RBZ takes bond notes to the people

The Reserve Bank of Zimbabwe has drafted stringent measures to hedge bond notes against abuse, and authorities are looking at relevant legislation to back the system. The first tranche of bond notes, worth US$65 million, comes into circulation this November, with massive public awareness campaigns beginning tomorrow (October 31, 2016).

The awareness campaigns will explain how bond notes will work and will reassure those sections of the public that have misgivings about the new system. The notes will be introduced in 2 and 5 bond denominations at par with the United States dollar. Though he would not be drawn into revealing details, RBZ Governor Dr John Mangudya told The Sunday Mail that authorities were looking at the legal framework to make the notes foolproof.

"All I can say is that legislation governing bond notes (is being looked at) and you will be alerted as the process unfolds. There are also plans to launch our publicity and awareness campaigns.

"The awareness campaigns will involve giving publicity to the bond notes and letting the people know what bond notes are, also addressing the misconceptions around them.

"This will be the time for the pubic to get the truth about the notes; not the speculation and other inaccurate messages that the public have been subjected to."

Dr Mangudya warned black market dealers that authorities would come down hard on anyone planning to abuse the notes. An RBZ team, he said, had crafted stringent measures to deal with arbitrage.

"As I have said before, we have drawn the line on those who want to engage in activities such as 'cash burning' or the black market. Our team will announce what we will do to guard against such malpractices. The announcement should be made (October 31).

"These announcements will be in line with provisions of the Exchange Control Act, the Bank Use Promotion Act and the Anti-Money Laundering Act. These are instruments which seek to regulate foreign currency and use of money so the announcement will seek to address issues related to that."

He added: "The bond notes will be introduced into the economy systematically, with exporters having their accounts credited before the notes are collected from banks. Exporters will get the value of the export incentive in their accounts. After that, the bond notes will then be credited to their accounts. After that, the actual notes will then be available at the banks for collection."

At a Zimbabwe National Chamber of Commerce Breakfast Meeting in Harare last Thursday, Dr Mangudya said, "We are reviewing our position on the incentives issued as bond notes, and considering awarding them to other earners of foreign currency such as non-governmental organisations.

"We already have incentives in place for those receiving money from the Diaspora. We have also come up with an incentive for the Diaspora. Recipients of the money are now getting three percent as an incentive. This is to encourage Diasporans to send money home."

Zimbabwe has been battling United States dollar cash shortages since April 2016, with depositors queuing in banking halls for hours only to withdraw between US$50 and US$100.

The situation has been attributed to externalisation, a huge trade deficit, lack of a savings culture and increasing pressure on the US dollar from within and outside the country. Authorities are introducing bond notes as both an export incentive and to ease pressure on US dollar transactions.

Exporters will be paid between 2,5 and five percent of export value in bond notes as an incentive to up capacity.