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The real cost of the bond brand

I have had an in-depth conversation with my co-writer Mufaro Zhou on the bond notes issue. Naturally, because we are a brand that keeps with the times, we were in agreement that this week’s article carry our thoughts on the arrival of the bond notes. We are both in agreement that I have a discerning spirit as soon after the death of Eric Bloch (a man whose general astuteness in economics always intrigued me), I was asked to contribute something in his usual column.

brand savvy with Stha Magida & Mufaro Zhou


I must tell you it was a mammoth task as I had to try and keep up with a legend. In that article which appeared in our sister paper, The Zimbabwe Independent, I advocated for the introduction of bond coins to assist in change issues. This came as a surprise to my co-writer, but I was convinced the bond coins would work and they did. In this instance, however, when the word came that the Reserve Bank of Zimbabwe was going to introduce the “bond currency” in slightly higher denominations, I said no. I have written several articles stating why they would not work. Having said this, below are Zhou’s thoughts on the introduction of bond notes and I concur with him.

The introduction of the “bond currency” (notes and coins) on Monday finally closed the central bank’s chapter on the forever promised localised currency. The bond notes were obviously not greeted with any excitement as is always the case with the so-called additional Zimbabwe bank notes — be they be bearer cheques, traveller’s cheques or the multiple zero digit notes of 2007-9. Contrary to the central bank’s assurances that the bond notes’ value was equal to the United States dollar, some traders quickly accorded them a trading value of 1:2 in comparison to US$1. Some people felt that RBZ governor John Mangudya just could not resist the temptation of having his signature on a bank note in order to make his mark as the central bank governor.

As the bond notes forcibly filtered into the market, I pondered about the real cost of a brand. The choice to consciously ignore the cost and demand for a brand is why most public enterprises in Zimbabwe will never make a breakthrough in their operations. On the other hand, the public enterprises deliberately pay a blind eye to the underlying fundamentals of why their brands are not performing. The reasons why the bond note brand is highly likely to underperform have been overemphasised in so many articles, with the basic fact being that the economy has to generate money instead of substituting real money with printing “value attached” alternative bank notes.

The “bond currency” can be subjected to a cost-based brand evaluation analysis through a simple method used to determine the actual value of a brand. A brand is valued using the accumulation of the costs that have been incurred to build the brand since conception. Items that can be included when evaluating costs are historical advertising, promotion expenditures and the cost of campaign creation, among other costs. One thing to keep in mind is that while costs can be collected and used the figure doesn’t necessarily represent the current value of a brand. The brand value, though comparable to the cost of the brand, can also be heavily altered by the goodwill associated with the brand. Considering goodwill in the case of the bond currency is definitely a non-starter as history of the central bank and those in authority wipes away any form of brand goodwill.

As I bring the cost-based evaluation analysis into the actual scenario, I start by emphasising that the RBZ claimed to have deposited $200 million with Afrexim Bank to produce bond notes of the same value. They have also promised to reward exporters with an additional 5% in bond notes equating to $10 million, as the two currencies are said to be at par. Furthermore, they paid for the cost of running the printing press and minting machine for the $1 coins.

Transportation of the bond notes and coins was also done at a cost. RBZ also ran a massive public relations campaign which was heavily dissimilar to the actual facts that were presented on the ground. This campaign cannot only be measured in direct financial terms, but also incorporate time, major processes and valueless effort put in by the central bank and other high-profile individuals. It was forced into our mind-sets that bond notes where meant for exporters and people receiving forex from the diaspora, but they were promptly disbursed to the general public on the first day of issuance without the public having exported any commodities.

Taking all this into consideration, I concluded that the brand value cost of the bond currency cannot be less than $250 million, without the goodwill of course, which, if included, could reduce bond currency brand value to a negligible amount. After countless nights in bank queues with this largely informal economy suffering from a liquidity crisis, the populace ultimately just embrace whatever option is available, even in the form of a bond note disregarding its true value. A population in famine hardly has a choice, except to dine on whatever is availed. This is even shown in the Bible in 2 Kings 6 v 25. Without choice we have been bonded. If we cannot trade with the current currency outside the country even in multicurrency economies like Mozambique, then we have indeed been bonded. The benefit of enjoying our current and future investments has been eroded by a few individuals who forcibly control and play with our livelihoods for their own financial advantage and greed of staying in power, even upon ultimate failure, as is the case now.

Till we bond again next week, remain brand savvy.

Stha Magida is contactable on Her co-writer is contactable on

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