Opinion / Columnist
Bond notes likely to feed corruption
22 Jan 2017 at 12:29hrs | Views
Where opacity and unaccountability thrive, corruption grows in direct proportion. The elite, like many other people in positions of influence, get carte blanche to abuse and manipulate systems. This is because citizens cannot see or hear what is happening.
The primary problem with the adoption of the bond notes late last year is the lack of transparency and accountability in the manner it has been done by government and the Reserve Bank of Zimbabwe. And because this is so, there is a big likelihood that the elite will be abusing bond notes for selfish gain. If they haven't already started.
Government started talking about the introduction of the bond notes around April last year. Finance minister Patrick Chinamasa, and a cohort of pseudo-experts from government insisted the notes would help incentivise exports and boost foreign currency inflows, with their production being backed by a $200 million Afreximbank facility.
That wasn't enough to convince the people. Citizens didn't like the idea because they suspected it was a slimy way of bringing back the Zimbabwean dollar. The local currency, by 2008, had given us a very bad record of suffering and probably the worst hyperinflation from prior to the birth of Jesus Christ. But people must start worrying more about lack of transparency where bond notes are concerned. It is this opacity that is the primary source of many other socio-economic problems that we are likely to experience.
The Zimbabwean government has deliberately kept away very crucial information regarding the production and management of bond notes. Up to this date, the majority of us don't know who is printing the notes. In May 2016, Morris Mpofu, the RBZ head of exchange control, told a Chamber of Mines conference that a German firm, Giesecke and Devrient, would be printing the notes.
Then we learnt that the German firm that had also been hired by the South African government to produce the rand had developed cold feet and would not be printing the bond notes. Despite all this, the notes were put into circulation. Confusion festered over this.
Vice-President Emmerson Mnangagwa would not be brought to say who the new printer was, when lawmakers grilled him in parliament in November last year. He vowed that the information would be retained as a secret and said people were free to speculate. Moreover, there was a clear difference between the bond notes specimens that the RBZ was advertising and the notes that were released into circulation.
Government has never bothered to give a consistent, clear and verifiable explanation of its intention regarding the introduction of bond notes. One narrative we have been fed with by Chinamasa and the RBZ's governor, John Mangudya, is that the bond notes would be used to boost exports by subsidising exporters.
On the other hand, Mnangagwa maintained that the bond notes would give government a measure of control over money in circulation, as Zimbabwe had no authority over the adopted basket of foreign currencies that replaced the local dollar in early 2009. These are his words: "The current financial service sector in the country is constrained by the fact that currently the legal tender of the country is anchored on currencies that we have no control over. We need a mode of transaction which we can control in the country on the basis of security provided by the Afreximbank."
But then, why is government so keen to control only $200 million worth of bond notes in an economy with a multi-billion dollar budget? Does this not imply that government has its eyes set on printing bigger amounts of local money to solve a biting liquidity challenge we are currently facing? If the bond notes were meant for exporters, why is it that even cigarette vendors are now being forced to use them when it is clear that they are not exporting anything?
Again, the issue of backing for the $200 million Afreximbank facility remains mired in mystery. The International Monetary Fund said it didn't have information relating to the facility, despite government insisting that it had been briefed and pledged its support. This, inevitably, brings into question the issue of not only transparency, but accountability too. Who, then, is taking responsibility for the $200 million bond notes facility?
In any case, as some legislators have rightly pointed out, parliament was kept in the dark about the bond notes and MPs only got reports of them, particularly when government made its intention to introduce the local surrogate currency known, through the media,
Wrapping the bond notes production and circulation in a blanket of secrecy, of course, has far reaching consequences. It gives those in control, the elite, the opportunity to abuse their offices in various ways. On the other hand, it reduces citizens' capacity to demand corrective action because they are not adequately informed.
There is an already existing fear that government is seeking to bring back the disused local dollar. That would not be bad if it didn't bring other bad possibilities with it. Uncontrolled production of bond notes is likely to happen. This would give the elite the chance to capitalise on an already existing black market to exchange the bond notes for foreign currency.
We saw this happening from the early 2000s to 2008. The RBZ was the leading player in this game, printing bearer cheques and offloading them on the black market for foreign currency. It cannot be doubted that RBZ was acting illegally by dabbling in the netherworld of the black market and most of the money that the central bank got went to line the already bulging pockets of well-connected fat cats. That is corruption.
Bond notes can also be used to fund other forms of corruption. There is a very good chance that Zimbabwe will be going to the polls in 2018. The government and ruling party, Zanu-PF, are currently as broke as a church mouse. They desperately need money to ensure that they retain power, by hook or crook.
They must buy votes, bribe some opponents and produce party regalia. They also need money to ensure the security sector — which is handy to them during elections — is well-funded. Maybe they also need to pay the Nikuvs of this world to help get victory. It would then be folly to go to elections on empty pockets because that might mean sure defeat. In this case, the bond note is vital for them because it puts them in control. They would print as many bond notes as they want using their shadowy printer and capitalise on these to buy real foreign currency.
The secrecy around the printer is just what the doctor ordered for Zanu-PF. Where citizens don't have an idea where the bond notes are being printed, they are sorrier for that. They cannot effectively act against poll rigging because they lack requisite information. They cannot lobby the printer or protest meaningfully to the international community. Worse still, they cannot stop the printing of the bond notes.
Needless to say, the wanton printing of bond notes, when it happens, will turn Zimbabweans into a pitifully corrupt lot. Retailers, wholesalers and consumers will be forced to turn to the black market, bribe bank officials to make lucrative transactions and get hired by the RBZ to sell the bond notes on the black market.
Tawanda Majoni is the national coordinator at Information for Development Trust (IDT), a non-profit organisation that promotes access to information on transparency and accountability in the public and private sectors, and can be contacted on firstname.lastname@example.org
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