THE Reserve Bank of Zimbabwe (RBZ) should disseminate more information on the recently introduced bond coins to clear prevailing scepticism regarding their usage, an economic analyst has said.
Latest reports indicate that only $2,5 million worth of bond coins out of the $10 million set aside are presently circulating on the local market as banks under-ordered them nearly a month after their introduction.
While the government and RBZ have ruled out any imminent return of the Zim-dollar, there is still enduring scepticism that the introduction of the bond coins is a precursor to the return to hyperinflation days.
The bond coins, whose value is indexed to the US cents, are in denominations of 1c, 5c, 10, and 25c with the 50c set for unveiling in March.
Their circulation, however, remains slow amid reports some sections of the transacting public were reluctant to trade and accept the new coins as change.
Bulawayo-based economic analyst and a lecturer of economics at the National University of Science and Technology (Nust), Ian Ndlovu, said there was a need for more engagement with the public on the benefits of using the coins and their convertibility to other currencies.
“It’s true that there’ve been mixed reactions to the introduction of bond coins from the transacting public. There’re several reasons why some people are generally apprehensive when it comes to the use of bond coins. Some people are afraid that the monetary authorities are reintroducing the Zimbabwe dollar or a domestic currency in another form through bond coins,” said Ndlovu.
“There’s also a lack of clarity on issues of convertibility of the bond coins into hard currency. It’s a fact in the public domain that Zimbabwe does not have sufficient foreign currency reserves.
“It’s also in the public domain that there’s tight liquidity in the banking sector, which has been characterised by some banks rationing cash as late as last year.”
Ndlovu said while the Central Bank disseminated information about bond coins before they were introduced, the information was inadequate.
“A number of people were asking whether the government would also pay people in bond coins. Some people thought that the bond coins would be followed by paper money of the same type.
“All these perceptions were generated and exacerbated by lack of clarity in terms of policy owing to lack of adequate information,” he said.
“In my view the introduction of bond coins needed a thorough national dialogue or discourse around the topic in a number of platforms.
“This would enhance people’s ownership of the whole scheme of bond coins. Some sections of industry and commerce tend to be wary of policies that are introduced in a top-down manner without adequate consultation with intended beneficiaries.”
He said public scepticism was not unusual given the painful memories that people had when the Zimbabwean economy experienced a meltdown in the period 2006-2008.
The hyperinflation of that time, which according to official figures climaxed at 230 million percent, gave businesses and the transacting public a torrid time in crafting medium to long term plans.
Since the domestic currency was officially abandoned six years ago, said Ndlovu, memories of how it progressively became worthless are still fresh in people’s minds.
He noted how the massive issuance of consumer and other types of loans soon after the formal adoption of a basket of regional and international currencies in 2009 was followed by an increase in non-performing loans.
Accordingly, Ndlovu said, the perception of the transacting public on these and other factors militates against the capacity of the monetary sector to facilitate conversion of sales revenue in bond coins to foreign currencies, which people can use to import essential goods and services since some local suppliers have collapsed in recent years.
He, however, said the prevailing scepticism does not imply that concerned people or economic agents will reject bond coins indefinitely.
“Some people by their nature or as a result of their past experiences tend to be risk averse. This means that they choose to adopt a wait and see attitude before they wholeheartedly embrace any new policy. Such people are found in virtually all economies.
“In fact, risk averse people tend to be in the majority in most economies. What’s necessary is to persuade such people to accept the new policy dispensation instead of forcing them,” said Ndlovu.
Comment could not be obtained from RBZ.