RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya says the introduction of bond coins represent a paradigm shift which is essential for the development of the country as people should get more returns from a dollar instead of calling for salary increments.
Speaking at a Zimbabwe National Chamber of Commerce bond coin sensitisation workshop in Bulawayo yesterday, Mangudya said the country was facing two macroeconomic challenges, namely a lack of competitiveness and a war of perception.
“For example, water in this country is more expensive than fuel, a litre of water is a dollar yet fuel, when you import it, has an FOB price of about 60 cents per litre,” he said.
Mangudya attributed such prices to a lack of change in the country which restricted people to rounding prices upwards. He said there was no tier system in prices and everything was pegged at 50c and the next price was automatically a dollar.
“Don’t tell me that producing water locally is more expensive than fuel which is coming all the way from the Gulf, India or wherever it is coming from. Our prices need sanity,” he added.
The central bank boss said the negative attitude towards bond coins was a perception and, therefore, a mind issue rather than a value issue.
“The question is, how many awareness campaigns do you want to change your mind?” he asked.
“It’s like going to church; we go there every day, but still sin.”
Bond coins were introduced in December 2014 with the RBZ saying they would alleviate change shortages in the country which is predominantly using the US dollar as its base currency.
There have, however, been problems of change denominations as it is expensive to import coins since the country does not mint US currency.
Although the central bank introduced bond coins to counter problems arising from change unavailability, there has been scepticism of its intentions and reported resistance from both informal and formal traders.
Mangudya said the current trend of using rand coins as change for the dollar were not economically prudent because there was a rate involved and to accept a 1:10 ratio would prejudice consumers.
“We cannot change the US-dollar rate, but we can change the pricing levels in this country which I do believe are high because we did not have change before so business would round up to the nearest 5c or 10c, 20c or even dollar,” he said.
“That is lack of competitiveness in our country. Look at our minimum salaries in comparison with the region.
“We think they are low, but they are not. Malawi is about $34 to $50 dollars, Botswana about $90, Zambia about $75, Ethiopia $50, but here $250 dollars. They are high because our cost of living is high. We lack competitiveness.”
Mangudya took a swipe at reports that the bond coins would impede cross-border traders as they were only legal tender in Zimbabwe.
“Which country do you know without coins?” he asked.
“The biggest economy America has coins.”
He went on to question who had ever been allowed to leave a foreign country with coins.
“The reason why we have brought in bond coins is to ensure divisibility of money which will essentially benefit the poor and ensure that you can buy more with a dollar,” he added.