Looking around for a foreign exchange rate in any bank is a force of habit for‘foreigners’, wherever they might be.
For my decade-old stay in Botswana, I always took a glance at the currency board every time I walked into a bank.
And so did locals with relatives outside Botswana.
People always try to help each other by sending or receiving money – so those with the meanseagerly watch the ups and downs of foreign currency exchanges.
Countries that are of economic importance to Botswana appear on the banks’ foreign -currency boards, showing the foreign currency conversion rates between the countries – in addition to “we buy at…” and “we sell at…” costs.
I admired the multi-colouredforeign currency boards in the banks, complete with luminous, mini national flags of the countries Botswana was in financial step with.
Even my beloved Zimbabwe was on the boards in all the banks I visited in Botswana.
But, after Zimbabwe and its flag, the bank showed nothing because Zimbabwe had no currency.
Zimbabwe had started printing its own ‘currency’ with disastrous consequences, an issue I addressed as far back as May 2003 (http://www.theindependent.co.zw/2003/05/23/banks-mustnt-be-run-like-tuckshops/).
The so-called bearer’s checks had an expiration date and were only valid in Zimbabwe.
The one thing I said about then Governor of the Reserve Bank of Zimbabwe, GedionGono, was that, “The bearer’s cheques we use are just paper money. But forgetting that paper money is fake money, Gono was at the same time warning Zimbabweans about real fake paper money in circulation in our country.”
In 2008, Mugabe was left with almost nothing to steal when inflation reached unheard of levels of 79 billion percent. We thought it was a stroke of genius that Zimbabwe got rid of the fake paper money and adopted a three tier financial regime of the US dollar, the South African Rand and the Botswana Pula as legal tenders.
Well, the fake Zimdollats are on their way back again but are returning as ‘bond notes’ not ‘bearers’cheques’.
So called “bond notes” are the same as the old ‘bearer’s checks’.
Gono and Fidelity Printers misbehaved at the instigation of the old, greedy moron. So, today, Mugabe wants to do it again but changing the name from “bearer’s cheques” to ‘Bond Notes’.
Now, people are panicking and want to withdraw their savings from the banks because of the impending introduction of worthless paper money. Last time it happened, Zimbabweans lost a lot of their money, including their pensions and savings, when this nonsensical kind of ‘money’ was introduced.
Companies are closing and people are being laid off by the hundreds every month. Now the US dollars in the country will not be allowed to leave thereby curtailing the flow of money within Zimbabwe.
The country is just not generating any products for export to invite more US dollars into the country.
The cash shortages are a combination of various factors, as New Zimbabwe explained the other day.
“Zimbabwe’s trade deficit, the gap between its exports and imports, has widened from an average $400 million 10 years ago to $2,5 billion at the end of 2015. Zimbabwe imports more than it exports, which means there is more money leaving the country than money coming in. With industry collapsing, more dollars are being used to import goods at a time when the country’s primary exports ÔÇö commodities ÔÇö have seen a decline in prices since 2013.”
The tale tale signs of impending disaster are all there, once again: maximum daily limits on individual withdrawals from ATMs and banks and banks running out of cash despite the fact that Zimbabwe has adopted many foreign currencies as legal tender. These include the US dollar, the British Pound, the South African Rand, the Chinese Yuan, and the Indian Rupee, among others.
“For as long as we are using a currency which is appreciating when we have neighbours that have currencies which are depreciating, we become a mopping house,” Zimbabwe’s Finance minister, Patrick Chinamasa, said earlier this week.“People come to mop up our US dollars. Any US dollars we bring, it will still vanish (as) people want USD as a store of value.”
So the solution is to, once again, print money and we all know where this is headed.
What I find interesting is that Zimbabwe’s situation has distablised other countries in the region, both politically and economically, yet the affected countries pretend all is well and give Mugabe standing ovations whenever he appears before them.
John Mangudya, Zimbabwe’s central bank governor, said the “bond notes”, pegged to the US dollar,will hit the streets “in a couple of months”. He did not say much except that they will be printed “outside Zimbabwe” and will be backed by the Cairo based Africa Export-Import bank to the tune of $200 million.
This is how Zimbabwe got into its economic mess before and no one believes Zimbabwe will not print more than the $200 million guaranteed.
Apart from Mugabe’s wastefulness, the country has wrong financial priorities. The health sector continues to deteriorate, education is facing great challenges, industry has collapsed and confidence in the banks has dwindled so much that people and the informal sector “entrepreneurs” (worth about $7 billion dollars, according to the Reserve Bank of Zimbabwe estimates) avoid putting their money into banks because they won’t get it back when they need it.
Last week, Mugabe took a large delegation to the US for a conference that his Foreign Affairs minister or Environment Affairs minister could have handled alone yet the government failed to come up with $12,000 to fly back home rescued Zimbabwean women stranded in Kuwait where they had been abused and some turned into sex slaves.