Chenai Mutambasere | In spite of all the warnings and attempted protests from concerned citizens, the Governor of the Reserve Bank decided to go ahead and commit the largest bank fraud known to mankind.

Pre-warnings showed that the bond notes would be government’s way of siphoning citizens hard earned cash by replacing it with paper that works in closed currency mode. The reality on the ground has seen those in micro economies thrive. In these scenarios individuals obtain bond currency to pay their supplier in bond currency and that supplier buys all their raw materials in bonds too from local suppliers.

As I write, I can’t imagine such a scenario existing in Zimbabwe but perhaps you buy, you grow and sell vegetables to local consumers assuming you have access to your own water.

Of course you would have to then use your gains on local purchases from sellers on the same scenario. Let me stop there it’s just not possible, as Zimbabwe is not a closed economy it relies heavily on external services even including medical facilities, fuel and mostly imports basic commodities too.

Currently the economy is struggling as it continues to function or plod along, but the writing is clearly on the wall:
1- In spite of reporting high profits banks remain illiquid for USD transactions with customers being asked to apply to withdraw their cash. With priorities given to those seeking medical attention overseas or paying fees to institutions outside Zimbabwe.This puts into disrepute the claim made on the support to local exporters because it becomes difficult to start an investment when you can’t conveniently withdraw from your account the required capital. In response to this those that are earning hard currency USD will at the earliest opportunity seek to externalise their resources to minimise the likelihood of not being able to withdraw.

Ultimately the cash crisis is worsening behind the scenes. In essence the more we become an economy were we withdraw bond notes and deposit bond notes we are continuing to move further and further away from any hope of economic restoration.
2- The lack of monetary policy means our country will never be able to increase in the available money supply. Originally we were told that the bond note was approved or at least there was backing to the tune of $200million against a break even demand of $5billion. Thus, soon we will observe a shortage in bond notes too which no doubt the governor will replace with more printed paper.

3- The continued cash crisis is being observed in some industries that have bulk purchases such as hospital as we have seen basic medication not being purchased due to lack of funds. With the floods come food but also diseases as we know will thrive particularly coupled with poor water and sanitation infrastructure.

I sure do hate to sound like the gloom doctor but Zimbabwe desperately needs an expansionary fiscal policy. But as long as we have the same group of crooks in government no one will lend us anything of significance, consequently, no one will invest anything of significance. If it hurts now – wait until it gets worse!!