All is not well with Zimbabwe at the moment as government’s plan to introduce own currency notes has met with stiff resistance from the citizenry. The move has also met with disappointment as German company, Giesecke and Devrient, refused to print the country’s controversial new currency.
Zimbabweans are wary of the new currency introduction as the over 500 billion per cent inflation that plagued the Zimbabwean Dollar is still very fresh in their memory. Currently, Zimbabweans make use of eight officially-acceptable currencies; they include the US Dollar, Euro, Botswana Pula, Pound sterling, Renminbi, Indian rupee, Chinese Yuan, as well as the South African rand.
The Mugabe-led government is hoping that the new bond notes will address the economic challenges bedeviling the country. Some experts, however, disagree. Naome Chakanya, an economist with the Labour and Economic Research Institute, a Harare-based think tank recently disclosed to Bloomberg that the new bond notes won’t address the structural challenges facing the economy. The economist explains that Zimbabwe’s economy collapsed in the wake of a campaign to seize white-owned commercial farms and hand them over to black subsistence farmers, triggering a near decade-long recession as exports from tobacco and roses slumped.
Disappointment for currency notes launch
In May, The Reserve Bank of Zimbabwe (RBZ) announced that it will introduce bond notes that will be at par with the United States dollar to address liquidity challenges.
The RBZ governor, John Mangudya, who initially announced that the notes would be in circulation by October, said a German company had been given the printing contract.
The launch of the ‘surrogate currency’ was moved to next month without any explanations. Then on Friday NAN reports that a leading business newspaper in Zimbabwe has revealed that the delays were caused by Giesecke and Devrient’s refusal to print the new notes.
The action of the German company has forced President Robert Mugabe’s government to delay the introduction of the new currency amid worsening cash shortages.
The German embassy in Harare confirmed that the company had refused to print the new currency.
Zimbabweans fear the introduction of bond notes will see President Mugabe’s government resorting to printing more money in order to extricate itself from a serious cash squeeze and in the process bring back inflation.
Banks have limited cash withdrawals to prevent hoarding of dollars, used in 95 percent of all transactions in the country.
Cash shortage in the country has been described as excruciating.
The new currency would be introduced next month and would be backed by a $200 million African Export Bank facility. But the question on every lips is who will loan Zimbabwe such an amount of money considering its debt profile and default in loan repayment