During the government of national unity, which ran from 2009-2013, Zimbabwe “dollarised” the economy. We found ourselves using what we called a “multi-currency” system and this meant you could use any currency, but the (almost) official currency was the US dollar (USD). We got our salaries in USD and prices were quoted in USD.
In 2013, ZANU-PF won the harmonised elections and by 2014, we started to experience cash shortages. At first, it seemed like we just had a shortage of coins, or at least that is the explanation we received from the government. They explained that because we had no solid contract with the countries whose currencies we were using, we were not receiving coins and thus we were battling a shortage of small change.
On 18 December 2014, the Reserve Bank of Zimbabwe (RBZ) introduced the 1, 5, 10 and 25cent coins. They called them bond coins and claimed they were on par with the USD in value, because apparently, the coins were backed by a $50-million loan given to our government by Afrexim bank. The full details of the agreement were never made public.
By March 2015, they had introduced the 50c coin. This had many Zimbabweans wondering, was this still about shortage of small change? Or was the government secretly introducing a Zimbabwean currency?
In 2016, Zimbabwe started experiencing major cash shortages. By then, the USD had completely vanished from circulation. Zimbabweans begged the government to join the rand union, or find a way to bring back the USD from wherever it had gone.
Their pleas fell on deaf ears.
On 28 November 2016, much to our shock and horror, the RBZ not only introduced the $1 coin, but also the $2 note. This time, they explained, these bond notes were backed by a $200-million loan facility, again from the infamous Afrexim bank. Surprisingly though, the International Monetary Fund (IMF), through their press officer Andrew Kanyengire, professed ignorance over the existence of such a loan.
Two months later, while we were still trying to make sense of the introduction of the $2 note, $5 bond notes to the value of $15-million dollars (according to the government), were being circulated. Government again claimed the value of these notes was backed by a loan facility with Afrexim bank and insisted the bond note was on par with the USD. Its value against the USD was, according to them, 1:1.
The USD comes in $1, $2, $5, $10, $20, $50 and $100 notes. If the issue was about availing change for these notes, all we ever needed was the first set of coins. If the bond currency was on par with the US dollar in value, why then would the government feel the need to introduce a $2 and $5 bond note when we already had the USD versions of those two notes?
Where had the USD gone for us to have to replace them with our own version of them?
The whole thing stank!
It became quite clear that the government had been trying all along to deceive the public into thinking all we had was a problem of loose change, yet clearly, the problem was more astronomical than that. The USD had disappeared from circulation.
It became apparent that the bond notes were introduced because somehow all the “hard currency” had been siphoned out of circulation and the government urgently needed to do damage control. Unfortunately, the introduction of the bond notes didn’t just fail to ease the cash shortages, it seemed to worsen them.
We spent 2017 and 2018 in bank queues and most of us never managed to withdraw any cash, bond, or USD. Withdrawal limits kept falling and at some point, the maximum withdrawal limit was just $50 (bond) per week. Now the USD had completely vanished. Those who had USD savings found themselves with no access to their hard currency. The government continued to insist that the value of the bond currency was the same as that of the USD.
Had the bond note actually been a real currency and on par with the USD, and also accessible to the public, people would have been able to use bond notes in other countries by exchanging them for foreign currency, or used their visa cards and master cards outside the country. Unfortunately, no other country was accepting the bond note and by 2017, no country was accepting Zimbabwean bank cards unless pre-loaded with foreign currency. The currency was not recognised as legal tender anywhere else, but in Zimbabwe.
Yet through all this, the government continued to insist the bond and USD were 1:1.
Because there was no cash, USD or bond, people had no choice, but to resort to using “plastic money” and mobile money transfers to pay for goods and services. The first choice being ecocash, a mobile money company run by Strive Masiyiwa’s Econet. Ecocash allows one to transfer, or receive money using their mobile phone and also allows one to make payments for almost all goods, and services using their phones. Ecocash charges a commission on every transaction.
The second option was bank cards. One could swipe for goods and services, but only in major outlets as few informal and/or small businesses offered that service.
As the crisis worsened, more people, including street vendors, acquired swipe machines. This proved unsustainable to most, probably because of the bank charges, so most informal traders chose to use ecocash. Thanks to the cash crisis, both ecocash and the banks are making a killing from digital money transfers without having to lift a finger. Do you think they want the situation to change?
As it became more and more evident to all that the bond note was not on par with the USD, the black market came up with a street value of the bond note against the USD. Miraculously, cash reappeared, not in the banks where it should have been, but in the streets. (The current rate is USD$1: ZWD$25.)
Black market forex dealers are popularly known as “money changers”; somehow they have had in their possession since then, an unending supply of the local and foreign currencies that disappeared from the banking system. They brazenly display and trade thick wads of USD, rands and brand new bond notes sometimes still sealed in their Reserve Bank of Zimbabwe packaging. Who is supplying them?
The money changers offer two main services. They sell bond notes to people who need cash as some retailers do not accept card, or ecocash payments. Cash (bond notes) is sold in the streets at a 30% premium. For example, if one wants $100 bond cash, they must transfer $130 to the money changer via ecocash, or bank. The rates fluctuate daily.
Money changers also buy and sell forex. By 2018, $100 USD cost $300 Bonds. What this meant was that one who earned $300 bond, in USD terms, actually earned only $100 USD. Today, USD$100 gives you $2,200bond/RTGS.
These black market traders operate in broad daylight and one identifies them by the thick wads of cash they wave to attract customers. Government officials, who most suspect to be the source of the cash in the black market, turn a blind eye.
Instead of going out of their way to solve the cash crisis, our government chose to jump on the gravy train. In November 2018, the government introduced a 2% tax on all bank transfers. This is a human rights violation. I say so because seeing as there is no cash in the banks, Zimbabweans have no option, but to use digital money. It is a gross crime against the people because consumers have no choice, but to trade digitally.
How does the government, whose role is to protect consumers, decide to join capitalists in the exploitation of citizens?
I will illustrate this with an example of what happens to someone who earns $100.
The punishment starts the moment your salary hits the bank and the bank takes a monthly service fee of about $5. To transfer the remaining $95 to a service provider one is charged the following:
This happens with every single transaction one makes. The government is in cahoots with our banks and with Econet to fleece already impoverished Zimbabweans of the little money they get if they’re lucky. Because of how much these stakeholders are making in their personal and institutional capacities, they are unlikely to solve the cash crisis.
In 2019, the government renamed the bond note “RTGS dollar” and announced that it was no longer on par with the USD. They announced what they called an interbank rate, which is currently pegged at USD$1: RTGS$17. They then banned all use of foreign currency marking the end of dollarisation. Again, the people were the biggest losers.
Because for the longest time, the government had insisted that the USD was 1:1 with the local currency, salaries, which had been pegged at USD during the government of national unity remained unchanged. This meant that if one was earning USD$500 in 2010, after the introduction of the bond note, they automatically started earning $500 bond. $500 bond was in real terms in 2018, worth USD$150. The introduction of the bond note eroded salaries by at least 65%, but the government insisted the value of the bond note was 1:1.
The introduction of the RTGS dollar and interbank rate was even more catastrophic. Because most salaries were not adjusted to the new rates, a salary of $500RTGS is now worth $29, according to the government’s interbank rate of 1:17.
The government will tell you they have doubled civil servants salaries, but what they did was adjust civil service earnings from an average of $500USD in 2018 to RTGS$1000, which is worth USD$58 according to the interbank rate. This not only daylight robbery, it’s a human rights violation of criminal proportions.
Victims of these criminal monetary policies can no longer afford basic human rights of food, health, education and clean water among other necessities.
The Zimbabwean economy looks to many like it’s being run by people who have no idea what they are doing. One would be forgiven for thinking it’s run by clowns who keep making economic blunder after blunder.
But it is not.
Our economy is run by top-grade criminals. Geniuses who have mastered the art of looting and disguising it as ignorance. The biggest beneficiaries of Zimbabwe’s economic woes is Zimbabwe’s ruling elite. It is they who siphoned USD out of the banking system and replaced them with worthless bond notes. It is they who have access to the scarce bond note and are selling it in the streets at a 30% premium. It is our ruling elite that continues to have access to the little forex we earn from exports.
In 2019, Neville Mutsvangwa, son of the Minister of Information, Monica Mutsvangwa and Chris Mutsvangwa was caught with USD$200,000, which he was apparently illegally trading in the black market, but nothing was done to him. Where did he get that kind of money?
In December 2019, the fight between Vice President Chiwenga and his wife exposed how the political elite has access to forex through the CBZ bank. Clearly, the majority of people are facing cash shortages caused and exploited by the ruling elite.
Chief Justice comes to the rescue – of the elite
On 21 January 2020, Chief Justice of the Supreme Court of Zimbabwe, Luke Malaba, ruled that all debts incurred before February 2019 were 1:1 with the USD. Who stands to benefit from such a ruling?
In 2014, when ZANU-PF stalwart and former security minister, Didymus Mutasa was kicked out of ZANU-PF, they went after him by exposing that he owed $69,000 to the electricity authority, ZETDC. It is clear that as a government official, he had not been paying for electricity.
In September 2018, Sydney Sekeramayi, a ZANU-PF politburo member and former minister of state security, was sent to the high court over a USD$327,481 debt owed to the electricity company. If he did not clear the bill, he can now go and pay RTGS$327,481m equivalent to USD$1,488. He was not the only one named.
Tendai Savanhu, former ZANU-PF MP for Mbare owed USD $19,116.20. ZANU-PF MP for Buhera South, Joseph Chinotimba owed USD $43,716. Ambrose Mutinhiri owed USD$54,000. Robert and Grace Mugabe owed USD$345,000 in December 2011, who knows what the figure is now?
According to The Telegraph, on 19 March 2012, Emmerson Mnangagwa then the defence minister, Sekeramayi, Mutasa and Webster Shamu then information minister, owed a combined 650,000 British pounds in bills. Saviour Kasukuwere, then youth minister, owed £70,000 and Morgan Tsvangirai £4,000. One can only wonder how much they now owe.
More ZANU-PF leaders have been exposed as owing ZETDC over the years including Oppah Muchinguri, the current minister of defence, who was reported in 2015 by the Zimbabwe Independent as having last paid her electricity bill for her highlands home in 2012. Christopher Mutsvangwa, Chris Mushowe and many others have been implicated too.
If we assume that all ZANU-PF leaders do not pay their municipal and power bills, it means combined, they owe our parastatals millions of USD. If any of them owed USD$500,000, it means they can pay it back as RTGS$500,000 today, worth a paltry USD$29,000.
The judgment has managed to reduce any debts they have by over 90%!
Zimbabwe currently owes millions of dollars to Mozambique and South Africa for electricity. How much of that bill belongs to ZANU-PF leaders? Because of this judgment that has slashed their debts, it is ordinary Zimbabweans who will for years be tasked with paying those foreign debts.
Government, as an institution, is another major beneficiary of this ruling. Government, known for not paying bills, owes hundreds of millions of USD to parastatals for telephone services, power, water etc. Their debt has just been slashed. It is said that the domestic debt bill stands at USD$9-billion, according to finance minister, Mthuli Ncube in 2018. This judgment, at the expense of the companies government owes, has reduced that debt to just over USD$400-million.
The biggest loser in all of this is the people. The institutions owed money by government officials and the state will suffer huge losses from this and are unlikely to ever be able to provide services efficiently. We shall continue to face water and electricity shortages. Companies will close, jobs will be lost and prices will increase.
Pensioners who were owed their payouts in USD will now be given their pensions in RTGS at 1:1. Insurance we paid for in USD will be paid out in the worthless RTGS.
Zimbabwe is in the hands of ruthless parasites who will suck the nation dry if not stopped. MC
Thandekile Moyo is a writer and human rights defender from Zimbabwe. For the past four years, she has been using print, digital and social media (Twitter: @mamoxn) to expose human rights abuses, bad governance and corruption. Moyo holds an Honours degree in Geography and Environmental Studies from the Midlands State University in Zimbabwe.
"Have no fear of perfection - you'll never reach it." ~ Salvador Dalí