Harare – Zimbabweans on Monday greeted their new “bond note” currency with deep suspicion that it could herald the return of hyperinflation that destroyed their savings less than 10 years ago.
The country has operated mainly on US dollars since 2009, but banks and cash machines started dispersing new “bond notes” valued at the equivalent of $1 and $2.
The new currency is meant to tackle the severe shortage of US dollar notes in Zimbabwe, where the economy has been in crisis for years and unemployment is now about 90 percent.
“They are only giving us bond notes because they don’t have real dollars,” Lovemore Chitongo, 40, a shoe salesman in Harare, told AFP.
“There is no way the bond note will be equal to the US dollar. The market will determine the exchange rate.”
Chitongo was charging $20 per pair of shoes — but $25 in bond notes. He would use the difference to buy US dollars on the black market, he said.
The Zimbabwe dollar was abandoned in 2009 after President Robert Mugabe’s government printed so many that inflation peaked at 500 billion percent and a 100-trillion-dollar banknote barely bought a loaf of bread.
On Monday, $1 bond coins and crisp $2 bond notes — decorated with Zimbabwe’s famous balancing rocks — were being reluctantly accepted by some shops and taxi drivers.
“We have no choice but to accept the bond notes for the time being,” said former bank manager Timothy Salimu after making a cash withdrawal.
“At least we will be able to access commodities. We were caught between a rock and a hard place.”
The central bank launched an advertising campaign trying to allay people’s fears, saying retailers and businesses had agreed to accept the new currency.
Opposition to bond notes fuelled some of the fierce anti-Mugabe street protests that have erupted this year, though a brutal police crackdown has recently quelled further unrest.
Police on Monday broke up a protest planned by the pressure group Tajamuka in Harare and arrested the group’s spokesman Promise Mkwananzi, an activist told AFP.
The Zimbabwe economy has been hollowed out by endemic corruption and government policy including land seizures and laws forcing foreign-owned companies to sell majority stakes to locals.
“The government is only treating the symptoms without attending to the problems,” Antony Hawkins, an economist at the University of Zimbabwe’s Business School, told AFP.
“We are not earning enough foreign currency and bond notes are not going to solve that. It will make the situation worse.”
Mugabe, now 92 and in power since 1980, remains active but increasingly frail as his ruling ZANU-PF party jostles over who will succeed him.
In past weeks, many Zimbabweans slept in queues outside banks to try to take out all their US dollars fearing they would be turned into bond notes, but banks put severe limits on daily withdrawals.
At the weekend, the government said $12 million of bond notes would be released on Monday, with each bank customer allowed to withdraw $50 a day.
A $5 bond note is expected shortly as the currency is introduced gradually.
“I will take payments in bond notes but the big question is what do I do with them since some shops are refusing to accept them?” Lewis Mapira, a taxi driver in Harare, told AFP.
The government has repeatedly failed to pay soldiers and civil servants on time this year.
Most of the US dollar notes in circulation have become so worn and dirty they are barely readable.
“Bond notes are a ploy to bring back the Zim dollar,” Movement for Democratic Change (MDC) opposition spokesman Obert Gutu told AFP.
“They are causing panic. We rely on imports and the people who import will need real currency. Our economy is dying.”
The government said the new notes are backed by a $200 million support facility provided by the Cairo-based Afreximbank. — AFP