The ManicaPost
Liberty Dube Business Correspondent —
RESERVE Bank of Zimbabwe International Banking and Portfolio Management deputy director, Mr Ernest Matiza, has called on the public to embrace plastic money in their everyday transactions.
He was speaking at a public lecture on bond notes at a local hotel which was attended by Africa University students and other stakeholders on Monday.
“It is all about trust. We are in a quest to sensitise the public about the bond notes as we are concerned about making people know their security features.
Let us not abuse ourselves by visiting the bank everyday, yet swiping facilities are readily available.
“Our message to you is let us use plastic money if we are to find a solution to the liquidity crunch affecting the country. Bond notes are not coming to solve the cash crisis, but are a bonus to exporters. They will be available for use by both exporters and non-exports, corporate and individuals through normal banking and daily transactional activities,” Mr Matiza said.
He added that the Export Incentive Scheme would not go beyond the maximum limit of the facility amount on US$200 million.
“By end of this year, we would have used an amount of $75 million. Already we have accumulated over $65 million up to end of October there about.
“Exporters are encouraged to improve their businesses and benefit from the scheme through increased export earnings. Each bond note in the economy will be evidence of exports within the economy and will represent a proportion of up to five percent of the foreign exchange earned by the country, thereby sustaining the multi-currency system.”
Mr Denford Mutashu of Confederation of Zimbabwe Retailers, said although there was fear and skepticism at first, particularly in the Small and Medium Enterprises, the retail sector had embraced and accepted the bond notes.
“We encourage all of you to embrace bond notes. We need to promote our own industry. The onus is on us to support Government’s initiatives and create employment,” he said.
In their joint presentation, Africa University lecturers, Mr Thomas Masese and Dr Solomon Mungure, said there was need to sustain the multi-currency system by earning more foreign currency through export earnings, new foreign direct investment and more diasporan remittances.
“So what do we need to do as a country? We need to produce and create jobs for the people – boost farming, reopen and open industries.
We need to invest in infrastructure and increase. Because of the mismatch between inflows and outflows of multi currencies, we face various challenges such as the foreign exchange malpractices include externalisation, capital flight, hoarding of US Dollar cash and looting by unscrupulous businesses and individuals, serious liquidity crisis- the circular flow is drying, local production suffers- companies close, people lose jobs, incomes decline and demand for local products falls-more companies close- people cannot pay fees, our ability to export declines as production suffers- after all a strong USD makes our exports uncompetitive,” read part of their presentation.
They emphasised on the need for Government to boost exports, noting that the export incentive through bond notes was one such initiative towards the cause.
The export incentive/bonus scheme is aimed at increasing domestic production for exports, thereby increasing the country’s export earnings which liquefy the multi-currency system and therefore it would not be inflationary.
“The cornerstone of economic development of any country is production of goods and services. In this regard, the sustainability of the multi-currency system in Zimbabwe is dependent on the economy’s capacity to generate sufficient foreign exchange to meet its requirements.
Foreign exchange that is being used by everyone in this country comes from exports, diaspora remittances, foreign investments and loans and grants.
A total of 60 percent (around US$3,6 billion) of the foreign exchange is from exports.
Zimbabwe’s major exports are tobacco, gold, platinum, diamonds and ferrochrome, which account for around 80 percent (US$2,6 billion) of the country’s total export receipts.
“Revitalising of the multi-currency system requires that Zimbabwe’s exports are boosted through provision of incentives, whilst at the same time ensuring that import dependency is reduced through efficient and productive utilisation of foreign exchange” said the two in a presentation.
Meanwhile, residents and stakeholders in Mutare have blasted the Parliament Portfolio Committee on Finance and Economic Development for not seeking their views on bond notes before they were introduced.
The bond notes which were rolled out by the Reserve Bank of Zimbabwe last week came in denominations of $5 and $2, while a $1 coin has been added into the multi-currency system.
Speaking at the Parliament Portfolio Committee on Finance and Economic Development public hearing on the Public Procurement and Disposal of Assets Bill and the Reserve Bank Amendment Bill at a local hotel last week, participants said there was need for a nationwide consultation exercise before the bond notes were introduced on the market.
Zaka East Member of National Assembly, Cde Samson Mukanduri, who chaired the session, said the committee, which is divided into two groups, was on a countrywide tour to hear and record people’s views on the two proposed bills.
“This was a national issue that affects all of us and you should have consulted us first before introducing the bond notes. There was need for you to consult us first and hear what we feel and think. That would be fair,” said one participant.
“Why didn’t you come to us first? What is the purpose of coming to us now when the notes are now in the streets?” fumed another participant.
The Public Procurement and Disposal Bill will repeal the Procurement Act and abolish the State Procurement Board.
In place of the board, it will set up a new body to be called the Procurement Regulatory Authority of Zimbabwe which will not conduct procurement proceedings itself but instead will oversee and regulate procurement activities conducted by Government Ministries, statutory bodies and local authorities.
“The Reserve Bank of Zimbabwe Amendment Bill will amend the Reserve Bank of Zimbabwe Act (Chapter 22:15) (No 5 of 1999) to enable the Reserve Bank, with the leave of the Minister responsible to finance bond notes exchangeable at par value with the US dollar, on the same basis that it previously issued bond coins,” said Parliament in a statement.
The better part of the two-hour session, however, was spent on deliberating on the RBZ Amendment Bill, particularly on the new currency.
Participants expressed mixed feelings over the introduction of bond notes, with the majority buoyant that the move would soon ease the cash crisis and boost production, while others were skeptical.
“There is nothing wrong about the bond notes. The US dollar has not been circulating and we are having problems in accessing money in banks. We hope that it will ease the current cash crisis,” said Ms Placky Mukwanda.
Ms Judith Sabamba said: “It is a blessing to us. We had waited for a long time. We thank Government for introducing the bond notes. Retailers are now accepting the currency. It was the only solution to the cash crisis.
“We were eagerly waiting for the bond notes, but my worry is, is it going to ease the cash crisis? Two days after the bond notes were introduced, there are still long queues in banks and there are still cash withdrawal limits.
“We sincerely hope that as time goes on, we will not spend hours queuing for our hard earned money,” said Ms Mollen Chiwaka.
