Bond notes: Zimbabwe’s answer to cash woes?

A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters

A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters

Published Nov 30, 2016


Harare - It was still not clear on Tuesday whether the introduction of a new currency, bond notes, would stave off the collapse of Zimbabwe’s fragile economy.

Zimbabwe is so short of cash it cannot afford many key imports, and civil servants have been paid late every month so far this year.

Zimbabwe has largely run out of US dollars, the currency it chooses to use since its own currency collapsed late 2008.

Read also: PICS: Zimbabwe's new currency is bright green

And on December 8, Zimbabwe’s new budget will be presented to parliament, with many ruling Zanu-PF supporters hoping that, despite all the gloom, annual bonuses will be paid to the civil service. Public servants’ salaries and other expenses consume more then 90 percent of government income.

Finance Minister Patrick Chinamasa wants to cut the civil service by at least 25 percent and warned earlier in the year there would be no bonus. But no one is sure whether he will be allowed to do what he knows needs to be done to revive the economy.

The Zanu-PF annual consultative conference comes a week after the budget when the party has never been more broke and divided, mostly about who will succeed President Robert Mugabe, who will be 93 in February.

Many people, in particular public servants, sleep outside banks at night to be first in line to withdraw limited amounts of cash in the morning. Most banks are limiting customers to about $65 (about R900) a day, and most of the more affluent people say they cannot afford to queue at banks more than once or twice a week to get their hands on enough cash to meet their commitments.

Now the government is hoping that the bond notes will ease the liquidity crisis.

While plenty of rude and amusing messages swirled around mobile networks on Monday as bond notes made their way into the shops, some supermarkets in central Harare refused to accept the new cash, while at least two in the more affluent suburbs did accept them. Bond notes are supposed to have the same value as dollars, but they cannot be used outside Zimbabwe.

“These bond notes signal the end of Mugabe and Zanu-PF, because some retailers are already saying we must pay more for something if we pay in bond notes. So the black market has begun,” said Evans Rutate, credit controller at a South African clothes chain in Harare.

Economist John Robertson said it would take a few days to see whether the bond notes would be largely accepted and if there were price rises of consumer goods.



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