The Sunday Mail
The issue of bond notes, whose introduction in my view is now belated, has been at the centre of public discourse for months. If one was to rewind to the introduction of bond coins some few years back, one will see the same apparent resistance and apprehensions then exhibited by the transacting public.Then, there was no prior education and awareness campaign about bond coins, unlike now, which education campaign is being overdone if you ask me.
Also there were no legal challenges playing out in our esteemed courts prior to the introduction and circulation of bond coins.
Again, if you ask me, the legal challenges playing out now are not only premature, but also seriously lack legal merit.
Monetary and fiscal Authorities are falsely accused of attempting to bring back the Zimbabwean dollar “through the back door”.
Just prior to introduction of bond coins, I wrote in an article in The Sunday Mail titled “Introduce into circulation now, the Zimbabwe dollar coins (not Z$ notes) and withdraw gradually, but simultaneously from circulation, the South African rand coins”.
My main argument was that it was more logical at the time to use Z$ coins in place of rudimentary and non-monetary instruments such as tokens, credit notes, ball point pens and even sweets for change purposes as was then prevalent in most retail outlets.
I still strongly advocate for this course of action, with the slight modification that it now also be extended to all other foreign coins in circulation and not just the South African rand.
This can be reinforced and complimented with introduction of bond notes.
My views against South African rand coins in particular are motivated by the need to limit foreign exchange rate discord and misalignment between that currency and the US$.
In the current circumstances, we need immediate and simultaneous injection into our monetary system of both bond notes and all Z$ coins lying idle and gathering dust in Reserve Bank of Zimbabwe vaults and peoples’ homes.
This will help bring closure to the prevailing cash crunch and this can be done quite feasibly between now and year-end.
The Z$ coins can be issued against security of gold reserves kept by the RBZ, now that our gold production figures are showing a significant upward trend.
By mid-2017, we should introduce a gold currency as preparation for the return of our own Zimbabwean dollar notes in 2018 or soon thereafter.
We need not call this new local currency the Zimbabwean dollar, as that name alone can send shivers down the spines of many.
The new Z$ notes to come in 2018 or thereafter should be backed and secured with gold reserves or other precious metals and minerals like platinum and diamonds.
In such a set-up, the local currency will be as strong, if not more so, than any hard currency in the IMF basket of currencies.
I have covered quite extensively and in some measure of detail, matters to do with the Gold Currency in prior articles, so I will not get myself bogged down in that at this juncture.
However, I do not subscribe to the idea of settling Zimbabwe’s foreign debt or parts of it until and unless all illegal Western sanctions on the country are unconditionally removed.
These were imposed in unjust and unwarranted circumstances as retaliation to our rather successful, long overdue and irreversible Land Reform Programme.
My strongly held view is that we should not make any further payments towards foreign debt to Western creditors until sanctions are gone.
The illegal sanctions, which did not enjoy the approval of the United Nations under international law, have severely frustrated our capacity to service foreign debts timeously.
It is on such a basis that we should seek debt forgiveness instead, as opposed to trying to secure debt relief under the false pretences of being a highly-indebted poor country (which in all honesty we are not).
The fact that a part of this outstanding foreign debt emanates from money borrowed to kill our freedom fighters in the Second Chimurenga and sustain an illegal colonial regime in place then, makes payment of this particular portion of the debt not only unpalatable, but also a rather bitter, unnecessary pill to swallow as well.
If we happen to secure relatively cheap foreign credit — as appears likely — we are best advised to use all such borrowings to settle our domestic debt instead.
Anyway, back to our currency issues.
Hopefully by the time we introduce back into circulation and start printing our own local currency, we will have substantially met most, if not all, of our macro-economic fundamentals.
These include but are not limited to:
1. Sufficient number of months of import cover in foreign reserves (more than three months, as often mentioned by the powers that be);
2. Value addition and manufacturing industries operating at near or full capacity; and
3. High formal employment levels.
My suggested road map on monetary issues something like this:
1. Release into circulation forthwith both bond notes and Zimbabwe dollar coins before Christmas Day 2016;
2. Introduce a Gold Reserve Currency sometime in 2017, while also systematically withdrawing all foreign coins with the exception of US dollar coins in order to manage foreign exchange rate risk judiciously and to manage problems of change and pricing of goods and services; and
3. In 2018 or soon after, bring back our local currency under a suitable name.
If the above sequence is followed, Zimbabwe has a good fighting chance of regaining its full and deserved pride as a sovereign State.
Edmore AM Ndudzo (CA, CPA, RPAA, IOD, BAcc and SAAA) was the first black City Treasurer of the City of Harare, and leading consultant in writing the Public Finance Management Act. He writes in his personal capacity, and in the national interest
