Mujuru fights to stop bond notes

HARARE – Former Vice President Joice Mujuru has ramped up her bid to stop the Reserve Bank of Zimbabwe (RBZ) from introducing bond notes — the country’s proposed surrogate currency — next month, as pressure continues to mount on President Robert Mugabe’s embattled government to turn around the dying local economy.

Mujuru’s lawyer Gift Nyandoro wrote to the Constitutional Court (Con-Court) on Friday asking the highest court in the land to treat her recent legal action against the notes with urgency, following last week’s announcement by RBZ governor John Mangudya that the central bank would be unveiling $75 million worth of the surrogate currency at the end of October.

“It is our client’s considered view that her application is most likely to be overtaken by events should it not be dealt with urgently, given the conduct of respondents regarding the introduction of bond notes. We therefore ask your office to have this letter placed before the chief justice.

“We write this letter pursuant to the correspondence we received from your office to the effect that the file of the above referred matter has been placed before the chief justice and that your office is still waiting for further directions.

“Our client is, however, worried by recent developments; in that the governor of the Reserve Bank of Zimbabwe, who is also a respondent in this matter, has since made it clear that bond notes will be released into the economy at the end of October 2016,” Nyandoro said.

“The governor pronounced this position during his 2016 mid-term monetary policy statement . . . The governor has gone to the extent of making indications of wanting to introduce smaller denominations of bond notes of $2 and $5,” he added.

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In its prompt response to Nyandoro, the Con-Court said it was awaiting instructions from Chief Justice Godfrey Chidyausiku, to give direction as to how the matter would proceed.

This follows the confirmation last Thursday by Mangudya that the country would start using the much-distrusted bond notes next month — in a move that sent shivers down the spines of ordinary citizens who fear the return of the despised Zimbabwe dollar and the attendant hyperinflation that was witnessed a decade ago.

The central bank’s announcement caught most analysts by surprise given the dire state of the economy, the ongoing protests against the surrogate currency, the slap down that Finance minister Patrick Chinamasa had received from Mugabe over his unavoidable cost-cutting measures he had announced in his mid-term fiscal statement review, as well as Mujuru’s court challenge.

This was also especially so after the RBZ had last month appeared to indicate that it was having second thoughts about bringing the bond notes into circulation while responding to Mujuru’s lawsuit — saying then that the surrogate currency was still at “a planning stage”.

But presenting his monetary policy statement last week, Mangudya said the central bank would be introducing the bond notes at the end of October.

“It is important to note that bond notes shall not be forced on people who do not like them. The bank is addressing the concerns by planning to introduce smaller denominations of bond notes of $2 and $5.

“In addition, the bank has proposed for the setting up of an independent board to have an oversight role on the issuance of bond notes in the economy. It is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar through the back door,” he said.

“The macroeconomic fundamentals or conditions for the return of the local currency are not yet right to do so. The issuance of bond notes has a self-control mechanism in that when there are no exports, there will be no bond notes.

“At the rate at which the country is exporting and based on statistics…, we anticipate that bond notes equivalent to around $75 million will be in the market by end of December 2016,” Mangudya added.

When the central bank responded to Mujuru’s lawsuit last month, it described her court application as both “premature and ill-founded”, adding, “Indeed bond notes, outside of a policy announced by Fourth respondent (RBZ), are still at planning stage”.

“At no point has the (Reserve Bank) stated that bond notes are bank notes or indeed currency as defined in our laws, in particular the (Reserve) Act and the Bank Use Promotion Act (chapter 24:24).

“The entirety of applicant’s (Mujuru) action is premised on bond notes constituting bank notes and, or currency when in fact there is absolutely no basis for reaching this conclusion,” Mangudya said then.

But Mujuru, who was sacked from both Zanu PF and government over untested allegations of trying to oust and assassinate Mugabe, wants the Constitutional Court to hear her matter as a matter of urgency, now that the RBZ has made a definitive decision on the introduction of the bond notes.

In her application, Mujuru argues that bond notes are not provided for under the RBZ Act, adding that despite them being said to have the same value as the United States dollar, they were bound to depreciate in value in no time.

“Money is property and a bond note, not being money, can never substitute money. There is therefore an infringement of the right protected by Section 71(2) of the Constitution to the extent that holders of foreign currency will be forced to use or hold bond notes in the place of their money.

“Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door.

“The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar they must follow the law and call it by name given its demonetisation.

“Just like the bearer cheques of the period before 2009, bond notes will not be worth the paper on which they will be printed, but will make the poor poorer as they will be made to lose the little valuable assets they have, such as livestock, to the privileged few who will be in possession of worthless bond notes,” Mujuru says in her application.

The fears of the country receding into the hyperinflationary era of 2008 were heightened last Tuesday by Mugabe’s much-criticised decision to reverse the belt-tightening measures which Chinamasa had announced during his mid-term fiscal policy review statement — doing so without offering any viable alternative measures of his own.

Economists said his decision had dented confidence and the credibility of both fiscal and monetary policy in the country — including the announcement of the introduction of bond notes by Mangudya.

The increasingly frail nonagenarian, the only leader Zimbabweans have known since the country gained its independence from Britain in April 1980, is facing the biggest challenge to his 36-year rule as the nation faces worsening myriad problems which critics say have been caused by his misrule.

Panicking authorities have resorted to using disproportionate force in their desperate bid to contain the growing civil unrest.

On Saturday, heavily armed police and soldiers terrorised residents and protesters in a bid to foil nationwide protests which had been called by 18 opposition parties coalescing under the banner of the National Electoral Reform Agenda (Nera).

Government’s savage clampdown against dissenting voices in the country, saw scores of opposition members and pro-democracy activists being arrested by police at the weekend — amid charges by critics that the country was now effectively operating under a state of emergency.

In the meantime, the High Court yesterday deferred to September 27 hearing an application by pro-democracy groups and opposition parties in which they are seeking to have a new police ban on demonstrations in Harare overturned.

Judge president George Chiweshe deferred the hearing to allow the parties to file their heads of arguments.-Dailynews