Mzembi blasts bond notes

TOURISM and Hospitality Industry minister, Walter Mzembi has expressed doubts over the effectiveness of bond notes, urging the government to instead adopt the South African rand.

Mzembi, who was speaking on South African television news channel, ANN7, on Wednesday, said it would be sensible to turn to the rand, as South Africa was Zimbabwe's major trading partner.

"I am following the debate on bond notes with a lot of interest. But notwithstanding the fact that I am a Cabinet member as Minister of Tourism and quite senior by any stretch of imagination," he said, "I can understand what the government is trying to achieve in terms of inducing liquidity in the market, but the multiple currency basket already has nine currencies including the rand, which I have always submitted is part of the solution to the extent that 70% of our exports go into South Africa or via South Africa, 70% of our imports come from South Africa and 80% of our Diaspora, globally, are resident in South Africa and, therefore, they have an impact on the profile of remittances into Zimbabwe.

"So it just makes absolute sense that we align to a regional currency that favours us to that extent."

Mzembi described the rand as the perfect currency for Zimbabwe under the circumstances, as long as it did not burden South Africans, forcing them to print for the country.

The Tourism minister said he had already expressed his views to President Robert Mugabe and RBZ governor John Mangudya concerning the adoption of the rand against the bond notes.

He said the rand would work well for his ministry against a strong US dollar.

"I have already spoken to President Robert Mugabe and the Reserve Bank governor to say that mine is an exclusive situation, special conditions apply because 70% of my source market is South Africa," Mzembi said.

"They (South African tourists) need to be motivated to come and spend in this destination, but unfortunately they are finding Zimbabwe uncompetitive because of the bullish nature of the US dollar against the rand."

The proposed introduction of bond notes to ease cash shortages is currently facing stiff resistance from a cross section of Zimbabweans, but most of Mzembi's colleagues in government have vowed the decision will not be reversed.

The imminent introduction of the bond notes, likely next month, has triggered unrest, with opposition and social movement leaders organising demonstrations against the government, while others have mounted legal battles against the Reserve Bank of Zimbabwe (RBZ) to compel it to drop the plan.

The move, equated to bringing the Zimdollar through the back door, has also sparked panic withdrawals of cash from banks, resulting in long queues, as people desperately try to take out their savings before the introduction of the bond notes.