What a time to be alive! 2019 has commenced at lightning speed. If you snooze you lose, literally. Born in 2016, the Bond note was received with a fair amount of scepticism. But even the greatest sceptic had no choice but to give the surrogate currency a chance as long as it was at par with the US Dollar. Three years down the line, all hell has broken loose. Business and labour are now resisting the pseudo currency. It no longer buys as much as it used to four months ago. Government appears to be firefighting at every turn. Will the Bond note survive this onslaught? We take a look at the ongoing pressures to dump the bond note in favour of the more stable US dollar.
Only a day ago, Delta Corporation did the unthinkable when they announced that they would only be accepting payments in US dollars. So ruthless was their statement that it went as far as declaring that they believe that RTGS and Bond are not currencies. As widely expected, Minister of Industry and Commerce Mangaliso Ndlovu came out guns blazing, castigating this move in no uncertain terms. A day later, the Reserve Bank of Zimbabwe (RBZ) and Delta Corporation were at the table ironing things out. Now, a joint statement has been released advising as follows;
“1. Delta withdraws the notice to sell its products exclusively in hard currency, in the spirit of the multi currency framework.
- The Reserve Bank of Zimbabwe will endeavour to provide the foreign currency required to ensure that Delta continues to trade on the current basis.”
Without any further information provided, we are likely to see Delta charging inflated RTGS or Bond Note prices in line with the prevailing parallel market rates. This will help them ensure that if RBZ fails to provide enough forex, they will have a safe fall back position. The US dollar price is also likely to feature as well. We await their new price list.
Teachers and nurses
Things are certainly moving fast. A joint Education and Nursing sector meeting convened on Thursday 3rd January 2019 made a declaration,
1. We are in total solidarity with the Doctors and all medical personnel currently on job action.2.
2.We are in total disagreement with the Government’s subtle and open threats against them for embarking on legitimate job action…”
2a) Our incapacitated members will not be able to attend to their normal duties for more than two days a week.
2b) That our salaries be paid in US$ with effect from October 2018
The joint meeting was attended by Zimbabwe Nurses Association (ZINA), Zimbabwe Teachers Association (ZIMTA), Teachers Union of Zimbabwe (TUZ) and Progressive Teachers Union of Zimbabwe (PTUZ) among others. ZIMTA Matabeleland North Province also issued its own declaration that they will not report for duty until salaries are paid in US dollars. It is important to note that schools are due to open next week. The pressure is piling on government.
Junior Doctors are now on day 34 of their industrial action and it looks like there is no solution in sight yet. The Zimbabwe Hospital Doctors Association of Zimbabwe (ZHDA) issued a press statement on 3rd January 2018 claiming that the agreement to be paid in US dollars was reached in March 2018 but is yet to be honoured. They also claim that on call allowances at a rate of US $10 per hour were agreed on in 2014 and to date, these have also not been paid as agreed. To add weight to these claims, senior medical staff at some hospitals have joined the cause. In a letter addressed to the Clinical Director at United Bulawayo Hospitals, Medical Officers, Junior and Senior Registrars say, “… it is with a heavy heart that we agreed to stop attending to emergencies…we are now overwhelmed and we share the same grievances with our juniors.” Clearly everyone will soon be ganging up to demand payment in forex.
The sincerity of government in dealing with the current foreign currency impasse has been questioned often. While it is understandable for the government to suspect that a third hand is employing some political or economic sabotage tactics, the fact on the ground is that the ordinary citizen is looking up to government for answers. Government’s overall response seems to be sluggish although the status quo is evidently unsustainable. If the governments strategy is to firefight, they may soon run out of water. When Rio Zim closed some of its gold mines citing forex challenges, the RBZ chipped in to provide some forex to keep them open. The same has just happened with Delta. But is Delta providing such an essential service as to deserve foreign currency allocation from the RBZ? Or is government afraid of the domino effect that is likely to emanate from Delta’s decision? Is beer or even soft drinks more critical than human life? If not, then why is it taking long for government to deal with the doctors’ plight once and for all. These are questions that many onlookers are asking. For now, government is handling each case on its own merits and demerits but unfortunately the fire keeps raging. Maybe a more holistic, firm and decisive action is now needed.
The Bond note is certainly being rejected left, right and centre. Market forces are at play here. It is important for businesses to keep a watchful eye on these developments. The action is coming thick and fast. Quick strategic steps are needed in order to instill confidence in the country. At the centre of it all, government is working overtime. A sustainable solution is the panacea.