Entitled to vote

15 11 2017

Barcoded!

 

Well, this is me. I am all there in that bar code. 9 fingerprints and a photograph. The right little finger refused to be recorded despite numerous attempts involving wiping it against my nose to get more grease on it. Seriously! Anyway, now I am legit to vote in next year’s general election the date of which is to be decided.

I am not at all convinced that I am going to vote given the farcical state of politics at the moment but I want to be able to just in case so I’ve done the biometric registering.

Oh, how prophetic that last paragraph though I must admit farcical might be the wrong word. You see, it’s 6 days later and we have just had a military coup d’etat or maybe we haven’t if one chooses to believe the now co-opted national radio station. Yesterday there were reports of “tanks” on the Kariba road heading into Harare. Dash-cam footage showed them to actually be APCs (armoured personnel carriers) and one was reported to have lost a track en route – not a good start. They apparently took up strategic positions in the city, blocking access to the Houses of Parliament, though curiously the troops seemed pretty relaxed and weren’t actually carrying firearms (they were probably in the vehicle).

In any coup attempt the radio stations are targeted and indeed by this morning the normally verbose ZBC was playing continuous, bland music. On the way back from a failed attempt to walk the dogs (too muddy due to heavy recent rains) we listened to the first statement read by one General Moyo. Rambling and more than a bit confusing, it basically stated that a coup had not happened but the intervention was because certain elements in the government were trying to recolonise the country and they weren’t going to let that happen. It did not say whom was behind the colonisation attempt or how it fitted the scenario. By the time I drove to work the statement had become much more lucid and better spoken. It was reiterated that this was most certainly NOT a coup and calm, peace, goodwill and normalcy (sic) should prevail – they were just after the criminal elements in the ruling ZANU-PF party. It sounded suspiciously like the statement the fired Vice President Emmerson Mnangagwa released a few weeks ago when he arrived in South Africa promising to be back, in 2 weeks, to fix up the mess that is Zimbabwe. Very MacArthuresque – it sounded to me like the same person had written both scripts.

It comes as no surprise that the “criminal elements” in ZANU-PF are members of the G40 faction led by Grace Mugabe who has aspirations to the top post of president when her husband, Robert Mugabe, dies. It has since emerged that a number of the G40 have been arrested including the finance minister Ignatius Chiombo whose security guard was foolish enough to resist the army detail sent to arrest him – he was shot. Pictures emerged on Twitter of his flattened security gate with an APC now parked inside. Pictures have also emerged on Facebook of  water tanks with the comment “more tanks seen in Harare”. A sense of bad humour is alive and well. So far the social media has remained unfettered as it serves the purpose of the various factions.

The whereabouts of Grace Mugabe has not been confirmed though rumours have it that she fled the country in the early hours of the morning to Namibia whilst others speculate the entire first family is under house arrest. There are certainly military roadblocks on the way to the airport (renamed the Robert Gabriel Mugabe airport last week at the trifling cost of $500,000 – I wonder how long that name will last?) and the troops manning them are reported to be civil.

A visit to the local bank was fruitless – closed apparently because the tellers hadn’t arrived though our domestic servant arrived this morning from the other side of the city and didn’t encounter problems. The local pharmacy was also closed (no explanation given) but the Borrowdale shopping centre across the road was buzzing as usual. I noticed an 81CD (US Embassy) car whose owner had taken advantage of the Embassy call not to come to work but was ignoring the advice to stay at home and was enjoying a meal at a restaurant! Not just Zimbabweans were heeding the call for normality.

Twitter is of course kicking up a cacophony of tweets speculating, guessing and maybe informing of developments. Perhaps the most reliable opinion is from Bulawayo-based David Coltart, a onetime Minister of Education, who despite previous misgivings seems to think that this is not a full blown coup but rather a bit of ruling party house cleaning by the old guard, often ex and current military types represented by Mnangagwa’s “Lacoste” faction, on the G40 faction (Alex Magaisa thinks differently https://www.bigsr.co.uk/single-post/2017/11/15/BSR-Special-The-end-of-an-era) So far there is no certainty that Mnangagwa, a veteran of the bush war and once Mugabe’s right had man, is actually back in the country. Whether he will return to lead the country to greatness is also unknown but if he can will Zimbabweans be prepared to forgive his Gukuruhundi involvement where thousands of Ndebele people were massacred in the mid to late 1980s? Time will tell. Maybe, just maybe I’ll get to use my voter registration next year but until it actually happens I will remain sceptical.

Advertisements




Waiting for the hammer to fall

24 09 2017

A very expensive hammer – or is it?

Just a pretty average ball pein hammer with an expensive price tag. I’ve just looked on Amazon and one can get a set of three for about £10 and the most expensive one in this style, also with a genuine hickory handle, is £15. Of course we expect to pay more but nearly double? Well that’s the way of Zimbabwe at the moment, that’s right folks, inflation is back!

Zimbabwe produces little these days and imports a lot. Along with a bloated civil service whose wage bill gobbles 80% of the budget and rampant corruption we are in deep trouble. We have a three tier monetary system which in theory is all US dollars but in practice has three different values; money in the bank which is labelled US dollars but will buy the money version, referred to as “cash” at a rate of 1.6 to 1. Then there are bond notes, a local substitute for “cash” which are pegged at the same value as the “cash” but trade at around 1.2 to the dollar. These bond notes are in theory backed by a bond from the Cairo based Afrexim Bank but it was recently revealed that the bond never existed so they are valueless but preferable to having money in the bank. A case of a bird in the hand being worth more than what’s in the bank.

Most outlets have a 3 tier pricing system to reflect the various value rates. For the moment my business doesn’t but that will change tomorrow. In the time that I’ve been writing this blog (about 4 days) Harare fuel pumps have run dry. It’s not surprising as the price for diesel has been hovering around $1.20 per litre for quite a few months now – completely unrealistic considering that they have had to buy the real US$ at a premium of 1.2 during most of that time. Yes, I guess the price is controlled somewhere along the line.

I was, by chance, chatting to a farmer at an agricultural supplies outlet on Friday. He asked if I could grow him some paprika as he was looking for an export crop to stay viable. He mentioned that he’d been pricing steel that morning and by the time he’d gone back to place the order 2 hours later the price had gone up 15%. We are talking a bank transfer price of course. That evening I went to a talk on Bitcoins and how to use them and what the investment opportunities and pitfalls are. The speaker referred to the day as Black Friday in reference to the galloping exchange rate.

A while ago I called my local service manager at the bank. On asking if I could pay for an import of the coir pith we use to propagate seedlings he asked me if we exported anything. No, I replied. Had I deposited any US$ cash recently? No of course I hadn’t – was this really a serious question? Well then, he said, bring in the cash and we can do the transfer. Guaranteed? Yes, guaranteed. This raised the obvious question of how far to trust the banking system. All external payments have to go through the Reserve Bank of Zimbabwe, the very instrument who in no small way has landed us in this mess. To be fair there has been a lot of greed and incompetence driven political pressure on them to just add zeroes to the value of the currency though, with the exception of the governor, a lot of the senior staff were there for the meltdown of the Zimbabwe dollar in 2008 – 9 and one must wonder what their influence is.

It should be evident by now that the USD price tag on the handle of the hammer is not United States Dollars at all but a proxy currency probably better named (nearly) Useless Substitute Dollars and the price of 39.00 is probably quite cheap. The Zimbabwe dollar is back under another name as a lot of people feared when the bond notes were first introduced.

When I started this post on Thursday I thought the title was appropriate. After reading a WhatsApp message this morning from a friend (the full text by Matt Matigari can be read here http://source.co.zw/2017/09/opinion-currency-crisis-art-deception/) I realized that it had been looking decidedly unstable as far back as 2013. The hammer most definitely has already fallen and we have only now heard the sound of the impact.

There are going to be casualties during the course of this next meltdown. An old friend has already lost his job and has no alternative income. He and his wifer may well end up renting our cottage and hopefully renting out their house. We have advised them most definitely NOT to sell as they will likely lose a lot of money in the time it would take to find a smaller property. They have several dogs most of which will have to be euthanized. Those who can will emigrate. Those who cannot will once again be destitute. Companies that depend on imports will likely fold. Money changers will prosper and just maybe, we will pay off the bond on our house for the equivalent of a few dollars – cash. Tighten your seat-belts folks, there’s rough weather ahead.

 





Déjà-vu – and it’s not good

9 08 2017

NEVER throw away what might be useful

We have a habit in this country of not throwing things away “just in case they might be useful one day”. It’s not without good reason but it can be taken to extremes.

In the days when Zimbabwe was Rhodesia and the country was under blanket sanctions for it’s persistent colonial ways ingenuity ruled. Getting fuel was difficult and just about everything else close to impossible. Car spares were horded and years after we got rid of an old car I still found spares squirreled away “just in case”.

Now that Rhodesia is Zimbabwe and we still have sanctions (but this time targeted against certain odious individuals) spares are once again becoming difficult.  In this case it’s spares for a Husqvarna hedge trimmer we use to trim tobacco and gum tree seedlings – so of course I feel somewhat smug that I kept the remains of a previous hedge trimmer. Just in case.

The shortages this time around are nothing to do with the sanctions but gross incompetence and greed by the ruling regime; the nation has simply run out of money. The bond notes alluded to in other posts are proving to be exactly what everyone feared them to be – a return to the defunct Zimbabwe dollar under another guise. There was never a bond/loan backing them (the Reserve Bank governor simply lied) and now the government has announced that it wants to release another 300m of  them backed by precisely nothing.

Inflation has also made a return. I priced a gum wooden door last week that has increased 50% over the last 4 months despite being made entirely of local products. It is priced in US$ but I’m almost certain that if I asked I could get a discount for “cash” i.e. real US$ notes of around 20% (most people use debit cards or similar devices to pay for items). A potential customer asked me if he could get a discount for bond notes and was told most definitely no. He did not ask if he could get a discount for real cash – US dollars.

So tomorrow I will start making a plan (something else for which Zimbabweans are notorious) and see if I can assemble the 1½ hedge trimmers in the picture into one functioning one. After all adversity is the mother of invention and we’ve been here before. Once as Rhodesia and again in the years when the Zimbabwe dollar was real if completely useless.  It’s a sense of déjà-vu and I don’t like it one bit.

There is one positive aspect to this. In the carnage of the demise of the Zimbabwe dollar in 2008/9 when inflation was running in six figures per month, people who’d taken out housing mortgages paid them off with one note or less. Yes, that happens when the largest note is 100 trillion Zimbabwean dollars.  Now if the government floods the country with bond notes we should be able to pick them up cheaply enough by paying in real dollars to pay off our mortgage really cheaply. There will of course be collateral damage as they say – territory we visited back in 2008/9. I don’t think I want to go there at any price.

P.S. (a day later). I was called this morning by a company that sells irrigation equipment – a part that I’d ordered had arrived. On asking the cost I was told $78 “… but we are offering a discount of 25% for US$ cash or 10% for bond notes.” So apparently the bond notes, based on nothing, are actually in demand.

 





A thin line

12 07 2017

Mike is multi-talented. He’s been working on the electrics of the cottage so that we can get it functional for renting out, but he can fix computers too and turn his hand to just about anything else; painting, welding you name it. But he’s struggling for work and even had to borrow some diesel off me the other day as he was running out and didn’t have any cash to put fuel in his car.

Smart has been doing tiling and minor building work for us. He’s pleasant, hard-working and also broke. Unlike a lot of builders here he does ALL the work himself; mixing cement, carrying the bricks and of course the building.

Nearly everyone is struggling to get by in Zimbabwe none more so than the artists. So this Sunday I went along to the art fair and expo at the Mukuvisi Woodlands – a nature reserve within the confines of the city which has a selection of non-dangerous game, horse rides, walks and is a great place to go and relax watch the birds and enjoy the animals. Not surprisingly they are also struggling, so it was a good opportunity to go along and lend support.

Works by Daryl Nero, Arthur Azvedo, Helen Leiros and Lyn Barrie were on display (main boards L to R)

It was not a big event but a lot of my favorite artists were on display. I cannot think a lot of money was made but a few paintings had been sold and everyone seemed to be enjoying themselves. Most works were well beyond my budget but I did pick up a couple of small pieces by Roseanne Tunmer that my wife could appreciate (she doesn’t share my taste in art). I heard Roseanne quip as I was paying that she’d be very pleased if someone stole some of her work!

A lion face in progress by Kelli Barker

Heron and tortoise by Roseanne Tunmer, pods by Wayne Stutchbury

Of course not everyone in Zimbabwe is struggling. The kleptocrats who rule the country are very well off thank you and seem quite unconcerned that their shenanigans are widely reported in the independent press. Those who can are helping themselves whilst the rest of us get by – or not.

Some, such as Grace Mugabe – the president’s wife, have millions but don’t use them. She has recently laid claim to the Mazowe dam (reservoir) denying all-comers access to a livelihood or recreation. Local water authority engineers who came to inspect a leak in the nearly 100 year-old wall were chased off in favor of Chinese engineers.

The much vaunted command agriculture scheme has been shown to be a massive money loser . For the uninitiated it is a scheme whereby funding has been acquired (some $500m) to allow mostly resettled farmers who have no access to funds (they have no title for the land they are on and therefore no collateral) the ability to grow maize and solve the nation’s chronic food shortage. The government supplies the inputs in the form of seed, fertilizers and chemicals and then buys back the harvest – at a loss!  400,000 ha were to be identified and a figure of 2m tonnes of maize harvested. At 5 tonnes/ha it is quite doable for less than highly skilled farmers. However only some 160,000 ha were subscribed to the scheme (or 17200 ha according to the government mouthpiece The Herald – I think a zero is missing). This amounts to about 800,000 tonnes at 5 t/ha or an average yield of 12.5 t/ha to achieve the 2m tonnes that has been much quoted, which is wishful thinking of a high order. ART farm where I used to live gets this sort of yield in a good year (which this last season was) and they farm to research standards. The farmers who this scheme targets have, at best, very ordinary farming skills. Even I, and I have basic maths skills, can see that something is badly wrong here.

Trawling the web yields some other interesting figures too. According to the Newsday site farmers started to deliver maize on the 1st April this year. Chatting to the ART farm manager yesterday he told me their maize was still at 14% moisture so hadn’t been harvested (it needs to be 12% or less to avoid storage problems) so I do wonder how this is possible. Is the government going to dry what must be wet maize?

I am struggling to summarize this debacle which even the most basic mathematics can reveal. Perhaps I should close with a quote from an issue of The Financial Gazette; “If figures do not lie, can anyone really give the US$500 million command agriculture initiative much of a chance given this compelling evidence of a nation that has squandered every opportunity at its disposal?”  Dated September 29 2016 it is prescient. Even the ultimate slime-ball of a politician, Jonathan Moyo, has labelled it “command ugly-culture”.

 





The cost of doing business

13 04 2017

A whorl of cosmos

The rains are over for this season and the cosmos (Cosmos bipinnatus) is fading, still attractive but not as flamboyant as 3 weeks ago. We had good rains for once; 1020mm at the nursery which is probably not a record but certainly substantial. The cosmos was just as showy as ever – it doesn’t seem to mind if it’s a drought year or not.

The government press has predictably predicted a “bumper” harvest but that is far from certain as it will be at least another month or more before the crops are in and there is a lot more to farming than a good rainy season. The fall army worm also made an appearance this year. New to Zimbabwe it has a voracious appetite for maize and is difficult to control once the crop gets large so the small scale farmers are likely to have had a hard time.

The current financial crisis continues to deepen. US dollars (cash) are commanding a premium discount with some outlets offering up to 20% off for the greenbacks. Even the much maligned bond notes are becoming scarce but I have yet to get a discount for using them instead of a debit card.

Two weeks ago I finally received a large outstanding payment for a contract of gum trees that we did last year. Normally I would spend it on raw material – the coir pith we favour for propagating seedlings comes from India and is bizarrely about 60% of the cost of the local milled pine bark medium. It’s also reliable quality and we have yet to experience any significant problems with it. Not something we can say for the local product.

I got hold of the business manager at one of the banks I deal with and asked him what the chances were of getting money out to pay for a container of coir pith; all of US$9600 for 24 tonnes delivered to Beira docks in Mozambique. He was direct (I appreciate directness).

“Do you export?” he asked.

“No’

“Have you been depositing US dollars cash into your account?”

Was this a serious question? “No I haven’t”. I was tempted to add “you weren’t expecting me to say yes were you?” but I remained quiet.

“Then no. If you bring us the cash we will make the application to the Reserve Bank”.

Hmm, like anyone trusts them. He went onto assure me that if the request was refused I would get my cash back in US dollars, not bond notes, and that they’d never had an application for a request of this nature turned down.

I should point out that I have never had, to my knowledge, anything but US dollars deposited into my account and here I was being told that in fact the bank did not believe that. It says at the top of my statement that it is a US dollar account – but it’s only useful in Zimbabwe.

When the Reserve Bank announced last year that it was introducing the now notorious bond notes, with a value equivalent to the US dollar, in order to alleviate the cash shortage (true, a lot of cash had disappeared from circulation) the populace panicked. Rumours that it was an attempt to re-introduce the defunct Zimbabwe dollar flourished in the fertile rumour environment and a run on the banks began. People slept on the pavements for cash withdrawals that progressively dwindled to a paltry $30 or less. Yesterday at another of the banks that I use there were people sleeping on the pavement but now it’s for bond notes. Yes, there has been a massive switch to electronic money but some things still require cash. Schools in rural areas, which are cheaper, don’t have bank accounts and unscrupulous landlords demand cash.

The amount of bond notes issued is pitifully small, some $10m to start with and then another 30m or so. That they have been issued entirely in $2 and $5 denominations is telling – it was never intended to do much. $10 and $20 would have had far more impact. Initially the Reserve Bank stated that the bond notes were guaranteed by a loan of $200m from the Afrexim bank in Egypt, but this has been nearly impossible to ascertain. $200 million in a GDP of some $11 bn is not going to do much (see this Forbes article)  and anyway, if all that was needed was cash why not just buy it from the USA? We all know the Zimbabwe government is broke so it cannot buy cash. However what could be easier than adding a few zeros to electronic money? Electronic money is not based on anything which is why the bank manager I was talking to wanted to know if I could pay in US cash for the import of raw material. He wanted to know that if his bank were to deplete its precious nostro account (held outside the country) was being backed by real crispies (well, once upon a time they were crisp – long ago) and not some figment of a government official’s imagination. So where does that leave me?

Last Thursday there was a workshop at the Tobacco Research Board (TRB) near the airport. They were promoting the growing of vegetable seedlings. Not much to do with tobacco research to be sure but the seedlings of both crops can be grown in polystyrene trays floating on shallow ponds in which fertilizer has been dissolved. The TRB manufactures the trays, has a local company make up the fertilizer solution and is in a joint venture to manufacture the pine bark based medium in which the seedlings are grown. So they are looking to expand their market. I was concerned that I was going to have a lot of competition for my business. It was time to check out the potential competition and I was also curious to see what the TRB, once a world-renowned research organization, had been doing on vegetable seedling research.

I was not over-awed but I had to admit that their seedling tray quality had improved since I last bought any. The presentations were not very impressive and their idea of seedling quality was lacking some fundamental concepts. Their growing medium appeared to be reasonable quality but was expensive but they were willing to take any sort of money, cash or electronic. I will have to try some.

Logic dictates that if the medium is acceptable that I buy it in bulk with currency that I can only use within the country i.e. my locally held accounts even though it’s relatively expensive. If however the quality is poor then I will have to look at sourcing “real” dollars (anything is possible in Zimbabwe) and getting in the coir pith medium from India that I trust. Quite what I’ll spend my local money on then I really don’t know.

Next Tuesday, 18th April, is our independence day. Two weeks ago, as is customary, I received a letter of request from the local ZANU-PF (ruling party) office asking for donations in “cash or kind” for the celebrations they were going to host where “800” people were expected. It was shoved into the top left drawer of my desk – they would have to ask in person. In the past I have fought with them over this with arguments such as; “Why don’t you go into the shopping centres and ask for donations there?” but they know the white farmers feel vulnerable and are soft targets, so yes I inevitable buckle and donate.

I was driving back from the gym yesterday after lunch when the inevitable call came – they were at my business and what was I going to donate? It certainly was NOT going to be cash so they accepted $100 through mobile banking. I cursed myself for being weak then just consoled myself with the thought that they’d got the least value money option available. It was a cost of staying in business in Zimbabwe.





Make your own story (the keys are on the tree)

20 03 2017

Avondale shopping centre has seen better days; the parking lot is potholed and the buildings are run down. The once luxurious 7 Arts theatre come cinema is seldom used and the roof leaks. The flea market on the old split level parking lot is active though. Arts, crafts, old books, cheap Chinese goods and bootleg music and movies are all on sale though these days business is hardly booming.

Down from the flea market cars are parked in the unpaved lots. Trees are large and provide welcome shade from the summer heat. And on one tree is nailed a key ring with keys on it. It’s not nailed low – about 2.5m up and it’s been there some time. There has to be a story to these keys. Why are they nailed so high up? Why are they there at all? Were they lost and then found and left for someone to find? Or? Make your own story!

The keys – arrowed

The keys have been there a long time





A Brexit. If only…

12 11 2016

Saturday midday we like to gather at the Gallery Delta in town. It’s Robert Paul’s old house, one of the oldest still standing in Harare and thus is listed. It also has good contemporary art but we like to sit and discuss politics, finance and generally anything of interest. Interesting people come through – it can attract diplomats and others but today it was the turn of local financial wiz Melissa. Married to a local Zimbabwean she has consulted to all manner of financial institutions both local and international and always has something of interest to contribute. The conversation inevitably turned towards Zimbabwe’s impending financial implosion and, of course, bond notes.

Background
In October 2008 the Zimbabwe dollar became worthless. Having been revalued three times and had 18 zeros removed over the period of 18 months (not of course in linear fashion) it really was worth less than toilet paper and also less effective. In the previous month my company went broke despite being  busy and after much soul-searching I brought in US$2000 of my own money which covered my expenses for the following month when customers started to ask if they could pay in US dollars.  The Zimbabwe dollar was officially abandoned at the beginning of February 2009 and the US dollar became the de facto currency in this part of the country. In the southern regions the South African rand and Botswana pula became more accepted due to the proximity of these countries. Change was initially an issue and supermarkets gave out sweets and ballpoint pens in lieu but come 2013 -2014 the South African rand was valued at close to 10 to the US dollar (2013 – 2014) so it made for useful change. We also had our first brush with bond coins (valued in USc but not exchangeable outside the country). Initially ridiculed they gained acceptance once the rand drifted above 11 to the US dollar. Currently there are a number of currencies that are officially trade-able; UK pound, US dollar, Australian dollar, euro, yen, Chinese yuan, Botswana pula and of course the rand.

As Melissa explained adapting the US dollar was a mistake. Zimbabwe became a magnet for criminals and money launderers the world over as there was little control over the use of hard cash – if you had it in the bank you could withdraw it as cash. Millions of dollars in cash were taken out through our extremely porous borders. The start of the rot was nearly instantaneous.

The rest of us were too enamoured with the new freedom to do just about anything we liked with our money to notice. You could travel unfettered by the need for endless currency applications; real VISA cards worked anywhere! South African supermarkets moved into the country and bought out the local chains and imported goods flooded the shelves at vastly inflated prices. But hey, we had choice.

The economy expanded due largely to the mining sector and high prices of gold and other minerals. Agriculture, once the mainstay of the economy, continued to flounder on the back of the land redistribution exercise though there were a few years when tobacco enjoyed a resurgence, driven by buoyant prices. Attempts to get external investors interested were hamstrung by the contradictory message; invest with us but the majority of the shares must be held by a Zimbabwean.

Corruption and nepotism have gone from strength to strength. Perhaps a new word should be coined here – nepotist + kleptocrat = neptokrat. Readers are welcome to make suggestions. It seems that every day there are new revelations of squandered, stolen and diverted funds. The most famous is the fifteen billion dollars that was unaccounted for from the Chiadzwa diamond fields in the east of the country, alluded to by none other than President Mugabe himself. Now $15bn is a lot of money for a small country like Zimbabwe, a bit more than the GDP in 2014, which could have wiped out our external debts and left a sizeable chunk to get things going again but nothing appears to have happened to those responsible.

As the economy founders so the tax base shrinks and there is little wonder that lower ranking civil servants have not been paid for months (civil service salaries gobble 97% of the cash budget). The military of course do get paid – the police have been told to raise their own wages and do so by the myriad road blocks and spot fines throughout the country that have left them thoroughly discredited and despised.

It’s all about trust
In May this year the Reserve Bank of Zimbabwe (RBZ) governor announced the introduction of the bond notes and the run on the banks began. The proposal was to ensure the value of the bond notes at an equivalent to the US dollar but they would be for internal use only so no good to those who would seek to externalize them. The public saw it as a ruse to bring back the Zimbabwe dollar in another guise. The restrictions on withdrawing cash soon followed and served to fuel the panic. It didn’t help that the bond from the Afreximbank that serves to support the value of the bond notes is veiled in secrecy and ignorance. Unexplained delays in releasing the notes and the refusal of a German company to print them haven’t helped.  Some banks are allowing more cash to be withdrawn than others but reports abound of clients queuing overnight to withdraw as little as $20 a day.

Zimbabwe has been slow to adapt to the plastic money found elsewhere. ATM and debit cards have been around for years and mobile banking has seen a major increase with the rise of smart phones which are ubiquitous even among the poor. The RBZ has been pushing the plastic money hard and most outlets now have POS (swipe card machines as they are known locally) machines and accept mobile banking. While unemployment is difficult to quantify (there haven’t been any recent surveys) it is undoubtedly high and a substantial proportion are informal traders who have to pay for the goods they bring across the South African border in hard cash. No small wonder they are suspicious of bond notes and local plastic money.

Cash is now commanding a premium of some 15% and I’m told traders abound at the local Roadport (bus terminus) in town and they have lots of $100 notes that cannot be found in banks. Likely they are in the employ of the neptokrats. I can now only buy the low sulphur diesel for my pickup with cash and some filling stations restrict the amount of fuel that can be bought with a card. Most businesses will give a discount for cash.

Legal challenges to the introduction of the bond notes have followed but on the 1st November Robert Mugabe signed the notes into law. Fait accompli.

Imports and nostro accounts
Nostro accounts (the money banks use to pay for imports) are heavily depleted due to our massive trade deficit. A friend who imports agrochemicals cannot pay his external suppliers despite having the money in the bank. VISA cards, which also depend on nostro accounts, work anywhere in the world for the moment and the crippling power shedding of last year and earlier this year have not reappeared largely due to the pay-as-you-go metering installed by the national power provider but I for one don’t expect this to continue. Greenhouse plastic, considered an essential import, is no longer available and this week when buying some basic pharmaceuticals I was informed that the calcium tablets had to be paid for in cash!

Smoke and mirrors
The people behind the bond note issue are not stupid – they must have known what the reaction would be. Why did they do it? I think it’s all a red herring to force us into the digital money arena where zeros are easily added with a few computer key strokes. After all, only $75m bond notes will initially be introduced in the form of $5 and $2 denominations. This is very small money though few actually believe that the neptokrats will be able to resist printing more, which may or may not be backed by a bond. The bulk of the cash in circulation is in US$100 and US$50 notes so the bond notes will have minimal effect on the nation’s liquidity. The various protest movements that sprung up this year, over various other social issues, including #thisFlag and #tajamuka were instrumental in sparking the riots that rocked Harare and Bulawayo, the second city, in July and August this year but it’s been quiet over the last 2 months as people’s attention is diverted into getting their cash out of the banks. Was this intentional or just fortuitous from the authorities’ point of view?

It's not looking good (Chatham House report)

It’s not looking good (Chatham House report)

We may yet be bailed out by the IMF Melissa suggested. Mozambique is also in dire financial straights as are Angola and Malawi. Zimbabwe imploding might well drag down the whole sub-region –  propping up the current regime would be preferable. Zimbabwe has cleared its debt with the IMF so this is possible.

And last but not least
As with any crisis of this proportion there are those who will find the humorous angle. “With the tumble of the English pound, the waver of the US dollar, the volatility of the rand at least the bond notes are stable” is a popular social network joke. When Harare’s main rubbish tip mysteriously caught alight a week ago, and dumped noxious fumes over the northern suburbs, there were those who postulated it was being fueled by bond notes!

20161107_082741

Pomona rubbish tip burning – bond notes the fuel?

Ah the Brexit, if only our problems were so small.