Harare – They said it couldn’t happen but it has: Zimbabwe’s bond notes are being smuggled just over the border and traded on the black market, a report says.
The state-controlled Sunday News says its reporters have been to border posts at Plumtree, Victoria Falls and Beitbridge where they’ve found traders selling the bond notes to people who want to make sure they have cash before they enter Zimbabwe.
“They will rather change their money here and that is why we try by all means to get the bond notes to conduct business… we are also making sure our people in Zimbabwe keep on supplying the notes so that we are in business,” an unnamed money changer at Ramokgwebana Border Post in Botswana told the paper.
Introduced in November
Bond notes were first introduced at the end of November, ostensibly to plug cash shortages in the southern African country which has not had its own currency since 2009.
The central bank said then that the advantage of putting the bond notes into circulation rather than “real” foreign currency was that the notes had no value outside Zimbabwe and therefore would not be smuggled out.
But this latest report would suggest the plan is starting to fail – though it’s important to bear in mind that the authorities are looking for scapegoats for Zimbabwe’s ongoing cash crisis.
Bond note circulation capped
The central bank’s decision to limit the amount of bond notes and coins in circulation to 163 million US worth (out of a promised 200 million) has likely contributed to the bond notes keeping – or nearly keeping – their 1:1 value with the US.
News24 on Monday saw a large number of clients inside one high street bank queuing to withdraw $300 in bond notes, an amount much larger than is usually permitted.
Surprisingly there was no queue for the bank’s ATM which was dispensing a maximum of $50 – even though that amount was in “real” US dollars.
That suggests that for now many Zimbabweans are just as happy to accept bond notes from their banks as they are to accept US.
And if they can get more bond notes, they’ll take them.
Zollars are worth less
But there’s a difference between concrete bond notes and “zollars”, the money that’s in Zimbabweans’ accounts that cash shortages won’t let them withdraw.
Traders are offering cash to desperate Zimbabweans at a 15 to 20% mark-up if they pay for it using a bank transfer, the Zimbabwe Independent said in its latest edition. That means that a bank account holder would have to transfer 115 to 120 “zollars” to a cash merchant to get his 100 US in bond notes or US.
Bearer cheque collapse
“Hoarders” and black marketeers were in part blamed for the dizzying collapse of Zimbabwe’s “bearer cheques”, the bond notes’ precursor which were in circulation to early 2009. In July 2005, the then central bank governor Gideon Gono even had police mount roadblocks to search for bearer cheques that were allegedly being circulated outside the formal banking system.