Sometime times I feel like I am stuck in a time loop. The same things keep happening again and again in Zimbabwe’s economy. So a few weeks ago, the Zimbabwean informal sector decided that it was no longer going to accept the $5 ZWL note effectively demonetising it. This has happened before, the informal sector ditched bond coins and bond notes last year in very much the same way.
Do you know what else has happened before? The RBZ in all these instances would issue a stern warning to the transacting public telling them not to reject these notes and coins because they were legal tender. That has never worked and will not work now. Here is what the RBZ has to say about the rejection of the $5 ZWL note:
PRESS STATEMENT
REJECTION OF THE $5 NOTE FOR PAYMENT FOR GOODS AND SERVICES
The Financial Intelligence Unit (FIU) is investigating cases involving traders who are rejecting $5 notes for payment for good and services. Such conduct is not only counterproductive but also criminal. ‘Those affected or inconvenienced by this malpractice should report to the Bank, the FIU or the nearest police station. The Bank urges all traders to conduct their operations within the confines of the law and respect consumers.
The Bank advises that all notes issued by the Bank and in circulation are still legal tender.
John P Mangudya Governor23 February 2021
RBZ statement on the issue
This time around the central bank even helpfully ask the public to report anyone who refuses to accept these notes to them. This feeble notice will unfortunately not revive the $5 ZWL which is already dead.
Why this warning will not work
Besides the fact that we have been here countless times before and it has not worked and will not work now here are some reasons why the note is doomed:
- Although the Zimbabwean government ignores it, the informal sector constitutes as much as 70% of the Zimbabwean economy. Gone are the days when civil servants used to dictate what goes and what stays, the informal sector is much more organised now and it is a formidable force that is beyond the Fiscal and Monetary orbits. Using a note they don’t want denies you access to the formal sector. This is a fact members of the public are painfully are of.
- You can always spend the note in big formal shops. However, whatever advantage you might enjoy by being able to spend that $5 ZWL note is wiped away instantly considering the differences between what the informal sector charges versus the very low prices in the informal sector. You cannot compare what big supermarkets charge with what tuck-shops charge.
- It’s a $5 ZWL note! It’s worth about 5 US cents. You cannot buy snacks with it. You will be lucky if you find a banana seller who has bananas going for that much. Unless you have a satchel full of them you are unlikely to be bothered if someone won’t take them. Members of the public are going to simply toss it to the ground where it will join it’s departed predecessors going back to that pangolin $2 ZWD coin instead of wasting their precious time reporting it to the RBZ. This is the biggest reason, thanks to our dilapidated economy no one is upset except our esteemed leaders. Everybody knows the note is just not worth its weight in your pocket so nobody cares.
- Even members of the public don’t want it. Nobody will accept it as change in a supermarket, they would rather take sweets as change. People would rather not withdraw than be given a bunch of $5 ZWL notes so banks will find it hard to put them back in circulation. Once the note goes to the bank it’s stuck there until the RBZ inevitably caves as it has done countless times before and takes it’s paper back.
- Not even government agencies will take it. ZUPCO bus conductors have been saying no.
Did I mention this useless piece of legal tender is not worth the paper it’s printed on? That nobody wants it? The RBZ cannot be proposing to punish everyone because nobody wants it. It’s already done anyway. The note is not marked for death. It’s already dead. The RBZ should be focusing on bringing us notes that make our transacting lives easier instead of resurrecting the dead.
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