nobody is whistling.
No ululation.
Just a series of mythoi ignorantly being orchestrated by the “literate”.
The ignorance being exhibited on bond coins somehow gives the impression that maybe it’s just sarcasm that we are the most literate country in Africa.
Perhaps they wanted to say we are the most ignorant! Off with that for a while!
Seeing that the monetary policy would be announced anytime soon, I just thought I should put in my two cents in the discourse leading to its crafting.
This is happening at a time when the amendments to the Reserve Bank of Zimbabwe Act and the Banking Act, earmarked at strengthening the legal and regulatory framework of the Central Bank and reducing financial sector vulnerability, are to be submitted to Parliament before the end of the first half of 2015.
It appears that the most pressing issues in the financial sector are the high levels on non-performing loans, reaching as high as 18.5 percent in June 2014.
The Central Bank is also faced with the gargantuan task of ameliorating the systemic risks arising from troubled banks, with Allied Bank having already gone bust, still leaving a number of banks in the troubled desert.
Against the above background; while the formation of Zimbabwe Asset Management Corporation (Zamco) to acquire and resolve non-performing loans is commendable, we cannot expect banks to suddenly start loaning.
The actual fears of banks are that borrowers will fail to pay back.
Banks will, therefore, not lend money to someone who will default with the hope of selling the bad debt to Zamco.
They can only lend when there is concrete assurance that there is high probability of recovering their money.
My title deeds are not good enough on their own.
Zamco is, therefore, just a reactive approach towards bringing sanity in the banking sector.
Its ability to bring confidence to the financial sector is very constrained.
It’s like saying to a human being: die and I will give you the best funeral.
Would you die?
That Zamco is not the stuff to banks is exhibited by their sitting on their loanable funds against increased demand for loans – especially during this period where school-children are going back to school.
This has made the face of interest rates – once a pretty one – become ugly.
The low supply of bank loans has also resulted in the proliferation of loan sharks who are charging usurious rates to gullible and desperate borrowers.
Loaning at an interest of as much as 30 percent for a period of just one month!
At this rate, we are all going to lose our limbs to these sharks.
My biblical suasion is: “Please, let us stop this usury!” (Nehemiah 5:10b).
The law should, of course, get rid of these illegal loan sharks.
But a sustainable way would be to quickly address what is compelling banks not to lend right now.
Delaying would be much to the detriment of the protected productive sectors desperately in need of capital to make a difference this year.
The best solution to address the above lies not in reinventing the wheel, but in spinning it, making sure that the credit reference bureau is established within the envisaged timelines, that is.
The bureau can address the information asymmetry gap in the financial sector which has contributed to over indebtedness and resulted in some clients with accounts in several different banks defaulting.
That’s the stuff!
The solution that banks want is not that of being reactive, as with Zamco; they want a proactive solution such as the credit reference bureau.
Then they will start lending.
Cabinet has already approved amendments to the RBZ Act to facilitate the creation of the bureau.
The target is to have the amendments submitted to Parliament in the first half of the year.
As a country that is very good at meeting all the quantitative targets of the International Monetary Fund, it is my hope that this important target will be met.
Otherwise 2015 will be a wasted year on the economic front, as November will eventually come and the Confederation of Zimbabwe Industries will tell us how much kilos the industry would have lost.
Diaspora remittances are very important to this economy as they have been surpassing foreign direct investment over the past years, which is a total opposite elsewhere.
For the period January to October 2014, Diaspora remittances were US$685.5 million compared to US$147 million worth of FDI in the same period.
Sadly, events in South Africa, which houses many Zimbabwean emigrants, might affect the flow of Diaspora remittances this year.
If the 40,000 migrant workers who did not meet the deadline to renew their special visas are to be deported, then they will have to leave their jobs there and won’t be able to send money home anymore.
What should be noted is that these emigrants with the necessary paperwork are the ones who usually use the formal banking system to send money home, as they can open bank accounts.
The Central Bank should do more to mobilise Zimbabweans in other countries such as the United Kingdom and Australia to remit money home.
We are expecting more from Homelink this year.
So, it was on December 18, 2014, just a day like today, when the bond coins made their maiden voyage in the circular flow of the economy with the Central Bank having gone to the extent of assuring that for transparency and accountability purposes, it shall ensure the whole process is subject to public scrutiny and that both value and quantity on bond coins in circulation are subject to audit by a reputable institution.
The coins’ value is indexed to the US dollar on a one-to-one basis.
Now; is there any other currency in Africa that – apart from being properly managed – is anywhere near the value of the bond coins?
If your answer is no, then it is our collective deduction that bond coins are the strongest currency in Africa.
I have heard folk saying that bond coins are not money, but, if money is medium of exchange, then bond coins are money.
If it looks like a duck, swims like a duck, and quacks like a duck, then it definitely is a duck!
Bond coins are money!
Some have tried to be clever and argued that they are not money since they are not being accepted in some quarters, citing that money must be generally acceptable. But show me a currency which absolutely meets all the characteristics of money!
The Rand?
How many shops accept the Rand in Harare?
Is it homogeneous?
Let us dispel all these wrong notions around the bond coins.
We cannot inconvenience ourselves when we have been given the choice of convenience.
That they don’t work outside Zimbabwe mustn’t be a fuss at all, as one can easily change them at the bank into something acceptable outside.
In any case, do the Tanzanians bring their coins here, expecting to buy with them?
Or the Mexicans? Or the Mongolians?
Why should bond coins be a special case then?
And I have heard folks saying that the bond coins are not a product of Zimbabwe!
Whose are they then?
The Americans?
Or maBritish?
