Bond Notes and Zimbabwe’s Bifurcated Economy.

The re-introduction of the Zimbabwe Dollar under the guise of Bond Notes has caused much consternation in Zimbabwe’s Economy. The better part of 2016 has seen Zimbabweans from all walks of life protesting or making submissions to the monetary and fiscal authorities in Zimbabwe to shelve the plans to introduce Bond Notes. As you are reading this piece Bond Notes are already a reality within our economy and in one way or the other we must deal with them. A lawyer friend of mine sent me a text message this morning: Big Men I saw them with my own eyes. I saw the bond notes. It is not hearsay. They were counting big men, and those are not bricks but concrete blocks. They are already being sold and for US$1000 you get ZWBN1500 (1500 Zimbabwe Bond Notes). Already some enterprising people- though connected to the party-state- are using their proximity to tap into the chaos.

Two major problems that Zimbabweans should embrace to tackle is their scavenging public and private executives and the bifurcated nature of the economy- a legacy of colonialism- that creates a two societies in one but with contradictory yet at often times complementary economics. Precisely two economies are operating in Zimbabwe: One based on the fundamentals of modernity and market economics vs. non-market modes of economy. These economies feed into each other creating a complex economy (mixture of formal and informal) that calls for solutions that go beyond orthodoxy western based teleological modernism. However, the crude reality is that the consumption tastes and patterns of most Zimbabweans operate within Western Modernism but at the same time the logic that informs their economics is a fusion of non-capitalist and capitalist modes. The interesting aspect is that the fundamental principles that informs these two worlds are irreconcilable, but to some sections of Zimbabweans they do not see the linkages. This poses the greatest challenges to economic reformers in Zimbabwe. 

The opposition in Zimbabwe is popular for the saying ‘you can’t rig the economy’. The statement presupposes waiting for an Economic Armageddon that will see the confinement of the bad ones of society (ZANU PF) to a Political Gehenna, in the same manner to the biblical Armageddon when sinners will be burnt in hell. This kind of economic logic will likely succeed in a highly urbanised and capitalist societies. The Greek crisis validates the Economic Armageddon End Game, yet events in Zimbabwe since the late 1990s has proved otherwise. ZANU PF’s grip on power failed to collapse even under the worst known inflation levels in human history outside a war zone. The height of the crisis in 2008, even saw ZANU PF and President Mugabe garnering significant support base closer to 50% in the March 2008 elections, despite their defeat in those elections. The significant support base that ZANU PF has been getting indicates a disjuncture between voting behaviour pattern and economic governance. It therefore raises fundamental questions why there has been failing to be an economic implosion outside the state sponsored violence thesis.

This lack of correlation between economic governance and political behaviour of citizens is not surprising when one reads Mhone, Ekeh and Mamdani’s characterisation of the post-colonial state and its attendant problems. Mhone observes that the African post-colonial economy is a structured capitalist enclave with low labour absorptive capacities and thus to lead to islands of prosperity circled by seas of poverty. The impact of the dual economic governance system is also mirrored in Mamdani's conceptualisation of civil society that the post-colonial African state has both, civil (modern) and customary (tradition/native) societies operating alongside each other. Peter Ekeh’s thesis on Colonialism and the Two Publics in Africa, further illuminates on the nature of the post-colonial society- primordial vs. civic- that emerged in post-colonial Africa and accounts for the dual governance system.

A reading of Rosa Luxembourg’s articulation of different modes of production and how capitalism manages to sustain itself by tapping into non-capitalist forms of production is also insightful to understand why the Zimbabwe’s economy has failed to collapse. The statistics indicate a 67% rural based population vs. 33% urban, close to 80% of the Zimbabwean adult population not having bank accounts and more than 90% of Zimbabweans depending on informal or subsistence economies. The argument in these statistics is not necessarily the geographical location but that they present the highest possible chances of citizens' interaction with and assimilating modern economic principles and modes of governance. This re-configuring of the economy has created a complex economy that is neither modern nor traditional, yet at the same time provide opportunities for some and misfortunes for others. It is that group that sees immediate benefits that will sustain the bond notes and they constitute a commanding majority against those minority- mostly urban based, rural petit-bourgeoisie, middle and working class- who will lose out because of their deep immersion in the formal economy. For those in the rural areas and informal economy Bond Notes present an alternative or it will help them to transact in and accumulate the short term. The question of sustainability of the Bond Note is a debate for another day as they must hustle (kuKiya-kiya) to the next day.

In my conversations with some Zimbabweans who are taken advantage of by unscrupulous dealers and business operators, they argue that they would rather dance to the tune on the dance floor. For this section of citizens whether Bond Notes or whatever currency is proposed they will use it because they think it is a passing phase and the question of how we got there is a non-issue for them. The extra-commissions charged by money transfer agencies or the demands by business operators to match amount of goods bought and cash given, practices outside money transfer platforms have rendered citizens hapless. The introduction of Bond Notes will give power to this group to negotiate the value of goods, services and foreign currency without being taken advantage of by predatory business people. A read of Mawowa and Matongo as well as Chagonda gives insights on how business and the state benefitted from parallel market and speculative activities at the expense of ordinary citizens. History is most likely to repeat itself as those who see benefits will only have immediate short-term benefits but the major beneficiaries will be the ruling party, the political connected and big business. These three entities, like in the hyper-inflation  era will be able to hedge their losses but maximise the returns and survive. For the ruling party and President Mugabe, the rule of self preservation- survival -matters most as he seeks a de-facto life presidency project.

The most intriguing question for most people is why ZANU PF continues to get support amidst such a debilitating economic crisis? From MDC-T’s Charlton Hwende to PDP’s Vince Musewe grumblings on their Facebook walls on the lack of correlation between economic governance and voting behaviour outcome- ZANU PF candidate amassed more than 11000 votes vs. 3000 for the second highest candidate- in Chimanimani, and it seems the same trend will likely continue into 2018, all things being equal. This puzzle is not only a phenomenon of geography (rural-urban divide) but a structural question where you have some significant sections of citizens partially or totally not socialised within the modern economy. A debate with one of my scientist cousins is anecdotal to the nature of our bifurcated economy. He argued that Bond Notes are good and they will help to easy liquidity and would not lead to any quasi-financial activities as in the hyper-inflation period. He premised his arguments on that John Mangudya is engaging and not abrasive like Gideon Gono and therefore we will not witness the raiding of bank accounts. Yet, on the flip side of his argument Alex Magaisa’s article articulates how we got to the present crisis and exposes the fallacy of his arguments built on social factors rather than economic facts.

The excessive abuse of Treasury Bills as an instrument for raising cash on the domestic market by the government to meet consumption rather than production goals and the Reserve Bank's directive for the repatriation of Nostro Bank Balances all sounded like the biblical Tower of Babel to him in our conversation.  This immediately make me ponder that if greenwood can burn like this what of dry wood. Despite the high literacy rate in Zimbabwe, we still lack financial and economic literacy. This financial and economic illiteracy presents challenges to all anti-bond notes activists, given that they have become the elephant in the room. Our prescriptions or engagement with the public have largely remained trapped in modernity yet our people are mired in the bifurcated economy where different conceptions of citizenship, morality and material expectations prevail.