By Takura Zhangazha*
There are conversations that we are not having concerning
our more mundane economic realities in Zimbabwe. I boarded a commuter omnibus,
commonly referred to as a ‘kombi’ in our country. An elderly lady, most probably a working
mother, had a heated conversation with the kombi conductor about the change
that she was handed for her one US dollar.
She had been given a South African five rand coin which she vehemently
refused. She argued that the five rands would
not get her to next destination, by way of cost, because the rand is not as
valuable as the bond coin.
Because of her rather loud remonstration, the kombi driver also
got a talking to in which she explained the fact that her next station’s arrival cost would be seven
rand even though she had been given fair change for the route she was currently
on. She therefore insisted on being given bond coins as change because that is only what the
kombis on her onward journey would accept.
So a journey that
would have normally cost five rand, now costs seven or the 50 cent bond coin.
Apparently it is the
fall in value of the rand that has triggered this new informal exchange rate. Except that the bond is not officially a
currency. It was introduced to deal with the problem of a lack of lose change
for retail businesses. And initially it was
quite unpopular. Fast forward to a year later and it is now a most valued ‘currency’.
And I am certain someone at the Reserve Bank and the Ministry
of Finance is smiling. Primarily because
this new found purchasing strength of the bond coin probably makes some sort of
case for the return of a Zimbabwean currency.
Even if it is predicated on the promissory note of the African Export
and Import Bank (Afrexim). And of course, that little talked about US$50
million loan.
But there is a pattern to all of this, apart from some
economists referring to this a s evidence of the effectiveness of the free market. Essentially the bond has become the currency
of the majority poor. They may not understand its full import in relation to
the fact that we do not have an actual currency but they are learning how to ‘deal’
with and in it.
From the vegetable vendor, through to the kombi conductor,
passenger the refrain about the South African rand is that ‘this will not be
accepted where I am going’. The preference is the US dollar or the bond coin.
What is not publicly debated is how all of this really
works. The Reserve Bank of Zimbabwe mints
the coins in South Africa with money received from Afrexim Bank. The latter
also guarantees the equivalent of the $US value of the coin (1:1). It is distributed to local banks who in turn distribute
it to retail and other businesses at an equivalent rate. From then on, it becomes laissez faire.
And in this framework, there is room for the return of the
money dealer of yesteryear, that is, 2007. In this the key question is one of
who really has access to these bond coins when they are in circulation. And this is the shadowy world of middle men
and women. Not that they will make a significant
profit. But they will be able to at least make the proverbial dollar out of
fifteen cents.
So the Reserve Bank of Zimbabwe has some serious explaining
to do. Though I am sure they are quite comfortable (and very pleased) with the
fact that their bond coin scheme now has 'transaction' legitimacy. Especially
via the informal sector.
What we essentially have is a free market economy that confounds
the poor before it affects the rich. Such little mini-battles about the value
of small coins is not something that will be witnessed or argued in the leafier
surburbs of our cities. Probably because
there the minimal denomination is the US dollar note.
But then again, we are used to the default mode of our
national economy. We do not collectively
question the effects of specific economic policies. Nor do we get regular explanations
from policy makers anyway. Hence the
bond coin has evolved from being the replacement for notes and sweets for
change, to becoming an actual domestic currency. Knowing the ‘entrepreneurial’
spirit of those that are in proximity to political power and office, someone, somewhere
is going to make a ‘killing’.
Particularly if the rand strengthens against the US dollar.
*Takura Zhangazha writes here in his personal capacity
(takura-zhangazha.blogspot.com)
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