The introduction of bond notes early next month is on course with massive educational national awareness campaigns expected to start on October 31 countrywide, Reserve Bank of Zimbabwe Governor Dr John Mangudya said yesterday. He said the bank was in the process of importing more US dollars, but warned the people not to abuse the money. The notes, with a value of $75 million, will be introduced in $2 and $5 denominations.
Dr Mangudya said there was no way Government would become careless to the extent of printing a lot of money as it was aware of the consequences. The printing will be controlled to avoid inflation, he said, adding the larger denomination notes would be in US dollars.
Speaking at a luncheon organised by the St Luke’s Anglican Church in Greendale, Dr Mangudya said the bond notes could not be introduced without carrying out wide awareness campaigns as people would be duped. He dismissed speculation that the current cash shortage was a result of the impending introduction of the bond notes. He said the shortage was a result of more imports and low exports.
Dr Mangudya also dismissed suggestions by some sections of the business community that Zimbabwe should adopt the South African rand as its base currency. He said Zimbabwe required its own currency before joining the Rand Monetary Union. However, he said it was still impossible to bring back the Zimdollar because the current conditions were not conducive for such an action.
“The major mistake was done in 2009 when Government liberalised the economy, which led to the use of the US dollar as a trading currency instead of a reserve currency. This resulted in some investors coming to Zimbabwe only for the US dollar and these took the money out.
“Since 2009, we gave an impression that Zimbabwe manufactured US dollars. The move taken in 2009 was dangerous. It was both economic and political and maybe we spent more time on the political side,” he said.
Dr Mangudya said it was not surprising that some people who were enjoying the current economic status quo were against the introduction of bond notes just as the detractors in the Bible discouraged Nehemiah from rebuilding . . .
“Let us rise up and build Zimbabwe together. We should not dwell in the past. We are facing challenges because Zimbabwe is importing more than she is exporting. We have exported cash to other countries.
“Let us work hard. We are to blame. We introduced the SI 64 to reduce imports and promote local production and people demonstrated against the measure. We are in a better situation now than in May. Because of the SI64, production is improving and employment creation rising.
“Let us exploit all the markets available, Zimbabwe has a wide market in China, we can export our beef and indigenous poultry to China. We have 13 million tonnes of gold underground but in 36 years we have mined 585 000 tonnes. If Botswana could do with diamonds only why can’t Zimbabwe use gold,” he said.
He said Government had brought the $20 million project for youths into small-scale artisan mining to promote production and enable more gold to go to the central bank. “Let us continue to do what is good for the economy. We want to develop a strong economy. Malaysia was worse off than Zimbabwe in 1995 but now has US$100 billion in reserves,” he said.
He said the current economic challenges were made worse by the drought, which saw the country increasing imports through buying food from other countries. “We have fiscal deficit or lack of fiscal space. Our expenditures are more than revenue. We use the bulk of our money to pay wages,” he said.
He said under UDI Ian Smith introduced import substitution, which saw no one importing commodities. He said Government had also brought an export initiative incentive to promote exporters.
“Foreign currency should be earned first. It is unfortunate that the people who make noise the most do not understand. Some people panic at the introduction of bond notes but they do not have the money,” he said.
He said most people wanted to have money on them but in other countries people rarely used cash. They do not move with cash and rely on plastic money. “During the past two weeks we have been securing money and it is coming but do not abuse it. We can use plastic money for some transactions.
“The problem is that we are now addicted to the US dollar. People also smuggle minerals. We need to increase production by coming up with good investment policies and then we can boost productivity,” he said.
Some of the people who attended the luncheon raised concern that corrupt activities such as externalising cash were being done by businessmen and not ordinary people. They said Government should also lead by example by buying local goods with ministers and Government departments buying local cars. Others suggested that an incentive be given to manufacturers to boost production since exporters could not continue exporting without incentives.