A cashier in a major supermarket struggles to give a customer change after ringing off his purchase.
“I am sorry sir, the dollar notes that I have are all severely torn up, Here, try this one and that one,” she says as she summons all courtesies she could muster in order not to further incense the customer, who is becoming visibly impatient.
“Its not really your fault young lady,” the gentleman says calmly. “This money has seen better days.”
The gentleman’s change was about eight United Stated dollars and some odd cents. Eventually, after a visible struggle, the cashier managed to shuffle through her cash tray and got what she considered the best looking US dollar notes, which she put together with a five dollar note and some South African rand coins. But the ordeal was not yet over.
“There is still six cents left sir, what would you like for it? It is just enough for either these or those.” she says, pointing out some chewing gum and sweets that are conveniently placed in jars next to her.
Such is the reality that shoppers have to contend with everyday in Zimbabwe. The acute shortage of small change and the severely worn out small denomination notes which have been in circulation since the advent of the multicurrency system has blighted Zimbabweans ever since.
The Reserve Bank of Zimbabwe (RBZ) will, on December 18 2014, bring coins into circulation, chiefly to ease some of these problems.
However, there has been immense speculation surrounding the motives for the introduction of the coins. Some quarters have even alleged that the introduction of the coins is a clandestine move leading to a wholesale appropriation of bank balances by either
the government or the Central Bank.
It is important that the public should be aware that the introduction of bond coins has come about after a careful analysis and wide stakeholder consultation on the benefits of the move.
The bond coins have been introduced by the RBZ after calls from industry, the banking sector and the public at large, that the unavailability of small change in the economy has been detrimental to consumer welfare.
Not only have been producers of goods and services struggling to accurately define the economic pricing points for goods and services, resulting in prices of most small items or units thereof being priced at $1, even if the cost of the item should be say, around 60 or 70 cents. This rounding up of prices resulted in consumers having to pay more than they should for these items.
Furthermore, consumers have also been “short changed’’ literally, with alternatives such as sweets, chewing gum and change vouchers being offered to consumers in lieu of loose change.
Commuters have also not been spared with many consumers being paired off in twos or fours on disembarking commuter buses as the conductors had no coins.
There is also a huge demand for small denomination notes in the economy. Most of the notes that have been in circulation are now soiled beyond a state where they can be repatriated to the United States for replacement with new notes. The economy, through banks has also been importing foreign notes, particularly United States dollars at huge cost.
The economy will reap a huge dividend in using the bonds coins for small transactions rather than notes, as the ageing rate of notes is much faster than the rate at which coins can deteriorate. Over time, more money will be saved.
The bond coins are therefore a positive step meant to eradicate all these problems, and their introduction will make life easier and cheaper for the broader generality of Zimbabweans.
Being pegged directly on a one to one basis against the United States dollar, bond coins will also hold a stable value. They are supported by a $50 million bond facility negotiated by the Reserve Bank of Zimbabwe with an international bank, which effectively means the coins are “bonded” or “guaranteed” to be purchased back, in United States currency by the RBZ.
The coins are therefore a good store of value.
Clive Mphambela is a banker. He writes in his capacity as advocacy officer for the Banker’s Association of Zimbabwe.
BAZ expressly invites stakeholders to give their valuable comments and feedback related to this article to him on email@example.com or on numbers 04-744686, 0772206913