State Of The Nation Address And What We Would Like To Hear

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President Robert Mugabe is set to deliver a state of the nation address today, the 6th of December. Business people, investors, bankers and members of the public will be paying a lot of attention to this state of the nation address after the introduction of bond notes. The introduction of the pseudo-currency has been marred with confusion and uncertainty and the business and banking communities will be seeking clarity on a number of issues during the SONA.

  1. How long are bond notes around for?

The bond notes are backed by a $200 million loan from Afrimex Bank according to the Reserve Bank Of Zimbabwe. The Reserve Bank said the notes, which fall under the export incentive, will be in circulation until the $200 million is exhausted. The central bank aims to incentivise exporters and increase the amount of foreign currency coming into the country through the bond notes. The notes were also meant to help alleviate the cash crisis that has gripped the country with people having to stand in bank queues for long hours to get a limited amount of cash. The bond notes were approved after a Presidential decree was issued to make them legal tender. Presidential decrees are valid for 6 months in Zimbabwe and the question is what happens after those 6 months? What happens after the $200 million loan is exhausted? Are they here to stay and replace the USD and pave way for the return of the Zim dollar?

2. Are bond notes really easing the cash crisis?

The first batch of the notes was introduced into the public on the 28th of November 2016. $2 notes and $1 coins were released and the total released so far,  according to the Reserve Bank, is $10 million. This hasn’t gone far in helping to ease the cash crisis and shortening the queues with banks reportedly running out of the bond notes already. This has left people wondering whether the notes are serving the purpose that the Reserve Bank said. People expected a return to normal banking practises but the queues have remained ever long and the daily and weekly limits haven’t shifted. Are these notes really easing the cash crisis then?

3. What exactly is the export incentive and how does it work?

The general understanding was that the bond notes would be offered to exporters who brought foreign currency into the country as a 5% incentive to the amount of forex that they bring in through their exports. However, the notes are now being distributed to all members of the public through all banks as part of their daily withdrawals. Is this how the export incentive is designed to work?  If so, where will the foreign currency imports come from when the notes are being issued to everyone including people who aren’t involved in exporting anything.

4. Is Zimbabwe investor friendly?

Foreign investors are surely eyeing the Zim situation in a hope to find investment opportunities. With the Zimbabwean government setting up statutory instruments to encourage the reopening of local industries and increase local introduction, investors will be interested to hear what the President says about that. With the introduction of bond notes and the subsequent confusion, investors will be looking for clarity during the state of the nation addreess.

The State Of the Nation Address (SONA) will air live on ZBC on the 6th of December at 14:30.

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