BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE DEPARTMENT OF ECONOMICS

THE EFFECTS OF BOND NOTES ON PROCUREMENT: A CASE OF BINDURA UNIVERSITY OF SCIENCE EDUCATION CHIRIKURE SHUMIRAI (B1544541)

A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE BACHELOR OF COMMERCE HONOURS DEGREE IN PURCHASING AND SUPPLY OF BINDURA UNIVERSITY OF SCIENCE EDUCATION

SUBMITTED IN APRIL 2018

APPROVAL FORM

The undersigned certifies that they have supervised, read and recommended to Bindura University of Science Education for acceptance a research project entitled “The Effects of Bond Notes on

Procurement: A Case of BUSE”, submitted by Shumirai Chirikure in partial fulfillment of the requirements of the Bachelor of Commerce (Honours) Degree in Purchasing and Supply.

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Signature of student Date Date

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Signature of Supervisor Date

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Signature of the Chairperson Date

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Signature of the Examiner (s) Date

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RELEASE FORM

Student Number: B1544541

Title of Project: The Effects of Bond Notes on Procurement: A Case of BUSE.

Programme: Bachelor of Commerce (Honours) Degree in Purchasing and

Supply

Year Granted: 2018

Permission is hereby granted to Bindura University library to produce single copies of this project and to lend or sell such copies for scholarly or scientific research purposes only. The rights and neither the project nor extensive extracts from it may be printed or otherwise reproduced without the author's approval.

SIGNED ------

Permanent address: 3114 Aerodrome, Bindura.

Cell number: +263 773 559 793

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DEDICATION

To Tino, my one and only child and son, the sky is the limit.

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ABSTRACT

The purpose of this study was to assess the effects of bond notes on BUSE procurement. The study was guided by three objectives which are: to examine the effects of bond notes on BUSE procurement; to establish the strategies used by BUSE to mitigate the effects of bond notes on procurement and finally to make recommendations for the challenges posed by bond notes on the procurement front. A case study research design was used and a purposive sample was made up of 10 BUSE employees and 10 local suppliers who were relevant to the study. Collection of data was done using close ended questionnaires where 10 questionnaires were distributed to the all 10

BUSE staff members. All of them were successfully answered and returned. The study adopted both qualitative and quantitative methodologies to analyse the data which was collected. The study found that bond notes posed negative effects on procurement such with disrupted procurement cycles, multi-tier pricing and over-pricing, compromised quality, substitutes, prolonged lead times and failure to secure deliveries. There was failure to secure bids, loss of buyer negotiation power and attractiveness. The research study also concluded that there was a change in procurement due to the introduction of bond notes which led to the shortage of foreign currency in an economy which relies heavily on imports due to lack of productivity. The research study recommended that government should inject United States Dollar into the market or fully dollarize or even adopt the

South African Rand. The study has also recommended that the resources that BUSE have such as the farm should be maximized to obtain long term benefits such as producing own consumables.

Key Words: Procurement, Bond notes, Multi-tier pricing.

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ACKNOWLEDGEMENTS

My sincere thanks and special credit goes to my immediate supervisor Mr. Muchabaiwa, without his patience, guidance and continuous support, expertise and help, it would have not been easy to complete this study. Special thanks goes to Winnie, Charles and Natsikai, Moreblessings and

Cratwell, you are wonderful people, without you guys I would not have made it.

My gratitude and sincere appreciation goes to BUSE and their staff for granting me the opportunity to carry out the research and for provision of any material required for the research to be a success through professional responses from questionnaires. Local suppliers were very helpful and cooperative, responding to interviews freely and openly.

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Table of contents

BINDURA UNIVERSITY OF SCIENCE EDUCATION ...... i APPROVAL FORM ...... i RELEASE FORM ...... ii ABSTRACT ...... iv ACKNOWLEDGEMENTS ...... v Table of contents ...... vi LIST OF TABLES PAGES ...... ix LIST OF ABBREVIATIONS AND ACRONYMS ...... xii CHAPTER 1 ...... 1 THE PROBLEM STATEMENT ...... 1 1.0 Introduction ...... 1 1.1 Background to the study ...... 1 1.3 The aim of the study ...... 5 1.4 The research objectives ...... 5 1.5 Research questions ...... 5 1.6 Significance of the study: ...... 6 1.6.1 To the government ...... 6 1.6.2 To the organization ...... 6 1.6.3 To BUSE ...... 6 1.6.4 To the researcher ...... 7 1.6.5 To future researchers/other academics ...... 7 1.7 Assumptions ...... 7 1.8 Delimitations of the study ...... 8 1.9 Limitations ...... 8 1.9.1 Geographical location ...... 8 1.9.2 The organizational structure...... 9 1.9.3 Time ...... 9 1.9.4 Confidentiality ...... 9 1.10 Definition of terms ...... 10 1.11 Chapter summary ...... 11

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CHAPTER 2 ...... 12 LITERATURE REVIEW ...... 12 2.0 Introduction ...... 12 2.1 The Conceptual framework ...... 12 2.2 Theories of Money ...... 13 2.2.1 Quantity Theory of Money – the Classicalists ...... 13 2.2.2 Liquidity preference theory ...... 14 2.2.3 Monetarism: Modern Quantity Theory of Money ...... 16 2.2.4 The Gresham’s Law ...... 17 2.2.5 Concept of dollarization ...... 17 2.3 Empirical Literature review ...... 19 2.4 Research gap ...... 24 2.5 Chapter summary ...... 24 CHAPTER 3 ...... 25 RESEARCH METHODOLOGY ...... 25 3.0 Introduction ...... 25 3.1 Methodology ...... 25 3.2 Research design ...... 27 3.3 Geographical Location of the Area under Study...... 27 3.4 Population and sample size ...... 28 3.5 Sampling Procedures ...... 28 3.6 Data Collection Instruments...... 29 3.6.1 Questionnaires ...... 29 3.6.2 Interview guide ...... 30 3.7 Data Collection Procedure ...... 31 3.8 Validity and Reliability ...... 32 3.9 Data Analysis and Presentation ...... 32 3.10 Ethical and Legal Considerations ...... 33 3.11 Chapter Summary ...... 34 CHAPTER 4 ...... 35 DATA ANALYSIS, PRESENTATION AND DISCUSSION ...... 35 4.0 Introduction ...... 35

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4.1 Response Rate ...... 35 4.2 Respondents’ Demographic Characteristics ...... 36 4.3 Results ...... 38 4.3.1 Effects of bond notes on procurement ...... 38 4.3.2 Respondents’ strategies to deal with bond notes and multi-tire pricing ...... 54 4.5 Chapter Summary ...... 57 CHAPTER 5 ...... 59 RESEARCH SUMMARY, CONCLUSION AND RECOMMENDATIONS ...... 59 5.0 Introduction ...... 59 5.1 Summary of findings ...... 59 5.2 Conclusions ...... 61 5.3 Recommendations ...... 62 5.4 Area for further research ...... 63 REFERENCES ...... 64 Appendix 1: ...... 69 Appendix 2: External interview guide ...... 74

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LIST OF TABLES PAGES

Table 3.1 Sample size………………………………………………………………….29

Table 4.1 Response rate……………………………………………………………….38

Table 4.2 Demographic profiles of respondents………………………………………39

Table 4.3 Bond notes as a solution to challenges…………………………………….42

Table 4.4 Perceptions about bond notes and its effects on procurement……………45

Table 4.5 Overall views on effects of bond notes…………………………………….55

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LIST OF FIGURES PAGES

Figure 4.1 Responses on whether procurement has remained the same………………….43

Figure 4.2 Effects on deliveries...... 47

Figure 4.3 Effects on settling payment...... 49

Figure 4.4 Effects on securing bids...... 50

Figure 4.5 Effects on buyer’s negotiation power…………………………………………52

Figure 4.6 Effects on buyer-supplier relationships……………………………………….53

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LIST OF APPENDICES PAGES

QUESTIONNAIRE………………………………………………………………………….56

INTERVIEWS………………………………………………………………………………61

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LIST OF ABBREVIATIONS AND ACRONYMS

BUSE – Bindura University of Science Education

ESAP – Economic Structural Adjustment Programme

GDP – Gross Domestic Product

MCR – Multi- Currency Regime

RBZ – Reserve Bank of Zimbabwe

RTGS – Real Time Gross Settlement

SPB – State Procurement Board

USD – United States Dollar

ZAR – South African Rand

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CHAPTER 1

THE PROBLEM STATEMENT

1.0 Introduction

The chapter gives the reader the general background of the study and introduces them to the general research problem as well as aims and objectives of the research. It covers statement of the problem, aims of the study, objectives and research questions. The study will be based on assumptions and the researcher also suggested the significance of the study to various entities. Definition of terms and a summary of the chapter will draw all highlighted issues before relative literature review.

1.1 Background to the study

Zimbabwe experienced an economic meltdown since the introduction of Economic Structural

Adjustment (ESAP) in 1991through the 2000 land reform up to 2007-2008 where hyperinflation was experienced leading to loss of value and confidence in the local currency, posing serious liquidity challenges. As a result, in February 2009, the Zimbabwe dollar was demonetized and thus

Zimbabwe adopted the Multi-Currency Regime (MCR) through The 2009 National Budget statement on 29 January 2009 which legalized the use of multiple currencies for transaction purposes (Noko, 2011), resulting in abandonment of its own currency, the Zimbabwean dollar, in

March 2009 (Sakarombe and Marabada, 2017). Five foreign currencies were granted official

1 status namely, the United States Dollar (USD), the South African Rand (ZAR), the Botswana Pula, the British Pound and the Euro.

After the adoption of the MCR in early 2009, the eventual choice of Zimbabwe’s exchange rate and monetary policy regime remained a key macroeconomic policy issue for Zimbabwe, as well as of a more general topical debate (Makochekanwa, 2017). It is uncontested that the MCR brought hyperinflation to an end; helped to stabilize the financial sector and the economy and establish the conditions for the restoration of positive economic growth. However, the MCR was initially due to run until at least 2012, and was extended until at least 2015 (National Budget Statement, 2009) and again extended beyond 2015 as the USD became both the preferred and the reserve currency.

No strategies were put in place together with the advent of the multi-currency system to control flighting of the USD since it is the reserve currency and store of value for many across the world, so there was a new scramble for Zimbabwe, this time to amass as much green bag as possible

(Nyamunda, 2016). At the same time, locals who had experienced the 2007-2008 hyper inflation amassed it and some externalized it at the same time, leading to vast disappearance of the green bag on the market (Makochekanwa & Chimhete, 2017).

Although it was initially intended that the rand would be the reference currency, the US dollar soon became the dominant currency for both accounting records and transactions, with even government accounts being kept in US dollars (Ngamanya, Munhupedzi & Chidhakwa, 2017).

This largely reflected the difficulties in obtaining ZAR currency, thus reflecting South Africa’s unwillingness to have the Rand circulating “unofficially” outside of reference currency. There were no restrictions on access to US dollars, the choice of prices and wages were agreed and quoted

2 in United States dollars, while South Africa is Zimbabwe’s main trading partner. Fluctuations in the United States dollar/rand exchange rate were therefore bound to have considerable effects on

Zimbabwe’s inflation rate, competitiveness and international investment position

(Makochekanwa, 2016). This exacerbated liquidity challenges which led to the introduction of bond money. In 2014, The Reserve Bank of Zimbabwe (RBZ), introduced $10 million worth of bond coins to avert shortages of small change in coins which posed difficulties for retailers on a practical level (Chagonda 2014). The 50c coins were released in March 2015. However, the circulation of these bond coins is limited to Zimbabwe because they are non-convertible internationally

Inevitably, real challenges came in early January 2016. The economy was hit by a cash crisis, which affected the social and economic wellbeing of the general populace (Sakarombe and

Marabada, 2017). The RBZ introduced bond notes in November 2016 with the motive of solving the cash challenges and they were introduced at par with the US Dollar. Long queues returned at the banks, capped withdrawals per week became the order of the day. The Mobile money increased its market share and electronic payments were promoted by the Central Bank as a solution. This brought a new problem altogether, of multi-tier pricing system on the purchasing front.

Bond notes did not solve the problem of cash shortages but rather, this led to market distortion where there is a substantive amount of bond notes on the market but the dollar is disappearing very fast (Makochekanwa, 2016). Institutions are failing to access the dollar to procure raw materials, goods and services. Banks have also been failing to meet external payment obligations for importation of raw materials, goods and services. Suppliers are demanding cash from buyers for

3 certain products. Companies have been struggling to access the foreign currency to make foreign payments of raw materials, goods and services, thus sourcing foreign currency on the black market

(Nyakazeya, 2017). This has increased pressure on the demand for cash, hence the discounts on cash transactions. Multi-tier pricing has become rampant following an increase in the amount of bond notes in circulation amid growing shortage of the USD. This has spawned the three tier pricing models for USD, bond notes and electronic platforms and mobile money transactions. Thus the coming of bond notes has relegated foreign currency to be hard cash whilst bank balances are now merely book balances. Foreign currency in bank accounts is local currency until the application for foreign currency is approved.

1.2 Statement of the problem

The Central Bank of Zimbabwe introduced Bond notes as a mitigatory measure to ease the cash challenges in 2009. However, this brought about problems of acceptability, availability on supply market, and the reinforcement of electronic money transfer usage by the Reserve Bank of

Zimbabwe (RBZ), and new problems on the purchasing front. The bond note has resulted in businesses demanding more cash payments to settle transactions, induced unnecessary exchange rate risks and complicated cross border transactions and a high level of distrust in businesses. The researcher therefore intends to extrapolate the impact of bond notes on procurement, through a case study of BUSE which operate within set procurement procedures and regulations.

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1.3 The aim of the study

The main objective of the study is to explain the effects of bond notes on procurement and strategies used on the procurement front as they grapple with the challenges.

1.4 The research objectives

The study seeks to establish the following specific objectives:

i. To assess the impact of bond notes on procurement at BUSE

ii. To establish the strategies that were employed by BUSE to deal with the problems brought

about by bond notes. iii. To recommend solutions to the problems posed by bond notes to BUSE procurement.

1.5 Research questions

The study seeks to answer the following questions:

i. What are the effects of bond notes on procurement at BUSE?

ii. What strategies are employed to deal with the problems brought about by bond notes by

BUSE? iii. What are the recommendations to challenges posed by bond notes on the procurement front

at BUSE?

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1.6 Significance of the study:

1.6.1 To the government

The study will help policy makers in developing strategies of dealing with economic uncertainties, currency fluctuations and multi-tire pricing systems. The study will show the imbalance between the introduction of bond notes and the easing of the cash shortages.

1.6.2 To the organization

The department of procurement in the organization under study will benefit from this study when it comes to forecasting, budgeting and strategizing on currency fluctuations and multi-tire pricing systems. The study will encourage and remind management of the need to develop strategies to deal with economic uncertainties and highly volatile currency fluctuations when it comes to strategic planning. The study will also add knowledge to the institution on the strategies to deal with economic uncertainties in procurement, thus improving procurement effectiveness.

1.6.3 To BUSE

It will add value to the academic perspective since it will be a databank for future reference.

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1.6.4 To the researcher

It is a good basis from which the researcher will carry out more detailed future researches through increased knowledge, thus will gain considerable experience in research hence can be a formidable icon in research and development fraternity of the nation.

1.6.5 To future researchers/other academics

Findings and recommendations of the study will help future researchers to solve problems of similar nature, thus highlighting strategies of dealing with currency fluctuations, dealing with bond notes and economic uncertainties.

1.7 Assumptions

 Bindura University as an organization, characterizes most, if not all, state universities and state

enterprises or parastatals.

 The research will have access to vital sources of data.

 The researcher will obtain accurate, complete, relevant and unbiased information.

 The case study is a true representation of the state enterprises since they are all governed by

State Procurement Board (SPB) regulations.

 The respondents will have an insight of, and will understand what will be asked of them.

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1.8 Delimitations of the study

The research will look at the effects of bond notes on procurement at public entities. A case study of BUSE procurement is deemed to be a true representative of them all since they are all governed by the same procurement board and are prevailing in the same economic situation with the same source of funding.

Suppliers’ contributions are vital and therefore the targeted population as well as operational workers who are directly involved in daily procurement activities. It shall review the period nine months before the bond notes and nine months after bond notes.

1.9 Limitations

1.9.1 Geographical location

The research will be conducted using a case study of a public university – this might affect the applicability of results to private enterprises which might be operating under flexible procurement regulations. However, the assumption is that they are all prevailing and operating in the same economic situation, so the results will be applicable.

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1.9.2 The organizational structure

BUSE is a bureaucratic organization which follows strict adherence to protocols, procedures and regulations. Exchange of ideas and information is based on levels and positions occupied in the organization, thus the tall hierarchical structure can hinder the researcher from obtaining sufficient and critical information. However, the researcher will make use of her attachment ties with the procurement team as well as the bursary department in which procurement is housed. The researcher will leverage on her being an employees of the same organization under study thus can access all people necessary for this research.

1.9.3 Time

The time available for the researcher might not allow her to interview all the relevant people, thus she will make use of interviews, questionnaires and extensive secondary data consultations to collect research data.

1.9.4 Confidentiality

Some information is held sacred and confidential to a particular group of people so the researcher might find it difficult to access information on payment strategies used by BUSE in order to acquire goods and services. A higher level of persuasion tactics and privacy shall be employed and observed in order to convince the respondents.

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1.10 Definition of terms

Procurement: It is a proactive, strategic corporate activity to ensure a continuing supply of goods and services to enable world class organizational performance (Lysons and Farrington, 2016).

They add that procurement manages supply chain risks through the effective negotiation of contracts, cost and price models, quality and other essential supply characteristics. Van Weele

(2014), supports saying it is the management of the company’s external resources in such a way that the supply of all goods, services, capabilities and knowledge which are necessary for the running, maintaining and managing the company’s primary and support activities is secured under the most favourable conditions. Examples may include raw materials, supplies, and other consumable items as well as assets such as machinery, laboratory equipment, office equipment and buildings.

Arbitrage: The simultaneous buying and selling of securities, currency or commodities in different makes or in derivative forms in order to take advantage of differing prices for the same asset (Samuelson et al, 2005).

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1.11 Chapter summary

The chapter comprised of an introduction and background to the study, the study objectives were formulated together with the research questions emanating from the objectives. The chapter also looked at the actual benefits that the audience stood to benefit from the study as well as the limitation and delimitations of the research. Chapter two will be looking at what have been covered by other authorities on the subject matter. Available relevant literature will be extracted from national, regional and international fraternity and it will be discussed in line with research design, population and sample research instruments and data collection procedures will be handled in line with the research. Chapter three will deal with the research methods and methodology and various aspects like research design, population and sample research instruments and data collection procedures will be handled after the collection of the data, the researcher will store and analyze it using micro-soft excel. Chapter four will be apprehensive with data presentation, analysis and interpretation, through tables, bar-graphs and pie-charts. The summary of the findings, conclusions drawn and recommendations will be provided by the researcher. Chapter five will cover recommendations based on research findings as well as feasible strategies to the identified gaps.

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CHAPTER 2

LITERATURE REVIEW

2.0 Introduction

This chapter aims to review the critical points of current knowledge on the topic under study.

It gives an extensive review of the available theoretical and empirical literature relevant to the study, summary of the literature review and the research gap.

2.1 The Conceptual framework

The demand for money is derived from its key functions as a store of value, a medium of exchange, unit of account and a means of deferred payment. As such, the demand for money is a question of how much the economic agents are willing to hold their wealth in the form of real cash balances at a point in time and what motivates them to do so (Mzumara, 2014). The discussion around money starts on the definition and motive of holding money.

Makochekanwa, (2016), quotes Friedman (1992), as saying money is whatever or anything that is generally accepted in exchange for goods and services; accepted not as an object to be consumed but as an object that represents a temporary abode of purchasing power to be used for buying other goods and services (Samuelson and Nordhaus, 2005).”

In application, the definition of money is derived from its key four functions (Sloman , 1991).

Firstly, money can be demanded by rational economic agents due to the functions it serve, as well as a medium of exchange (Grant, 2000). In this context, money is used as a means to

12 purchase (buy and procure) goods and services, and also in the business of selling goods and services (Beardshaw, Brewster, Cormark and Ross, 2001). As a medium of exchange, money eliminates the need for double coincidence of wants and brings efficiency in the economic system (Mzumara, 2014).

Money also functions as a store of value by affording economic agents the opportunity to perform inter-temporal transfer of value from one period to another as it allows them to transfer purchasing power from one period to another (Grant, 2000). Thirdly, money functions as a unit of account by providing a yardstick for measuring the relative worth of a wide variety of goods and services (Mzumara, 2014). Lastly, according to Beardshaw et al, (2001), money functions as a means of deferred payments whereby it allows economic agents to buy on credit.

2.2 Theories of Money

2.2.1 Quantity Theory of Money – the Classicalists

Fisher’s Quantity Theory of Money states that nominal income is determined solely by movements in the quantity of money (Grant, 2000). His argument was that, when the quantity of money doubles, Money demand multiplied by Velocity doubles and so must Price level multiplied by Y, the value of nominal income.

Beardshaw et al (2001), supports that the Classicalists thought that wages and prices were completely flexible, they believed that the level of aggregate output Y produced in the economy during normal times would remain at full employment level, so the income in the equation of exchange could be treated as reasonably constant in the short run. The quantity theory of money

13 then implies that if Money demand doubles, Price level must also double in the short run because Velocity and income are constant (Sloman, Wride and Garratt, 2012).

For the Classical economists, the quantity theory of money provided an explanation of movements in the price level (Sloman & Garratt, 2013). Therefore movements in the price level result solely from changes in the quantity of money in the market.

2.2.2 Liquidity preference theory

According to Grant, (2000), in 1936 John Maynard Keynes abandoned the Classical view that velocity was a constant and developed a theory of money that emphasized the importance of interest rates. Keynes argues that there are three motives why rational economic agents would want to hold money at any particular point in time: the transactions motive, the precautionary motive, and the speculative motive (Mzumara, 2014). Therefore, any money should satisfy and satisfy the three motives.

Transactional Motive

People hold money to finance their day to day needs (transactions). Keynes emphasized that this component of the demand for money is determined primarily by the level of people’s transactions (Sloman et al, 2013). But he believed that these transactions were proportional to income, like the Classicalists, he took the transactions component of the demand for money to be proportional to income.

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The precautionary motive

Keynes also said that people hold money as a cushion against an unexpected need, unforeseen contingencies or emergencies, for example, unexpected bills, unexpected visitors, death, accident, hospitalization. He believed that the amount of precautionary money balances people want to hold is determined primarily by the level of transactions that they expect to make in the future and that these transactions are proportional to income (Sloman et al, 2012). Therefore he postulated that the demand for precautionary money balances is proportional to income.

Thus Keynes is simply saying that income is the main influence on consumption (Grant, 2000).

The speculative motive

Keynes agreed with the Classical economists that money is a store of wealth and called this reason for holding money as the speculative motive. He believed that even though the wealth component of the demand for money is proportional to income, interest rates too have an important role to play as a determinant of the speculative motive of the demand for money

(Beardshaw et al, 2001). From Keynes’ reasoning, as interest rates rise, the demand for money falls and therefore money demand is negatively related to the level of interest rates. The demand for real money balances is negatively related to interest rates and positively related to real income. Thus rationale economic agents will as much as possible put their money in interest bearing options such as bank accounts if the interest rate in high or keep the cash for other speculative purposes (Grant, 2000).

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2.2.3 Monetarism: Modern Quantity Theory of Money

A school of economic thought that stresses the importance of money supply, led by Milton

Friedman is what is known as monetarism (Grant, 2000). Kishtainy (2014), argues that there is a link between the money supply and the economic output in the short run, yet in the long run , more money would simply lead to inflation. Thus Grant (2000), agrees that fluctuations in the rate of inflation appear to follow the fluctuations in the growth of money supply quite closely. Attempts to fine-tune the economy through active monetary policy – boosting the money supply during downturns, for example, would be futile (Kishtainy, 2014). Thus Sloman and Garrat (2013), explain that even though there might be some short-run impact, the lags between different variables would make it hard for the government to successfully harness the effects and thus in the long-run, the result would be higher inflation. The argument here is that, according to Kishtainy (2014), rather than fiddling with the money supply in response to the economic cycle, governments should set a fixed level of money growth and stick to it regardless of economic conditions.

Whether the demand for money will be backed by Friedman’s theory or Keynes’ propositions, in any economic situation, economic agents will prefer to have money so as to lubricate their economic activities (Coskeran 2012). Thus according to Kishtainy, (2014), the issuance of any money or anything which will mimic the functions of money in any society will always impact on the economic activities (like procurement) of the majority citizens of that society. The introduction of the Zimbabwe Bond Notes by the Reserve Bank of Zimbabwe (RBZ) brought about a lot of reactions and perceptions from various economic agents across the country, and some beyond the borders (Makochekanwa, 2016). It also brought about substantial change in

16 the day to day economic transactions by economic agents, hence the closer examination of

BUSE as a whole unit to find out the impact on procurement.

2.2.4 The Gresham’s Law

The Gresham’s Law was propounded by Sir Thomas Gresham (1519-1579) an English financier who, during the Tudor Dynasty stated that bad money drives away good money, thus any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the

"good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the artificially overvalued money is preferred in exchange, because people prefer to save rather than exchange the artificially demoted one (which they actually value higher). In short, the coins that circulate in the economy will tend to be of the most

“debased” sort available, like bond note. Thus Bonga & Dhoro (2015), explain that what has happened to the USD and the Zimbabwean dollar is not new, and has been proposed long back by Gresham’s law which suggests that a high quality currency is driven out of circulation by a cheaper currency.

2.2.5 Concept of dollarization

Berg and Boreinsztein, (2000), refer to dollarization as when a country officially abandons its own currency and adopts a more stable currency of another country, most commonly the U.S. dollar as its legal tender. It takes different forms such as official, unofficial, full or partial, or

17 currency substitution which Bogetic (2000), defines as the situation where two or more currencies circulate within a single economy or region to facilitate transactions that are unrelated to international trade and finance. Zimbabwe adopted unofficial dollarization in 2009 when it adopted the MCR when the local currency completely failed until authorities, authorized the use of foreign currency in all formal dealings and the Central Bank ceased to issue new notes and coins. Market forces saw the USD being preferred more for almost every

Transaction compared to the ZAR (Makochekanwa, 2016). The process of dollarization in

Zimbabwe was peculiar in that it was not backed by international reserves as is normally the case with countries that have dollarized (Bonga & Dhoro, 2015). The only foreign currency that the government had was from taxation after full dollarization.

Full dollarization is the most direct, irreversible, and credible way of bringing about tighter trade and financial integration (Bogetic 2000). For countries that have officially adopted other currencies they do have access to coins of the adopted currency, whilst informal dollarization has no access to coins. The concept of dollarization is not new, some countries have used it as a way to stabilize their economies and the most adopted currency is the United States dollar.

Full dollarization, however, is an almost permanent resolution whereby the country's economic climate becomes more credible as the possibility of speculative attacks on the local currency and capital market virtually disappears (Bonga & Dhoro, 2015).

Dollarization is a positive stance for stabilisation in the short run and several countries have adopted such regime to attain stability. Panama adopted the dollar as its official currency in

1904, Ecuador dollarized in September 2000 and El Salvador followed suit in January 2001, amongst many others. Dollarization may promote economic stability in the short term, but structural and institutional problems must also be addressed if a dollarizing country like

Zimbabwe is to achieve long-term economic growth and development (Berg et al, 2000).

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According to Bonga et al (2015), the only country that has successfully de-dollarized is Israel, which introduced the U.S. dollar in the late 1970s as a parallel currency, and only managed to get rid of it after a series of economic reforms reinstated confidence in the shekel. Lots of informally dollarized countries, like Argentina, go through waves of increasing, then decreasing dollarization in line with citizens’ confidence in the local currency.

Dollarization, though it benefited the general public in Zimbabwe, it did have adverse effects on most businesses. Low confidence in the financial institutions of the country caused the public to keep their foreign currency transactions outside the financial system. Thus Boeg

(2000), states that one of the more significant downsides is if a dollarized country suddenly reintroduced their domestic currency. In November 2014, Zimbabwe suddenly introduced bond notes.

2.3 Empirical Literature review

There is scanty empirical research on the exact area understudy given that it is a rare situation to ever happen in many (if any) economic societies. The research which is nearer to this was done by Makochekanwa, (2016), and it analyzed the reactions and perceptions of

Zimbabwean economic agents following the announcement of the impending introduction of the Zimbabwe Bond Notes. The analysis was done through primary data collection in which a structured questionnaire was administered to 145 economic agents within the first seven days after the announcement. The major findings were that the majority of the surveyed

Zimbabwean economic agents were frightened by the announcement. 66% of the total sample indicated that the introduction of the Zimbabwe Bond Notes will negatively impact on their business operations and/or economic activities. To minimise the possible negative impacts of

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Zimbabwe Bond Notes on their economic activities, economic agents were going to withdraw all the US dollars from their local (Zimbabwean) bank accounts, keep all their US dollars safely in their homes or even under the pillow while some would do nothing! Given free choice and without any coercion to choose between US dollars and the Zimbabwe Bond Notes as the medium of exchange, majority of respondents totally 136 (representing 94% of the sample) said they will prefer and demand US dollars, while only two respondents (representing 1% of the sample) said they will demand the Bond Notes. A total of seven respondents (representing

5% of the sample) said they will demand both US dollars and Zimbabwe Bond Notes. The research also revealed that the major disadvantages of the introduction of Bond Notes into the economy includes it is not convertible, discourages imports, discourages investments, it is inflationary, erodes confidence in the financial system, and that it promotes black (parallel) market in foreign currency. The conclusions were that the introduction of the Zimbabwe Bond

Notes will have a negative and severe impact on the economic activities of Zimbabwe as represented by declines in exports, manufacturing activities, investment and deposit banking and an increase in inflation. The recommendations were that if the authorities were determined to continue and implement the policy contrary to the views by the general business community and ordinary Zimbabwean citizens, then the best they can do is to inject the US$200 million into the economy as United States of America dollars (US$).

The other previous study which is closer to the current research in that it looked at Bond Coins which fall in the same family as Bond Notes is the one by Makochekanwa and Chimhete

(2017), which investigated the effectiveness of bond coins as a solution to change shortage, and mispricing challenges faced by businesses and the transacting public in Zimbabwe. The study employed a questionnaire approach in which they interviewed 150 economic agents. The analysis found a significant positive relationship between bond coin adoption and change

20 problem alleviation. The authors concluded that the bond coins were successful in addressing challenges of small change in Zimbabwe. However, the analysis found an insignificant relationship between small change alleviation and overpricing. This shows that bond coins have not been successful in addressing overpricing in Zimbabwe. With regards to the extent of bond coins adoption by businesses and the transacting public in Harare CBD, the paper established that the uptake of bond coins by businesses and the transacting public was successful to a larger extent with evidence from customers from Harare’s CBD supermarkets. Specifically, evidence from the research established that 80% of the respondents preferred bond coins to rand coins, with 86.67% of the respondents preferring bond coins to vouchers. The research further established that 86% of the research participants preferred bond coins to gifts while 98.67% of the respondents confirmed that small businesses accepted bond coins and 98% of respondents further confirmed that they can transact with bond coins with large businesses. The paper concluded that the introduction of bond coins in Zimbabwe successfully solved the problem of small change though the same introduction of bond coins failed to solved the problem of overpricing.

Another study which is related to the topic under study is the one by Munhupedzi and

Chidhakwa (2017), titled “Investigating the Impact of Dollarisation on economic growth: A

Case of Zimbabwe.” This study examined the effects of dollarization on business in Zimbabwe focusing on economic indicators such as inflation rate, GDP, employment and ease of doing business during the period 2009-2015. The general speculation was that Zimbabwe’s economic problems were due to dollarization. Through analysing data from interviews and secondary sources, the research established that dollarization brought about stability in the economy, arrested inflation, and caused a marginal increase in GDP. However, the response of the employment rate was independent of the dollarization and may be attributed to other factors

21 such as Economic Structural Adjustment Programme (ESAP) in 1992, the global economic crisis in 2008 and the absence of reliable data. The recommendations were encouraging the use of other currencies and adoption of the ZAR.

Dhlamini and Mbira (2017), carried out their study on the Current Zimbabwean Liquidity

Crisis and showed that the liquidity crisis beleaguering banks has been bedeviling companies since 2009, after the introduction of the multi-currency system which has affected the

Zimbabwean economic development. They investigated the causes of the liquidity crisis faced in the Zimbabwean economy. The study used survey design and researcher administered questionnaires in collecting data from the respondents located in Harare, Bulawayo, Gweru and

Masvingo. Out of the 200 questionnaires issued, 150 were successfully completed and returned resulting in a response rate of 75%. The study also used secondary data obtained from government agencies on export and import performance. SPSS AMOS was used to test the hypothesis raised and generate a path model determining the size and strength of the direct and indirect influence between the predictor variables and the downstream variable. The study identified public and investor confidence, country risk, and externalization of funds, illicit financial flows, and net export performance as significant drivers that have an effect on the current liquidity crisis as antecedents to liquidity crisis. The results showed that the absence of the lender of last resort role by the central bank has no significant contribution to the liquidity crisis currently obtaining. It is recommended that the government focuses on the aforementioned antecedents in order to address the liquidity crisis. It was recommended that the government focuses on the aforementioned antecedents in order to address the liquidity crisis.

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In a research by Makochekanwa (2007), the author investigated the demand for money for

Zimbabwe during the hyperinflation period. The research employed monthly data for the period covering February 1999 to December 2006. The paper found that both interest rate and rate of change in prices were relevant variables for explaining the variations in the demand for real cash balances in Zimbabwe during the period studied.

Another paper by Munoz (2006) investigated the demand for money in Zimbabwe using monthly data for the period 1998:1 – 2004:12. The author employed time series econometrics in which broad money (M3), domestic consumer price index (CPI), real gross domestic product (GDP), the 3-month deposit interest rate and the parallel (black) market foreign exchange rate were the major explanatory variables. The study found a stable money demand function which exhibited a long run income elasticity of around 0.5 in line with Baumol-Tobin expectations.

Nyawata (2001), employed time series data analysis in the form of error correction model to investigate the determinants of demand for money in Zimbabwe, and at the same time analysed the extent to which the process of financial liberalization might have caused instability in monetary aggregates. The author estimated money demand functions for both narrow money

(M1) and broad money (M2) for the period covering 1975 to 1998. The study found that money demand remained stable even after a regime shift which was represented by a shift from financial repression to financial liberalization under the Economic Structural Adjustment

Programme (ESAP) economic reform of 1991 to 1995.

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2.4 Research gap

Previous studies related to this study only looked at the introduction of Bond Coins which fall in the same family as Bond Notes, as well as the perceptions on the introduction of bond notes.

The rest of the studies reviewed concentrated more on the demand for actual money. However, since the introduction of bond notes, no study has been established concerning the impact of bond notes on procurement at BUSE in particular hence the rationale behind this study. Unlike previous studies by Makochekanwa and Chimhete, which focused on the effectiveness of bond coins as a solution to change shortage, and mispricing challenges faced by businesses and the transacting public in Zimbabwe, this study focuses on the impact of bond notes on procurement.

2.5 Chapter summary

The literature was guided by the Friedman’s and Keynes’ theories of money. It was seen that money should be acceptable in the exchange for goods and services as an object that represents a temporary abode of purchasing power to be used for buying other goods and services, thus it should be used as a means to buy or procure goods and services. It should eliminate the need for double coincidence of wants and bring efficiency in the economic system, enabling the transfer of purchasing power from one period to another. The issuance of money or anything which will mimic the functions of money in a society (like bond notes) will always impact on the economic activities of the majority of citizens of that society, like procurement. The next chapter provides information about the research methodology which will be used in this study.

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CHAPTER 3

RESEARCH METHODOLOGY

3.0 Introduction

This chapter describes the methodology used in this research. For the purpose of this study, a mixed method design consisting of both quantitative and qualitative research methods was used. In this chapter, the research methodology discussed encompasses the research design, geographical location of the area, population and sampling procedures, research instruments used for data collection, research ethics, data collection approaches as well as data presentation and analysis.

3.1 Methodology

Methodology is a way to systematically solve the research problem and it is defined as an approach taken to tackle a research problem (Musingafi and Hlatywayo, 2013). Wyse (2011), defines qualitative research as primarily exploratory research which is used to gain an understanding of underlying reasons, opinions, and motivations. It provides insights into the problem or helps to develop ideas or hypotheses for potential quantitative research. In this case, the researcher used a complex, holistic picture, analysed words and reports detailed with views of key informants and conduct the study in a natural setting. Qualitative research methods will be used because they help provide background information on examining the impact of bond notes on procurement at BUSE.

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Contrary to qualitative research study, quantitative research paradigm is an inquiry into a social or human problem based on testing a theory composed on variables, measured with variables and analyzed with statistical procedures in order to determine whether the predictive generalizations of the theory holds truth (Creswell, 1994). Put another way, quantitative research is based on measurement therefore pre-structures the data, research questions, conceptual framework and design. One advantage put forward by Tom et al (2011), is that quantitative research readily allows the researcher to establish relationships among variables whereas Tashikori and Teddie (2002), adds that it is better in understanding large scale, structural features of social life.

Thus, the research method that was used in this study is a mixed method design which consists of both qualitative and quantitative techniques. According to Tom, Chigunwe and Nkala

(2011), mixed method designs are usually used because one method alone would not provide a comprehensive answer to the research questions. One advantage of the mixed method design is that it provides strengths that offset the weaknesses of both quantitative and qualitative approaches research (Jick, 2010). The two paradigms were used since one method complemented the other in this research study thereby establishing a hybrid approach. The findings from one type of study were also checked against the findings deriving from another to check validity. In this case, the mixed methods were used to enrich the understanding of the impact of bond notes on procurement at BUSE in Zimbabwe, through confirmation of conclusions.

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3.2 Research design

According to Musingafi and Hlatywayo (2013), research design is the plan to be followed to answer the questions raised by the research problems. It is a set of plans and procedures that reduce error and simultaneously help the researcher to obtain empirical evidence (data) about isolated variables of interests. A case study research design was chosen for this research study.

A case study is an in-depth study of a particular situation that is used to narrow down a broad research field into a researchable one. This is so because the researcher focused principally on the Bindura University Buying (Procurement) Department. The design is chosen because it enables the researcher to make use of several approaches to research (Mukono, 2015).

3.3 Geographical Location of the Area under Study

Bindura University of Science Education is situated in Bindura town. The town is located in the northern side of Harare and it is the capital city of Mashonaland Central Province some

89km from Harare. The town is administered by the Bindura Municipality. According to

Zimstats, (the Zimbabwe National Statistical Agency 2012), Bindura town has a population of

43 675 and 10 950 households. Bindura has three institutions of higher learning (universities such as the Zimbabwe Open University, Bindura University of Science Education and

Zimbabwe Ezekiel Guti University), a number of primary and high schools, government departments, two major hospitals, retail and wholesale shops (such as N Richards, Gains, Metro

Peach, TM, and OK, ColourSell Furniture and Electrical Equipment Suppliers) and major business operators, as well as a number of manufacturing and processing industries.

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3.4 Population and sample size

A research population is generally a large collection of individuals or objects that is the main focus of a scientific query. It is for the benefit of the population that researches are done

(Castillo, 2009). Chimedza (2013), defined population as the collection of the entire individual items or points under investigation. A target population refers to the aggregate of all possible elements for which results are required. The particular population, which the study is interested in, and from which the sample is drawn, is known as the target population (Dooley, 1990).

For the purpose of this research, 10 employees that comprise the buying team were chosen, and 10 local (Bindura) suppliers who are on BUSE’s 2017 suppliers’ list who comprise 2 wholesalers, 2 retail supermarkets, 1 farmer, 5 hardware suppliers. In total, the researcher will conduct 10 interviews and administer 10 questionnaires to obtain information.

Table 3.1: Sample Size

SAMPLING DATA COLLECTION

CATEGORY TECHNIQUE TOOL TOTAL SAMPLE

Buyers Purposive Questionnaires 10

Suppliers Purposive Interview guide 10

TOTAL 20

(Primary source: 2018)

3.5 Sampling Procedures

Moore and McCabe, (2015) defined sampling as the process of selecting units (for example people, organizations) from a population of interest so that by studying the sample one may fairly generalize the results back to the population from which they were chosen. For non-

28 probability sampling, the probability of each case being selected from the total population is not known and it is impossible to answer research questions or to address objectives that require a researcher to make statistical inferences about the characteristics of the population. Thus against this background, the researcher used the non-probability sampling technique. The sampling method that was used is purposive sampling. The study employed purposive sampling technique where respondents were selected according to the drive of the study. By definition, purposive sampling involves the targeting of social groups, in this case, the study targeted all procurement staff and 10 local suppliers who are on BUSE’s 2017 suppliers’ list who comprise

2 wholesalers, 2 retail supermarkets, 1 farmer, 5 hardware suppliers. Tom, Chigunwe and

Nkala (2011), contend that respondents/ participants are selected on the basis of the research objectives. Purposive sampling was advantageous in that it is less rigorous, convenient and feasible in such contexts where time and resources constraints are limited.

3.6 Data Collection Instruments

Multiple forms of data collection techniques including questionnaires, documentary research and interviews were used in order to produce a research that has high levels of reliability and validity (Tom, Chigunwe and Nkala, 2011).

3.6.1 Questionnaires

According to Hussey and Hussey (1997) as in Birungi (2015), a questionnaire is a list of carefully structured questions, chosen after considerable testing, with the view of eliciting reliable responses from a chosen sample. A questionnaire consists simply of a list of pre-set questions. The questionnaires used in this study consists of both structured and semi structured questions. Open ended questions allowed respondents to compose their own answers rather

29 than choosing between a number of given answers. On the other hand, closed questions require a choice between a number of given answers but do not allow the respondent to qualify and develop their answers.

The questionnaires are by far the most common way researcher use to gather information because they are cheaper to administer. The questionnaires have closed questions which makes respondents keep fixed and remain focused on the subject under study. Open ended questions give the respondents the opportunity to fully express their ideas without limitation as compared to the closed questions. More so, the questionnaire gives the respondents free time to express their views without the influence of the researcher. Therefore, the two methods were fused together so that their respective strengths might be reaped. The questionnaires were operationalised in terms of the impact of and strategies to address the problems associated with bond notes on procurement at BUSE in Zimbabwe. These variables were the basis for designing the semi-structured questionnaire used.

A sample questionnaire was first conducted to 5 people so as to eliminate all sources of weakness, error, bias and to obliterate ambiguities. Following the pilot test, a standard questionnaire was finalized and administered to employees who work in the procurement

Department at BUSE.

3.6.2 Interview guide

An interview can be defined as a questionnaire administered by an interviewer who is not allowed to deviate in any way from the questions provided (Haralambos and Holborn 1991, cited in Tom et al, 2011). It can be done face to face or using a telephone. The researcher

30 preferred face to face interviews since the distance permitted and due to additional benefit of enhancing information through non-verbal ques. To ensure success of the interview sessions, the researcher adequately planned for the sessions, making appointments beforehand and drawing schedules properly. The researcher would also transcribe data obtained during each and every interview and record some of the interviews. They were done on a one by one basis.

The advantages of in-depth interviews are receiving instant feedback, first-hand information coming up with more detailed data through the use of information relayed by the respondents through non-verbal expression, prompting further enquiries into the subject matter. Interviews give room for the interviewer to ask more complex questions and follow-up questions.

Interviewees are guaranteed security on every data they provide and also interviews affected by time will be rescheduled. For the purpose of this study, external suppliers were interviewed on the impact of bond notes on procurement at BUSE. The Interview guide was operationalised in terms of the impact of and strategies to address the problems associated with bond notes on procurement at BUSE in Zimbabwe.These variables were the basis for designing the interview guide used.

3.7 Data Collection Procedure

The researcher purposively selected external suppliers and booked them for the interviews.

This was then followed by the actual interviews which the researcher personally administered.

The researcher also self-administered drop-and-pick questionnaires to employees in the BUSE

Buying Department in order to help them clarify the research questions. In all cases, the researcher sought for written consent from the respondents before the interviews began so that they could acknowledge their participation. All the data provided was accurately recorded.

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3.8 Validity and Reliability

Reliability is defined as the accuracy of the actual measuring instrument or procedure, while validity is the appropriateness, meaningfulness, and usefulness of specific inferences made from the answer (Doodley 1995). In other words, validity is concerned with the study’s success at measuring what the researcher set out to measure.

To ensure that the research study is valid and reliable, the researcher used both qualitative and quantitative research methods so that they complement each other’s weaknesses. A case study design was appropriately chosen and used in order to enhance the validity and reliability of results. In addition, the research ethics such as informed consent, upholding human rights, voluntary participation were also observed. Validity and reliability was also ensured by carrying out a pilot study and conducting trial tests that were run using a mini sample of five respondents. The research instruments were then refined and perfected before they were finally used in the research field.

3.9 Data Analysis and Presentation

Data analysis is the process of inspecting, cleaning, transforming and modelling data with the goal of highlighting useful information, suggesting conclusions and supporting decision making (Musingafi and Hlatywayo, 2013). The data collected from questionnaire guides and interview guides was coded, quantified and captured onto a Microsoft Office Excel 2013 spread sheet. Adegoke (2010), recommends that the researchers should group data and give it some codes before entering the information into the SPSS (version 21) to make some analysis. The researcher coded and quantified data by classifying data with the same information from each respondent with a similar response. Data was then cleaned to check for errors before being

32 exported to the SPSS (version 21) for analysis. All qualitative data was analyzed using descriptive analysis and statistics.

Following data analysis, data was then presented in terms of the research problem as recommended by Leedy and Ormrod (2005) as cited in Tom et al, (2011). In this research study, data was presented in the form of tables and figures. By definition a table is usually an arrangement of words, numbers, signs or combinations of them into a two dimensional matrix for the purpose of exhibiting certain information in compact and comprehensive form while a figure is any kind of graphic illustration such as a graph, pie chart, photograph, drawing, sketch, or other devise to convey an idea in a non- verbal fashion (Tom, Chigunwe and Nkala, 2011).

Tables and figures are appropriate in this case because they are clear and easy to understand.

All qualitative data was analyzed using descriptive analysis and statistics. Data interpretation was based on inductive and deductive analysis techniques and the discussion of findings was linked to the empirical evidence of literature provided in chapter two.

3.10 Ethical and Legal Considerations

In this research study, fundamental ethical principles were applied. Punch (2005), in Musingafi and Hlatywayo (2013), defines research ethics as moral obligations and principles that researchers should adhere to in carrying out and reporting their studies. Welfel (1998), in

Makore-Rukuni (2001), stresses that research ethics are important in that they enable the researcher to develop meaningfully acceptable research protocols that are worth the participants’ time and have a reasonable chance of yielding meaningful findings, protects the rights of participants’ and report results fairly and accurately. In respect of this, the researcher obtained a written permission of authorization from BUSE and supplier companies in line with best practice not to be an interloper to the target institution and organizations, and sought for

33 written consent from all participants before gathering data. The researcher also informed all participants on the purpose and benefits of their involvement in the research study in order to ensure voluntary participation. The respondents’ privacy was highly respected while their responses were treated confidentially. The researcher avoided falsification of data in order to maintain the integrity and objectivity of the research study.

3.11 Chapter Summary

This chapter looked at the research methodology used in the study, materials and data analysis procedures used. Quantitative and qualitative research paradigms were used, with the use of research instruments such as questionnaire guides, interview guides, as well as the use of documentary analysis. Also, the researcher touched on validity and reliability of the research study. Data was processed using Microsoft office excel then analyzed using the SPSS (version

21) and was presented in the following chapter.

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CHAPTER 4

DATA ANALYSIS, PRESENTATION AND DISCUSSION

4.0 Introduction

The previous chapter outlined the methodology used for the purpose of this research. This chapter analyses and presents the data as was described in chapter three. Data interpretation was based on deductive and inductive analysis techniques while data presentation was expressed in sub themes that were guided by objectives of the research study. Data presentation, analysis and discussion were done in areas such as response rate, gender distribution and the impact of bond notes on procurement. Discussion of findings was linked to the empirical evidence of literature provided in chapter two.

4.1 Response Rate

The researcher intended to administer 10 questionnaires and carry out purposive interviews.

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Table 4.1 Showing Response Rate

CATEGORY QUESTIONNAIRES RETURNED (%)RESPONSE

DISTRIBUTED RATE

Buyers 10 10 100

Interviews planned Interviews (%)Response rate

CATEGORY conducted

Suppliers 15 10 67

TOTAL 25 20 80

(Source: Primary Data, 2018).

For the purpose of this research, 10 employees that are responsible for procurement and 15 local (Bindura) suppliers who are on BUSE’s 2017 suppliers’ list were selected for data collection. In total, the researcher planned to administer 10 questionnaires and conduct interviews. All the 10 questionnaires were completed and returned. However, only 10 consented to the interview thereby making a total percentage of 100 and 67 percent respectively. The attained response rates were considered to validate the research in line with what was suggested by Saunders (2006), that a 30% response rate validates a research.

4.2 Respondents’ Demographic Characteristics

The section below presents the demographic profiles of the respondents in terms of gender, duration of service and their preferred currency. The table below shows the findings obtained from this research study.

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Table 4.2 The Demographic Profile of the respondents (N=20)

CHARACTERISTIC VARIABLE FREQUENCY PERCENTAGE

Gender Male 8 60

Females 12 40

Duration of service 5 years and below 5 25

6-10 years 6 30

11-15 years 6 30

16-20 years 3 15

Above 20 years 00 00

Level of education Diploma 10 50

Degree 3 15

Certificate 2 10

Advanced level 3 15

Other 2 10

(Source: Primary Data, 2018).

The respondents’ duration of service affects the type of responses obtained from participants as issues like exposure and experience are important. As illustrated on the table, the duration of service of 30% (N=6), of the respondents was between 6-10 years and 11- 15 years respectively. Thus, 60% of the respondents had served their organisations for a period of 6-15 years. 25% indicated that they had served for 5 years or less while only 15% (N=3), had a duration of 16-20 years in service. The average duration of service years of the respondents was 5 years. Also, as illustrated in the figure above, the gender distribution consisted of 60%

37 males and 40% females. This coincides with the findings and conclusions made by O’Connor

(2009), that man are dominant in most institutions when compared to females.

4.3 Results

The main objective of this research study was to establish the impact of bond notes on procurement at BUSE. The research findings in terms of the effects of bond notes were highlighted below:

4.3.1 Effects of bond notes on procurement

4.3.1.1. Acceptability of bond notes

Understanding the Respondents’ preference in terms of currency in procurement was also important as it determined the usefulness of bond notes in procurement. The researcher asked respondents to indicate their currency of choice and the findings are supported by

Makochekanwa (2017), when he said that the majority did not want bond notes to be introduced.

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Zimbabwean Bond notes

10% 10% United States of America 15% dollar (US$) South African Rand (ZAR) 15% 50% Botswana Pula (P)

Other Currencies

Figure 4.1: Respondents’ preference in terms of currency in procurement.(Source:

Primary Data, 2018).

The majority 50% (N=10), of the respondents preferred the American dollar, while 15% (N=3), preferred the South African rand. Only 10% (N=2), of the respondents preferred the

Zimbabwean bond notes, 15% (N=3) preferred the Botswana Pula and those who preferred other currencies 10% (N=10). A research by Makochekanwa (2016), also disclosed that if given free choice and without any coercion to choose between US dollars and the Zimbabwe

Bond Notes as the medium of exchange, majority of respondents totally 136 (representing 94% of the sample) would prefer and demand US dollars, while only two respondents (representing

1% of the sample), would demand the Bond Notes.

Respondents’ views on bond notes as a solution to challenges faced by businesses in procurement and the transacting public in Zimbabwe

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Respondents were asked if bond notes were a solution to challenges faced by businesses in procurement and the transacting public in Zimbabwe. The table below presents the results in this regard.

Table 4.3: Respondents’ views on bond notes as a solution to challenges faced by businesses in procurement and the transacting public in Zimbabwe (N=10)

RESPONSE Number Percentage

YES 1 10

NO 9 90

TOTAL 10 100

(Source: Primary Data, 2018).

As shown on the table above, 90% of the respondents believed that bond notes were not the solution to challenges faced by businesses in procurement and the transacting public in

Zimbabwe. Only 1 (10%), thought that bond notes were a panacea to the challenges.

4.3.1.2. Participants’ responses on whether procurement has remained the same following the introduction of Bond notes.

The figure below shows responses on whether procurement has remained the same following the introduction of Bond notes

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NO YES

Has the procurement function 90% remained the same since the introduction of bond notes? 10%

0% 20% 40% 60% 80% 100%

Figure 4.2: Participants’ responses on whether procurement has remained the same following the introduction of Bond notes (Source: Primary Data, 2018).

Ninety percent of the respondents’ views on whether procurement has remained the same or not following the introduction of bond notes was negative showing that procurement has changed.

On the effect of bond notes on the procurement function, 90 percent’s response was that the effect of bond notes has been negative, including multi-tier pricing; prolonged lead times; compromised quality; arbitrage; loss of leverage power and bulky buying as well as economies of scale and other associated benefits.

By the same token, interviews also revealed that because of late payment by BUSE, they hike prices for it (price discrimination) to cater for the prolonged payment periods. Other interviewees lamented that they have payment issues with BUSE so given the prevailing situation on the market where foreign currency has to be acquired from the black market, they dread doing business with BUSE while other respondents indicated that they are now getting

41 few orders from BUSE because they prefer cash payment method or pre-payment due to the prevailing situation on the market.

4.3.1.3. Participants’ perceptions about the effect of bond notes on procurement at BUSE

In the quest to find the impact of bond notes, the researcher examined some key determinants that include the impact on pricing, deliveries, payments to suppliers, securing bids, international bidders and transactions, BUSE buyers’ negotiations with suppliers and Supplier

Relationship and BUSE procurement relationships with internal customers (users).

Table 4.4 Participants’ perceptions about the effect of bond notes on procurement at BUSE. (N=10)

Unsure PERCEPTIONS Agree =3 =2 Disagree=1 MEDIAN No No . (%) . (%) No. (%) No. Bond notes have caused multi-tier pricing and pricing complications 10 100% 00 00 00 00 3

Bond notes have caused delays in deliveries 7 70% 1 10% 2 20% 3 Bond notes have affected the way BUSE pay suppliers 8 80% 00 00 2 20% 3 Bond notes have caused the university to fail to secure bids 6 60% 1 10% 3 30% 3 Bond notes have affected international bidders and transactions 4 40% 2 20% 4 40% 2 Bond notes have affected the effectiveness of the procurement function 9 90% 10 10% 00 00 3 Bond notes have affected BUSE buyers’ negotiations with suppliers 8 80% 1 10% 1 10% 3 Bond notes have affected BUSE Procurement and Supplier Relationship 5 50% 2 20% 3 30% 3 Bond notes have affected BUSE Procurement

relationships with internal customers (users) 4 40% 3 30% 3 30% 2

Source: Research Survey Data, 2018.

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4.3.1.4. Multi-tier pricing and pricing complications

As presented on the table above, all (100%; N=10), indicated that bond notes have caused multi-tier pricing and pricing complications. The buyers indicated that suppliers were demanding cash up-front and were overcharging, for example, one respondent from the department said,

“…some suppliers are charging different prices depending on the mode of payment, eco-cash,

RTGS, bond notes, USD, swipe…some have hiked prices to cater for the different modes of payments and their implications on the market, for example, a rim of bond paper rose from

$3.50 to $11.00 where it is cheaper. Where they accept RTGS and eco-cash, they also overcharge.”

Similarly, interviewees indicated that indeed, bond notes and multi-tier pricing had a negative effect such as “… prolonged lead times; unwillingness to quote by suppliers for fear of under- quoting; Short-changing of prices leading to re-quotes.”

Another respondent said,

“Yes there has been a need to re-quote because they would have encountered higher prices than previous ones from their sources thus the need to pass it on to BUSE and other buyers through a re-quote or renege on their orders if they are not willing to go by the new quote.”

These results are similar to those findings by Bvirindi (2016), who established that a phenomenon called multi-tire pricing system emerged in Zimbabwe as a result of the bond notes. Retailers charge different prices for goods and services depending on the brand of dollar being used. Makochekanwa and Chimhete investigated the effectiveness of bond coins as a solution to change shortage, and mispricing challenges faced by businesses and the transacting

43 public in Zimbabwe and also concluded that the introduction of bond coins failed to solve the problem of overpricing.

4.3.1.5. Delays in deliveries hence effect on procurement cycle

Figure 4.3 below shows that when asked whether bond notes caused delays in deliveries, 70% of the respondents (N=7), agreed and 10% (N=1) were not sure while 20% (N=2) disagreed that bond notes have caused delays in deliveries. Explanations that were obtained from the interviews in this regard shows that the BUSE Buying Department has failed to get deliveries“… on numerous occasions and … would settle for plan B like resourcing.” This has impacted negatively on the procurement cycle itself as they have to restart the cycle of the same order all over again at the delivery stage as a result of unfulfilled orders.

80%

70%

60%

50%

40%

30%

20%

10%

0% Agreed Unsure Disagreed

Figure 4.3: Participants’ responses on the effects of bond notes on deliveries N=10

(Source: Primary Data, 2018)

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One respondent interviewed from the suppliers’ side was quoted saying,

“Yes, we have failed to deliver as per expectation due to stock-outs as a result of shortages of foreign currency since they were relying on foreign suppliers for competitive brands that are preferred by buyers, compared to local brands,” while another stated that “… BUSE has increased its orders with them,” attributing the increase to their competitive prices compared to their competitors.

Another respondent also said,

“Yes, we once failed to get a delivery on a scheduled time. However, they concurred that it was not as a result of bond notes and multi-tire pricing, but as a result of other factors like promotions and changes in prices.”

Thus, he attributed the changes in prices to shortage of foreign currency which they say increased soon after the introduction of bond notes.

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Settling payments

80% 70% 60% 50% 40% 30% 20% 10% 0% Agreed Disagreed

Figure 4.4: Participants’ responses on the effects of bond notes on settling payments N=10

(Source: Primary Data, 2018)

The majority that is, 80% (N=8), also revealed that bond notes have affected the way BUSE pay suppliers but 20% (N=2), disagreed. One respondent explained that,

“…suppliers demand payment upfront or one day up to maximum three days payment period.

Some demand foreign currency only, especially foreign suppliers and those who supply imported goods.”

In the same manner, one also stated: “BUSE prefer to be supplied then pay later but have prolonged payment periods. By the time they pay, prices on the supply market would have gone up thus their payment would be eroded by half or more leaving them with no profit at all.

Therefore, this has put BUSE on the position of a less attractive buyer and less preferred one.”

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Another interviewee agreed that bond notes had an effect on the way BUSE pay suppliers by explaining that “… in terms of payments, the change was very significant as it has always been erratic and inconsistent, sometimes within seven days, sometimes they forget and wait to be followed up after a month or longer.” However, for other suppliers, there was “…no change as

BUSE has always had a reputation of late payment.” While others indicated that “… payment agreement between them and BUSE is prepayment, thus have no problems with them.”

Securing bids

Figure 4.5 below illustrates the responses from the participants when they were asked whether bond notes had an impact on securing bids from BUSE’s suppliers.

30%

Agreed 60% Unsure 10% Disagreed

Figure 4.5: Participants’ responses on the effects of bond notes on securing bids N=10

(Source: Primary Data, 2018)

Sixty percent (60%; N=6), of the respondents indicated that bond notes have caused the university to fail to secure bids in many instances. However, 10% were not sure and 30%

(N=3), disagreed. In contrast to interviews, all the other suppliers said “Yes, but due to out-

47 stocking as a result of multi-tier pricing and shortage of foreign currency.” This confirms to the previous findings that showed that bond notes and multi-tier pricing’s effect on the procurement cycle and the Respondents’ way of doing business were negative. According to

Mandizha (2017), companies are struggling to access the foreign currency to make foreign payments for raw materials, thus a number of them are sourcing the foreign currency on the black market, increasing the demand for cash, hence pushing the discounts on cash transactions upwards.

Results from questionnaires also showed that 40% (N=4), of the respondents believed that bond notes have affected international bidders and transactions. The other 40% disagreed that bond notes have affected international bidders and transactions and 20% (N=2), were not sure. The respondents stated that there were a lot of complaints and have lost most of the international bidders, if not all. In a related research study, Makochekanwa, (2016), noted that the major disadvantages of the introduction of bond notes into the economy includes that it is not convertible, discourages imports, discourages investments, inflationary, erodes confidence in the financial system and it promotes black (parallel) market in foreign currency.

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4.3.1.6. Buyers’ negotiation power

80% 80% 70% 60% 50% 40% 30% 20% 10% 10% 10% 0% Agreed Unsure Disagree

Figure 4.6: Participants’ responses on the effects of bond notes on buyers’ negotiation power. N=10 (Source: Primary Data, 2018)

Eighty percent (80%), of the respondents also stated that bond notes have affected BUSE buyers’ negotiations with suppliers while 10% (N= 1), were not sure and10% (N=1), disagreed separately. This concurred with findings from interviews as one respondent was quoted saying:

“…. it (bond notes), has affected negatively. There is no more room for negotiation, BUSE have been reduced to a price-taker as negotiations are now loose-win. There is also increased demand for certain goods due to scarcity as a result of foreign currency shortage.”

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4.3.1.7. Buyer-Supplier Relationships

30%

Agreed 50% Unsure Disagree

20%

Figure 4.7: Participants’ responses on the effects of bond notes on buyer-supplier relationships. N=10 (Source: Primary Data, 2018)

The results also show that 50% of the respondents also pointed out that bond notes have affected BUSE Procurement and Supplier Relationship negatively. However, 20% were not sure and 30% (N=3), disagreed.

Also, 40% revealed that bond notes have affected BUSE Procurement relationships with internal customers (users), 30 % were not sure while another 30% (N=10), disagreed. One respondent stated,

“We are now strained. BUSE have become pushy and sometimes harsh to suppliers because the user departments will be fuming for products as well. However, we try to maintain relationships and keep the few loyal suppliers by expediting their payments”

50

On the contrary, interviews revealed that “… their relationship with BUSE have improved compared to the time before bond notes.” Other interview respondents made similar indications that bond notes have not affected relationships. However, one respondent stressed that they demand prepayment only while another stated that their relationships are win-win but they all said they preferred a situation where BUSE do a half price deposit.

As for internal relationships, one respondent pointed out that,

“… some of them do not believe that procurement was facing challenges and sometimes they tell users to source on their own thus compromising the credibility of buying and violating buying ethics thus leading to corruption, however, we have not removed any supplier from their supplier base but we are only getting bids from a certain few who will be able to meet orders at that particular moment. Most suppliers are failing to deliver orders while many cancel the orders.”

Literary, this means that the supplier base has changed.

Participants’ overall views on the effects of bond notes on procurement at BUSE

The participants were asked on their overall views on the impact of bond notes on procurement at BUSE. The following presents the findings obtained in this regard:

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Table 4.5: Respondents’ overall views on the effects of bond notes on procurement at

BUSE (N=10)

RESPONSE Number Percentage

NEGATIVE 9 90

POSITIVE 1 10

TOTAL 10 100

(Source: Primary Data, 2018).

As shown on the table, almost all (90%; N=9), of the respondents generally saw bond notes as having a negative impact on procurement. This confirms to the earlier results that revealed that the effect of bond notes on effectiveness of the procurement function was that the effect of bond notes has been negative, including prolonged lead times; compromised quality; loss of leverage power and bulky buying as well as economies of scale and other associated benefits.

Other emerging issues

From the research findings, respondents indicated that bond notes had a bearing on the quality, cost and price of commodities. One respondent in the Procurement Department at BUSE stated that,

“We are now getting substitutes on almost all the goods than preferred brands and sometimes there are no substitutes for a particular brand and thus fail to get deliveries.

And the interviewed respondent said,

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“…bond notes brought about shortages of foreign currency in-turn affecting cost and prices negatively as a result of different discounts incurred in acquiring foreign currency from the parallel market.”

On the other hand, the interviewed respondent said,

“Yes, most imports used to be priced competitively but now their prices are up due to shortages of foreign currency and it being acquired from the parallel market resulting in multi-tier pricing.”

This was also echoed by the interviewed respondent who said,

“Yes, foreign currency is available on the parallel market where they are incurring up to 85% charges depending on the currency sought and the amount required, thus cost and prices have really gone up.”

Informants from indigenous business suppliers also admitted that bond notes and multi-tier pricing system had a bearing on the quality, cost and price. For instance, one respondent commented that,

“Cost and prices have increased due to foreign currency shortages that came as a result of bond notes, leading to multi-tire pricing. The major challenge is that the bond note is scarce as well, most of our customers are now using electronic forms of payment further complicating the process of acquiring foreign currency from the parallel market for us, which needs hard currency. Yet on the other hand banks do not have cash to fulfill cash withdrawals on demand.”

Thus, the findings in this regard indicated that bond notes and multi-tier pricing system had an undisputable bearing on the quality, cost and price of commodities.

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4.3.2 Respondents’ strategies to deal with bond notes and multi-tire pricing

In order to look for appropriate solutions to the problems associated with bond notes and multi- tire pricing, respondents were asked to elaborate the measures they have employed to deal with bond notes and multi-tire pricing so as to assess their effectiveness.

Supplier relationship management

Responses from BUSE Buying Department showed that they are limited because “… they operate under regulations and public procurement procedures which cannot be easily bent, hence they have only resorted to trying to maintain good relations with their suppliers by expediting their payment at least, for those who accept RTGS.”

Substitutes

All the suppliers highlighted that due to shortage of foreign currency and the RBZ priority list for Foreign currency release and permitted goods, they have since replaced their customer’s preferred brands with substitutes, for example, Pure Drop; Zim Gold, Roil, D’lite substituted with Purola and olive oil; Vaseline Petrolium Jelly replaced on the shelf with Crown; Brita;

Elegence; and Sunlight Liquid replaced with Cleano, Brita, Swish. One of them explained

“…we cannot afford to keep our shelves open, we have replaced competitive brands that we used to acquire from foreign markets since the demise of the manufacturing sector in Zimbabwe with local substitutes…”

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Price hikes

Suppliers stated that they have resorted to price hikes to keep pace with the price of foreign currency on the market as a strategy of survival. He said “…we are required to quote our prices in USD, so we hike all our prices to cater for the discounts of cash on the black market.”

Multi-tier pricing and “USD only” pricing

All of the indigenous suppliers clearly stated that they have resorted to multi-tire pricing whereby they peg USD prices lowest to attract the currency. They further explained that “…for some goods that we get from other countries, we demand USD only so that we continue in business”

Electronic payments

It also emerged that all suppliers including indigenous ones have embraced electronic payment platforms like swipe, RTGS and mobile money which they were skeptical to embrace before the coming of the bond notes. “…we are have no choice if we are to stay in business.”

However, they charge more for using those platforms thus increasing the prices.

Other alternatives

Some suppliers added that they have resorted to using middle men while one supplier revealed that they were using a facility called Kawena whereby money sent by Zimbabweans who live

55 in one of their major foreign market is remitted to them as import goods from that market. He explained saying “…this is how we have managed to keep foreign brands on our shelves.”

4.3.3 Respondents’ recommendations

The asked the respondents on their recommendations on the challenges posed by bond notes on the procurement front.

Removal of the bond notes

All the respondents’ first recommendation was for the government to remove the bond notes from the market with one of them saying “…government should remove the bond notes from the market because the problems of money availability have worsened. Bond notes did not change anything but worsened the life of buyers and our businesses are suffering…”

Injecting more USD

One of the respondents’ recommendation was for government to inject more USD into the market. Their sentiments were that the “…bond note is very scarce that it was better if the government had injected the $200 million AFREXIM export incentive facility as USD into the market.”

Adopt the South African Rand

The majority of the respondents recommended that “…the government should just adopt the

South African Rand since it trades more with South Africa than any other country.”

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The South African Rand will promote the ease of doing business and in turn ease the procurement function.

Innovation and investing in opportunities

Questionnaires revealed that respondents recommend that BUSE can invest in innovation to encourage its faculties like the faculty of science and departments like the farm to produce most of the consumables like what other universities are doing. This will help the institution in lessening the procurement needs thus reducing the risk and challenges.

Review of the RBZ priority list

Another recommendation was that the government should review the priority list for foreign currency application and prioritise parastals for critical imports to avoid a situation whereby they have to cancel invitation to tenders and bids as a result of lack of foreign currency.

Full dollarization

All respondents were of the recommendation that the government should adopt full dollarization to enable it to operate under the regulations and control of full dollarization to prevent externalization of the USD. Full dollarization will bring stability and sanity on the supply market and help restore confidence in the procurement function.

Thus the general recommendation was for government to put mechanisms to ensure that there was enough money supply on the market to support and promote procurement thus the need to adopt

4.5 Chapter Summary

This chapter presented and explained the results obtained from the field. The issues of major interest were the effects of bond notes on procurement at BUSE, how BUSE procurement and

57 supplier relationship is affected by bond notes and how BUSE is sourcing. The general findings were that bond notes have caused the shortages of foreign currency leading to higher prices and or disappearance of certain brands on the local market. The bond note is also scarce creating demand and causing price hikes and multi-tire pricing with different modes of payment attracting different price charges. The responses obtained indicated that bond notes have caused multi-tier pricing and pricing complications as well as delays in deliveries. The majority that also revealed that bond notes have affected the way BUSE pay suppliers while some of the respondents indicated that bond notes have caused the university to fail to secure bids. Results also showed that 40% of the respondents believed that bond notes have affected international bidders and transactions. 80% of the respondents also stated that bond notes have affected

BUSE buyers’ negotiations with suppliers while 10% were not sure and10% disagreed respectively. Fifty percent of the respondents also pointed out that bond notes have affected

BUSE Procurement and Supplier Relationship and 40% revealed that bond notes have affected

BUSE Procurement relationships with internal customers (users). The following chapter looks at the recommendations, conclusion and a summary of the research.

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CHAPTER 5

RESEARCH SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction

The previous chapter focused on analysis, presentation and discussion of research findings of the impact of bond notes and multi-tire pricing on procurement at BUSE. In this chapter, the researcher reviews the main research findings and draws major conclusions that can be drawn from them. The researcher also provides recommendations that are aimed at solving the challenges associated with bond notes on procurement.

5.1 Summary of findings

The critical goal of this research study was to establish the impact of bond notes on procurement at BUSE. The objectives included in the study included the examination of the effects of bond notes and examining strategies that were employed by BUSE to deal with the problem. A Case study research design was used. In-depth interviews were administered to 10 suppliers who consented to the interviews and these were local (Bindura) suppliers while 10 questionnaires were administered to Bindura University (BUSE) employees from the Buying Department and the research findings were triangulated as one method alone could not provide a comprehensive answer. Data analysis was done quantitatively and qualitatively, using SPSS and a thematic approach was employed to present research findings on the impact of bond notes and multi-tire pricing on procurement at BUSE. The main research findings and major conclusions were drawn from them.

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Effects of bond notes on procurement

 From the responses obtained, all respondents indicated that bond notes have caused multi-

tier pricing, pricing complications and delays and failures in deliveries affecting the

procurement cycle negatively. The majority of respondents also revealed that bond notes

have affected the way BUSE pay suppliers thereby causing the university to fail to secure

bids including international bids and transactions. Respondents also stated that bond notes

have affected BUSE buyers’ negotiation power with suppliers leaving BUSE to be price-

takers. Supplier Relationship as well as relationships with internal customers (users) have

been affected negatively. In some instances, BUSE have failed to secure bids. Precisely,

findings reveal that bond notes have relegated BUSE to a less attractive customer as

suppliers prefer buyers with hard cash, especially foreign currency, than RTGS.

 Bond notes were also reported to have a negative bearing on the quality, cost and price and

this includes getting substitutes on almost all the preferred brands as shortages of foreign

currency in-turn affect cost and prices negatively as a result of different discounts incurred

in acquiring foreign currency from the parallel market. Moreover, bond notes’

effectiveness on the procurement function was found to be negative, including prolonged

lead times; compromised quality; loss of leverage power and bulky buying as well as

economies of scale and other associated benefits. Thus bond notes have reduced the

effectiveness of the procurement function at BUSE.

Strategies employed to deal with the challenges posed by bond notes

 The measures to deal with bond notes and multi-tire pricing were limited because

buyers pointed that they operate under regulations and public procurement procedures

which cannot be easily bent. However, they have used supplier relationship

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management as their major strategy to keep their suppliers. They have also made sure

that those who accept RTGS have been paid on time.

 It was found that suppliers used different strategies like embracing electronic payments,

using multi-tier pricing and “USD Only’ pricing, price hikes, substitutes and other

alternatives to keep in business.

5.2 Conclusions

From the findings of this research, the researcher concludes that:

 Bond notes have negative effects on procurement which include, among other things,

failure to deliver as per expectation due to stock-outs as a result of shortages of foreign

currency and/ or failure to get a delivery on a scheduled time (prolonged lead times),

unwillingness to quote by suppliers for fear of under-quoting; short-changing of prices

leading to re-quotes, failure to secure bids and loss of international bidders. Bond notes

also makes it difficult to manage payments of international suppliers and those who

demand foreign currency.

 It can also be concluded that bond notes have a negative bearing on the quality, cost and

price and this includes getting substitutes on almost all the good and preferred brands and

shortages of foreign currency in-turn affecting cost and prices negatively as a result of

different discounts incurred in acquiring foreign currency from the parallel market.”

Moreover, bond notes and multi-tier pricing system’s effectiveness on the procurement

function has been negative, including prolonged lead times; compromised quality; loss of

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leverage power and bulky buying as well as economies of scale economies of scale and

other associated benefits.

 Also, bond notes and multi-tier pricing system negatively affected negotiations between

buyers and suppliers thus a negative effect on their relationships including buyers’

relationships with internal customers (users). Another conclusion is that the measures to

deal with bond notes and multi-tire pricing are limited because BUSE operate under

regulations and public procurement procedures which cannot be easily bent.

5.3 Recommendations

In designing programs and policies to enhance the impact of bond notes and multi-tire pricing on procurement at BUSE, the researcher therefore recommends the following:

 Taking into account the major findings summarized above, the RBZ/government should

inject the USD into the market and avoid injecting the money as Zimbabwe Bond Notes.

Injecting the USD into the economy will be the best option as it will ease the current cash

shortages facing the country thus easing the procurement function and enhancing its

effectiveness.

 The government should adopt an official full dollarization. The Official or full dollarization

is a complete monetary union with a foreign country from which a country imports a

currency, by making the foreign currency full legal tender and reducing its own currency,

if any, to a subsidiary role. In officially dollarized countries, there is no domestic currency,

no currency risk and, therefore, no risk of currency crises. As a result, domestic interest

rate structure tends to be similar to the one prevailing in the wider monetary area.

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 The government should focus on addressing public and investor confidence, country risk,

illicit financial flows, externalization of funds and net export performance while addressing

the lender of last resort function by the reserve bank to enhance liquidity and ensure a sound

financial system for economic development.

 BUSE should maximize its opportunities in the farm and the faculty of science to produce

most of its consumables, if not all, like what other universities are doing.

 Procurement Regulatory Authority of Zimbabwe should put mechanisms to enable public

institutions like BUSE to adjust special procurement needs according to the prevailing

market situations, like procuring foreign currency on the black market for critical needs.

5.4 Area for further research

 The implications of Real Time Gross Settlement (RTGS) on survival of the public sector

procurement.

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Appendix 1: Questionnaire

BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

DEPARTMENT OF ECONOMICS

QUESTIONNAIRE ON IMPACT OF BOND NOTES ON PROCUREMENT AT BUSE

My name is Shumirai Chirikure, a student at Bindura University of Science Education studying for a Bachelor of Commerce (Honours) Degree in Purchasing and Supply. I am carrying out an academic study on “The Impact of Bond notes on procurement: A case study of BUSE.”

I kindly ask for your participation in answering the following questions:

INSTRUCTIONS i) For closed questions indicate your answer by tick or putting an ‘X’ in the appropriate box.

ii) For open ended questions give your answer on the space provided.

SECTION A: RESPONDENTS’ DEMOGRAPHIC PROFILES

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1. Gender distribution of the respondents Male [ ] Female [ ]

2. Duration of service

(Please indicate your answer by tick or putting an ‘X’ in the appropriate box below) 5 years and below Duration of service 6-10 years 11-15 years 16-20 years Above 20 years

3. Respondents’ preference in terms of currency in procurement American dollar [ ] Botswana Pula [ ] South African rand [ ] Zimbabwean bond notes [ ] Other currencies [ ]

SECTION B: IMPACT OF BOND NOTES ON PROCUREMENT AT BUSE

4. Are bond notes a solution to challenges faced by businesses in procurement and the transacting public in Zimbabwe?

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Yes [ ] No [ ]

Elaborate……………………………………………………………………………………… ……………………………………………………………………………………………….… ………………………………………………………………………………………………….

5. Has the procurement function remained the same following the introduction of Bond notes? Yes [ ] No [ ]

Explain your answer...... ………………………………………………………………………………………………..… …………………………………………………………………………………………………..

6. Perceptions about the effect of bond notes on procurement at BUSE

(Please indicate your answer by tick or putting an ‘X’ in the appropriate box below) PERCEPTIONS Agree Unsure Disagree Bond notes have caused multi-tier pricing and pricing complications Bond notes have caused delays in deliveries Bond notes have affected the way BUSE pay suppliers Bond notes have caused the university to fail to secure bids Bond notes have affected international bidders and transactions Bond notes have affected the effectiveness of the procurement function

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Bond notes have affected BUSE buyers’ negotiations with suppliers Bond notes have affected BUSE Procurement and Supplier Relationship Bond notes have affected BUSE Procurement relationships with internal customers (users)

Elaborate on your responses ………………………………………………………… ………………………………………………………………………………………………….. …………………………………………………………………………………………..……… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………….

7. What is your overall view on the impact of bond notes on procurement at BUSE? Negative [ ] Positive [ ] Elaborate ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… ……………………….

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SECTION C: MEASURES TO DEAL WITH BOND NOTES PROBLEMS IN PROCUREMENT

8. How have you been managing payments, including of international suppliers and those who demand foreign currency? ...... ………………………………………………………………………………………………..… ………………………………………………………………………………………………… ……

9. In light of the above, what measures did you employ to deal with bond notes and multi- tire pricing? ...... ………………………………………………………………………………………………..… ………………………………………………………………………………………………… …….

SECTION D: RECOMMENDATIONS

10. What do you think should be done to solve the challenges brought about by the introduction of bond notes on the procurement front?...... Thank you!

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Appendix 2: External interview guide

BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

DEPARTMENT OF ECONOMICS

My name is Shumirai Chirikure, a student at Bindura University of Science Education studying for a Bachelor of Commerce Honors Degree in Purchasing and Supply. I am carrying out an academic study on “The Impact of Bond notes and multi-tire pricing on procurement”, a case study of BUSE.

I kindly ask for your participation in answering the following questions:

1. Are you familiar with the bond notes and the multi-tire pricing system in the market?

2. Have you ever encountered a situation when you had to charge your goods using the multi-

tire pricing system?

3. Have you ever failed to deliver BUSE orders as scheduled as a result of the bond notes and

multi-tier pricing?

4. Using your experience, was there any effect on the way you do business with BUSE?

Elaborate.

5. Did it affect the way BUSE paid you in any way? Explain.

6. Was there a situation where you failed to bid successfully as a result of the system?

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7. What was the effect on the number of orders you received from BUSE and transactions?

8. Can you explain whether the way BUSE used to do business with you has remained the

same?

9. Did it have a bearing on the quality, cost and price?

10. How has it affected your negotiations with BUSE?

11. Explain how your relationships with BUSE were affected?

12. How have you been managing securing orders from your own supplies, including of

international suppliers and those who demand foreign currency?

13. What form of payment are you demanding from BUSE given the prevailing situation?

14. What are your recommendations to the challenges posed by bond notes on the procurement

front?

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