It is puzzling how President Mnangagwa is now flinching from making the bold decisions that are needed to start Zimbabwe on a path to recovery. The most glaring dropping of the ball is the refusal or reluctance to demonetise the Bond Note. It can only be because he wants to protect and encourage corruption and black market activity, fuellled by a criminally negligent Dr Mangudya at the RBZ

President Emmerson Mnangagwa is in the process of undoing an image that he had carefully built up since November last year and which had brought him massive support and goodwill that he should have capitalised on to correct market sentiment.

But he has dropped the ball so massively that even his own supporters are beginning to have second thoughts. They are beginning to think that there was nothing to all the talk and display of resolve except a desire to win the election and become President.

Fundamentally, the problem with Zimbabwe at the moment is the complete lack of confidence in President Mnangagwa's political will to

  • Fight Corruption
  • Take painful measures, even politically unpopular ones, in order to right the ship
  • Properly clean house in ZANU PF and government to signal to local and international investors that things have changed.
Take the first and most glaring issue: the Bond Note. There is no useful purpose being served by this surrogate currency except to drive speculative activity on the black market. By stopping Professor Mthuli Ncube from demonitising the Bond Note, the president has sent a fundamentally fatal signal to the markets.

Let us explain.

There is believe (sentiment) in the market that the RBZ is secretly printing Bond Notes and selling them on the black market to raise US Dollars. Which takes us back to 2008. The people in the street with the US Dollar also believe this, so they are going to continue driving the "exchange rate" to dizzying heights that will take us to 2008 before the year is out. Guaranteed. Absolutely guaranteed.


Because there is no confidence in the system and no confidence in the Reserve Bank. Those with US Dollars believe the RBZ will continue printing Bond Notes, and it is an avenue for them to enrich themselves by demanding more and more and more Bond Notes per US dollar, taking this into the formal system and becoming, nominally, through RTGS, US$ billionaires without producing anything at all.

Which makes the refusal by President Mnagagwa to demonitise the Bond Note all the more alarming.

By removing this surrogate currency from circulation and stopping it from being legal tender, we will immediately go back to 2010, where everything is priced is US dollars, not Bond Notes or any other local currency.

It will also stop the RTGS problem where it currently is, allowing government to deal with it methodically. Whereas, right now, the RTGS situation continues to get out of hand, driven primarily by the Bond Note on the street.

This leads us directly to the lack of political will to fight corruption. With known criminals and corrupt people, including cabinet ministers and former cabinet ministers, continuing to enjoy their ill-gotten gains, it fuels the sentiment that the fight against corruption was just a cosmetic anti-G40 move.

Which leads to the sentiment that even those remaining in government now, including the new ministers, are still engaging in corruption because there are no consequences for that behaviour as long as you support President Mnagagwa (just it was under President Mugabe).

This sentiment emboldens the black market and fuels lack of confidence in the general population, resulting in panic-behaviour across the board.

Dr Mangudya at the RBZ sits at the nexus of all this and his continued tenure at that institution is so criminal it beggars belief.

Let us give just one example.

Under our system, the political leaders and the RBZ should know that fuel is one of the most visible and fundamental drivers of confidence in the market.

When people see a fuel queue and fuel appears to be in short supply, basic psychology kicks in and people's minds start running to cooking oil, maize-meal and other basic commodities. It just starts with those visible fuel queues and people telling each other "Zvatotanga so" meaning "It has started." And suddenly, you have cooking oil or maize meal demand shooting through the roof as people panic to get these commodities before the fuel situation also reaches those shelves and commodities become scarce.

It follows therefore, that the first thing the RBZ and Ministry of Finance should do is oversupply fuel, consistently. 

Doing this calms the situation in all other sectors automatically.

But this is not happening and no one now believes a word Dr Mangudya says about the situation.  He is a walking confidence crisis.

It also does not help that the President has suddenly gone underground and is no longer visible (just like Mugabe).

People are asking genuinely what happened to the billions of dollars' worth of deals that he was trumpeting just before the elections.

Which adds to the crisis of confidence.

All this, of course, can be traced back to a shocking lack of transparent communication that almost feels like sabotage of the new administration. 

And no, Nelson Chamisa is not the solution. A GNU is not the solution. Even if Chamisa had been elected, we would still have had the debt that we currently have and the world would still be as circumspect as it is now.

The problem is a governance style on the economic front which has distanced itself enough from the Mugabe regime in how it operates. 

To illustrate this, this particular post was made only because of what we saw yesterday, with government now trying to yet again to intervene in the economy by issuing threats to businesses. That is the Mugabe style, a style that does not work and has never worked. It only ensures the continued decline of industry and confidence.

Margaret Thatcher showed the way in Britain in 1979/1980. You can not, as a government, engage in half-measures when it comes to liberalisation. When you liberalise, you do so fully, without flinching. When you do so, you normally correct the situation in a period of 7 months.

But President Mnangagwa is flinching. And we fear the lack of confidence will, within the next 14 days, be so bad that it will not be possible correct it before 2023. 


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