Opinion / Columnist
Money changers embrace bond notes
01 Dec 2016 at 16:28hrs | Views
As Zimbabweans warm up to the bond notes introduced by the Reserve Bank of Zimbabwe (RBZ) yesterday, a snap survey at the notorious money changers market at Road port in Harare revealed that it was business as usual as the bond note is trading at par with the US dollar.
The money changers, popularly known as "osipatheleni" in Bulawayo, have embraced the bond notes just like all other members of the society. This is against the background that members of the public were fearful that these money changers would be at the forefront of resisting the bond notes and possibly manipulating its denoted value to trade it at a profit against the US dollar.
A money changer who identified himself as Skha told this reporter that they had embraced the bond notes as most members of the transacting public had embraced the surrogate currency.
"If we reject the bond notes, then we are pushing ourselves out of business. People are bringing the notes for exchange and we are dealing with them without problems," added Skha.
He, however, called on the RBZ to expedite the release of the five dollar bond note. "We are actually calling on RBZ to expeditiously release the $5 note for easy transaction with our customers," he said.
At the moment the RBZ has only released the one dollar bond coin and the two dollar bond note. This has evidently not been enough to meet the demand for the currency. The newly introduced one dollar bond coin and the two dollar bond note are in addition to the cocktail of other bond coins that were introduced in late 2014 and early 2015. The introduction of the bond notes has relieved the banking public who had of late faced challenges in accessing cash from banks. Productive time was being lost as workers spent long hours at banks to withdraw the paltry amounts that were being offered by banks. In as much as the introduced bond notes are yet to fully satisfy the demand for cash, there is a noticeable change in terms of the bank queues that had become a permanent feature at most banks, especially in Harare and other major cities. Members of the transacting public are enjoying convenience as petty transactions are being done smoothly. Even some members of the business community are happy with the rate at which the general public has embraced and are using the bond notes.
In a related development that points to the persisting shortage of the United States dollar, traders at the international bus terminus are charging a commission of 20% for United Sates dollars cash. "If one transfers $1200.00 into my bank account, I will give them $1000.00 cash," added another money changer who identified herself as Nomagugu. Probed further on how they would withdraw the transferred funds from their bank accounts, Nomagugu indicated that they would also make transfers to their "bosses" in the illegal money trade chain.
This points to some form of collusion with bank executives who could be fuelling the illegal money trade through providing the United States dollars to the illegal traders and then facilitating their withdrawal from banks. This situation calls for stringent monitoring and enforcement of banking regulations by the RBZ Financial Intelligence Unit (FIU) in collaboration with other law enforcement agencies.
The RBZ has traditionally monitored suspicious cash transactions and these bulk transfers should be no exception. The banking sector infrastructure should not be used to facilitate destabilization of the financial services sector which provides the bedrock upon which the general economy is anchored.
The RBZ might need to reconsider the idea of licensing bureaux de change as a means of controlling the exchange of the various currencies in circulation. This suggestion is against the background of the legalization and operation of the multi currency system since 2009. Zimbabwe is currently using a total of six currencies namely the South African rand, Indian rupee, Chinese yuan, Botswana pula, British pound and the Japanese yen. While the strategy by the RBZ to preserve the status of the US dollar as a reserve currency is understandable, there is need for a formal and controlled mechanism of managing the exchange of the other currencies in use. The Government can also derive some revenue from taxing the exchange transactions.
In the meantime, the RBZ authorities should be breathing a sigh of relief as one of the intended objectives of the bond notes i.e. the need to ease the liquid crunch has been achieved. What remains to be seen is the success of the strategy in so far as it relates to the incentives being offered to exporters and those receiving Diaspora remittances.
bevanmusoko@gmail.com
The money changers, popularly known as "osipatheleni" in Bulawayo, have embraced the bond notes just like all other members of the society. This is against the background that members of the public were fearful that these money changers would be at the forefront of resisting the bond notes and possibly manipulating its denoted value to trade it at a profit against the US dollar.
A money changer who identified himself as Skha told this reporter that they had embraced the bond notes as most members of the transacting public had embraced the surrogate currency.
"If we reject the bond notes, then we are pushing ourselves out of business. People are bringing the notes for exchange and we are dealing with them without problems," added Skha.
He, however, called on the RBZ to expedite the release of the five dollar bond note. "We are actually calling on RBZ to expeditiously release the $5 note for easy transaction with our customers," he said.
At the moment the RBZ has only released the one dollar bond coin and the two dollar bond note. This has evidently not been enough to meet the demand for the currency. The newly introduced one dollar bond coin and the two dollar bond note are in addition to the cocktail of other bond coins that were introduced in late 2014 and early 2015. The introduction of the bond notes has relieved the banking public who had of late faced challenges in accessing cash from banks. Productive time was being lost as workers spent long hours at banks to withdraw the paltry amounts that were being offered by banks. In as much as the introduced bond notes are yet to fully satisfy the demand for cash, there is a noticeable change in terms of the bank queues that had become a permanent feature at most banks, especially in Harare and other major cities. Members of the transacting public are enjoying convenience as petty transactions are being done smoothly. Even some members of the business community are happy with the rate at which the general public has embraced and are using the bond notes.
This points to some form of collusion with bank executives who could be fuelling the illegal money trade through providing the United States dollars to the illegal traders and then facilitating their withdrawal from banks. This situation calls for stringent monitoring and enforcement of banking regulations by the RBZ Financial Intelligence Unit (FIU) in collaboration with other law enforcement agencies.
The RBZ has traditionally monitored suspicious cash transactions and these bulk transfers should be no exception. The banking sector infrastructure should not be used to facilitate destabilization of the financial services sector which provides the bedrock upon which the general economy is anchored.
The RBZ might need to reconsider the idea of licensing bureaux de change as a means of controlling the exchange of the various currencies in circulation. This suggestion is against the background of the legalization and operation of the multi currency system since 2009. Zimbabwe is currently using a total of six currencies namely the South African rand, Indian rupee, Chinese yuan, Botswana pula, British pound and the Japanese yen. While the strategy by the RBZ to preserve the status of the US dollar as a reserve currency is understandable, there is need for a formal and controlled mechanism of managing the exchange of the other currencies in use. The Government can also derive some revenue from taxing the exchange transactions.
In the meantime, the RBZ authorities should be breathing a sigh of relief as one of the intended objectives of the bond notes i.e. the need to ease the liquid crunch has been achieved. What remains to be seen is the success of the strategy in so far as it relates to the incentives being offered to exporters and those receiving Diaspora remittances.
bevanmusoko@gmail.com
Source - Bevan Musoko
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