Coward’s way would be to remove bond notes altogether


What would the demise of bond notes mean to our identity?

Chris Chenga
In crucial times, whether it be in proprietary business or macro-management, continued existence can solely be dependent on resolving on an identity. Consider instances when a business or national economy are plodding through a prolonged unsatisfactory path.

If an inflection point that changes the course of fortunes is to occur, the company or a national economy, has to resolve that its identity demands more desirable outcomes.

Factors that are technical, fundamental, or environmental become secondary. The only consequential factor to bringing about desirable outcomes, is the identity that the business or national economy resolves to have.

Widely read individuals will familiarise this form of thinking to a philosophy called metaphysics. Metaphysics abides to the belief that desirable outcomes manifest from one’s resolved identity. If one identifies with success, one will be successful.

There is real world economic evidence to this. Discrete gestures such as the USA having the telephone code +1 is subtle identity resolve of leadership. An insistence by highly educated Chinese policymakers to speak in native tongue, even to a western audience, is an identity resolve to demand Chinese respect and influence.

At a business level, corporate mission statements function in similar philosophical discipline. This trickles down to branding itself.

All are ideological and aesthetic forms of resolved identity. So perhaps then, there is weight to the notion that a business or national economy can resolve to an identity, and if that identity is worthy, significant dividends in outcomes may follow.

Monetary challenges abound

Our monetary situation is not dire. It’s difficult. Yes, bond notes are facing tremendous pressure, inflation is a considerable risk, and worst case analyses by individual economic agents may in instances be justified. But the monetary pressures Zimbabwe faces are not insurmountable.

As highlighted in a Moody’s Investor Services report published in May, sub-Saharan Africa’s recovery from foreign currency shortages will take time.

Indeed to group Zimbabwe’s monetary challenges within regional context helps ease the elevated concern slowly creeping into our market.

It helps to put into perspective the potential of overcoming these challenges, and if done right, shoring up foreign currency reserves to enable brisk business and investment certainty.

The regional context further gives greater credence to the fact that Zimbabwe’s problems are not particularly bond notes; or their characterization as a surrogate currency.

The Naira, Kwanza, Shilling are all under inflationary pressure, and all subject to informal market exchange rates (some higher than 30 percent cash discounting).

Across the continent, businesses are contesting for scarce foreign currency with their respective central banks and governments. Priority lists in commodity dependent countries have been in place since as far back as 2013.

Just like in Zimbabwe, regulatory responses are challenged by the transfer of liquidity from formal channels into highly cash based informal activity.

Indeed then, in terms of monetary outlook, the bond note is within relatively uniform occurrences across the continent.

It is technically flawed to point blame at bond notes, and their nature as a monetary instrument, to be the problem itself. If bond notes are the problem, what about the Kwacha, Kwanza, Shilling and several other African currencies?

Mending a wounded identity

Opponents of the bond notes argue that it is bad monetary instrumentation. Some opponents of the liberal nature critique the bond notes but due to opposing affinity they cannot hail sustaining a multi-currency regime (with bond notes in the basket).

In staunch conservative establishments, there is an inaudible but power backed rhetoric that would like the introduction of a nationalist posturing Zimbabwean dollar.

Neither demographic is correct. Both claim disappointment in a monetary instrument that is no way technically exceptional in its shortcomings to any other currency on the continent.

Understandably though, because in many ways currency can be perceived as identity itself, both demographics feel wounded in identity.

Sure, less emotive business agents and the average citizen just want a more functional monetary regime to their stakeholder interest. They may be disinterested in such an identity narrative. But even their vested cure resides in a mended identity too.

The identity of a currency is in the productivity that sustains that currency. It is in the confidence in which an economy holds behind that currency.

If we are to overcome our monetary challenges, we should resolve to uphold a certain identity if our fortunes are to change course.

A failed bond note would affirm us as being an economy that cannot be productive and inspire confidence, much so that it fails to sustain two consecutive currency regimes.

A demise of the bond note will not mend whatever identity grievances certain demographics already hold, in fact, such a demise would only affirm worse characterization of who we are as an economy.

Thus, what is required is for Zimbabwe to resolve to make the multi-currency regime, with a prominent bond note, a sustainable currency model. It has to work!

It starts with policy leadership, across the board. Rhetoric of ease of doing business is proving to be lip service. Numerous investors with a keen interest are put off by nuisance bottlenecks.

Many business agents are slowed down by regulatory uncertainty and administrative incompetence. The main structural impediments to competitive markets are corruption and rent seeking.

Actually, policy resistance in many cases in not from market agents, but from arbitrage and manipulation from policy implementers themselves. As long as these factor remain in our economy, the multi-currency regime with bond note prominence will fail. Subsequently, our national psyche will continue to be scarred.

Bond notes are not a flaw, their faulty environment is the flaw. Most important in this moment is to resolve to claim a high identity! An identity of productivity and economic efficiency to sustain a multi-currency regime, with bond note prominence.


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