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Economists: RBZ Should Not Introduce Proposed Bond Notes

An employee counts British pounds and Euro notes at a currency exchange office.
An employee counts British pounds and Euro notes at a currency exchange office.

Businesspeople and economists say President Robert Mugabe’s government must take drastic measures to revive the country’s economy but do not support the recent policy measures announced by the Reserve Bank of Zimbabwe, which include the introduction of an export incentive paid in bond notes and cash withdrawal limits, among other issues.

Reserve Bank Governor, John Mangudya, says latest policy measures are meant to boost industrial production, plug foreign currency leakages and ease pressure on the U.S dollar.

He says the bond notes, which are designed to bankroll the five percent export incentive scheme, would be leveraged on a $200 million loan facility from the African Export and Import Bank.

Speaking at a meeting organized by the Zimbabwe National Chamber of Commerce to review the Reserve Bank of Zimbabwe’s new policy measures, business people and economic experts said they fully supported the central bank’s efforts to boost local production and exports, but were totally against the introduction of bond notes.

They said printing bond notes was like bringing back the Zimbabwe dollar.

Confederation of Zimbabwe Retailers president, Denford Mutashu, said they can only support bond notes if these coupons won’t be used as a way of re-introducing the Zimbabwe dollar.

Lovemore Mukono of Mukontronics, which exports electoral goods, said the central bank should not introduce the bond notes as business and ordinary citizens have no confidence in so-called printed money.

Zimbabwe Investments Authority chairman, Nigel Chanakira, said if the new policy is not revised, that is likely to undo the authority’s attempts to promote investment.

Economics Professor, Ashok Chakaravati, who is working with the government in its efforts to improve the ease of doing business in Zimbabwe, said it was not necessary for the country to introduce bonds notes as a way of revitalizing the economy.

Instead, he said, government should introduce an import levy to finance the export incentive scheme.

Irvin Chifera Reports On Anxiety In Zimbabwe Over The Economy And Proposed Bond Notes
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Another economist, Brains Muchemwa, noted that it was not advisable for the central bank to force people to use currencies they did not like.

Business executives also raised concern over the government’s huge wage bill and its failure to address corruption, which they claimed was scaring investors.

Economist, Masimba Manyanya, expressed similar sentiments, adding that there was no commitment from government to fight corruption.

Zimbabwe National Chamber of Commerce vice president, Devine Ndlukula, appealed to the central bank and government to consider industry’s concerns in order to come up with policies that would attract rather than stifle investment.

Mangudya said the recent approval of the country’s debt payment plan by the International Monetary Fund and other finance institutions would boost the country’s re-engagement plan and improve investment opportunities.

But despite such positive moves, Chakravati said there was still need for clarity on the indigenization program, which needs amendments that would attract foreign direct investment.