Sydney Kawadza
Zimbabweans wrongly believe the bond coins are politically inclined yet this is a pure economic policy targeting the consumers who were being fleeced through the rounding off of prices of basic commoditiesIn his maiden monetary statement, Reserve Bank of Zimbabwe governor Dr John Mangudya announced to the nation that he would be introducing bond coins to be used alongside the multi-currencies in circulation in the country.

Zimbabweans, especially consumers, who were targeted by the initiative, were sceptical about the bond coins.

Dr Mangudya clearly outlined the purpose and need for Zimbabwe to issue the bond coins into the system, especially the idea of bringing convenience to consumers.

The coins were subsequently introduced into the national economy on December 18 last year in denominations of 1c, 5c, 10c and 25c coins.

The RBZ governor said the bond coins were a legal tender issued in terms of the Reserve Bank of Zimbabwe Act.

“They are called bond coins to reflect the fact that these coins are backed, anchored, cemented or bonded to a US dollar facility that is giving the coins the strength of being at par or one-to-one with the US cents.

“They (bond coins) are meant to address the challenge of the negative effects of rounding up prices on consumers and the nation at large,” he said.

After initial resistance, especially by some vendors and commuter omnibus operators as well as small traders, Zimbabweans have finally found chemistry with the bond coins.

The bond is set to be sealed.

In many areas in Harare, people and businesses are increasingly showing acceptance of the initiative – and even putting signs to that effect.

At Makomva Shopping Centre in Glen View, most traders and tuckshop owners have put up signs indicating that they accept bond coins.

“It is unfortunate that people are resisting the coins but if Government and the RBZ say the coins are a legal tender then we have to accept them. The bond coins have actually helped when we want to give people change and I personally have no problems with them,” Gerry Chikonzo, a vegetable vendor said.

Some corporate organisations have even gone a step further in support of the initiative.

Innscor Africa Limited has inserted adverts in the media embracing the bonded coins.

The Innscor Group said it fully embraced the bonded coins as a legal tender and therefore all its outlets were using the coins to provide change for the convenience of their customers.

“We are also accepting bond coins as a medium of exchange for the purchase of goods and services. Bond coins are useful for fostering and enhancing price competitiveness.

“It is against this background that Innscor has already reduced prices in its businesses and will through the month of January continue re-visiting its prices to assist in making life more affordable for all its customers,” the statement said.

However, economic analysts expressed shock that it is the consumers who are expected to embrace the coins instead of the business community.

“The business community was profiteering through rounding off of prices and the coins should see goods going for their actual prices. In fact, the preferred rand is far less than the US dollar and if you prefer R5 over the 50c bond coin it means you are getting US40c.”

There was also a call for Zimbabweans to separate politics from policy issues.

“Zimbabweans wrongly believe the bond coins are politically inclined yet this is a pure economic policy targeting the consumers who were being fleeced through the rounding off of prices of basic commodities,” one economist said.

Governor Mangudya however said the bond coins were a panacea against the rounding up of prices while they are necessary for economic recovery.

“The coins are meant to bring convenience (and not inconvenience) to consumers and to create real value or safe haven for consumers by ensuring that businesses do not continue to round up prices to the nearest 5c, 10c, 50c or $1 as is the current practice in Zimbabwe.

“They are therefore necessary for the realignment of prices which are sticky downs in this economy and the elimination of ‘rounding tax’ that reduces consumers’ purchasing power,” he said.

The RBZ boss said the bond coins would necessitate the right sizing of prices for goods and services in the national economy.

“They provide room for price competitiveness which is missing in our economy. We need to change that attitude and/or practice for the recovery of the economy.”

The RBZ had, he said, a mission to deliver warm winds of economic recovery to every corner of the nation and the bond coins should be viewed in the broader context of economic policy measures that Government is putting in place not only to buttress the multiple currency system but more importantly for the recovery of the economy.

“We need to make the economy the foremost priority. Management of the pricing system in our economy through these coins should therefore be a priority for addressing the lack of competitiveness.

“We are also very cognisant of the fear factor by individuals of the local currency especially given what happened during the hyperinflationary era.

“I understand the fear and I would like to assure the nation that the Reserve Bank of Zimbabwe would not play with people’s lives by misrepresenting bond coins for the local currency. No, that is not our mission.”

Dr Mangudya said a strong economy was the wellspring of Zimbabwe’s national strength pledging to restore the viability of the financial sector to all have dreams and hopes in the future.

“We believe in a gradual approach of introducing the bond coins to the public to achieve an increased positive awareness and to highlight the importance of using bond coins in the economy, fostering compliance for embracing bond coins through moral suasion.

“We also believe in rational economics especially in a society characterised by a high deficit of confidence and lack of discipline.”

He said coins were necessary in any economy for providing change and to ensure that money is divisible.

“It is proven worldwide that business would raise prices without the penny or cent. Like in Zimbabwe there is no sweet which costs a cent unlike before.”

Professor Raymond Hombra, an economics professor at Pennsylvania State University, USA, once told a congressional committee that rounding cash sales up to the nearest nickel would cost consumers US$600 million annually.

In this light, Dr Mangudya said the removal of coins causes high prices in an economy.

“A system of rounding prices is regressive and hurts those least able to afford because they make small cash purchases. This is the situation in Zimbabwe that needs correction. We should not be afraid of making the right decisions for the recovery of the economy,” he  said.

The RBZ governor said the monetary authorities would continue to educate the public to appreciate the coins through various awareness programmes that include print, workshops, advertisement and engagements with the people.

Bond coins are used in many countries with some partially dollarising while others have completely done so as in Zimbabwe, Panama and Ecuador among others.

The coins in Panama are called Balboa and like the Zimbabwean bond coins they are in denominations of 1c, 5c, 10c 25c and 50 cents and are at par with the US cents.

Consumers in Panama use the US dollar as in paper money and there are no paper Balboas.

Panama has been using the US dollar for its currency since 1904.

Coins used in Ecuador are the Ecuadorian Centavo which are denominations of 1c, 5c, 10c, 25, and 50 centavos and are identical in size and value to US cents.

They circulate within Ecuador alongside US coins and US bank notes.

Feedback: [email protected] or [email protected]

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey