Zimpapers Logo

Sanderson Abel
Zimbabwe adopted the multi-currency system in 2009 after the value of the local currency was seriously eroded by hyperinflation. However, following the adoption of the multi-currency system, the country also began to face the change challenges due to the lack of smaller denominations of currency below a dollar, save for rand coins whose quantum was meagre and therefore their circulation was limited.

For this reason, prices of goods were distorted and retailers ended taking advantage of their customers by rounding off prices, which made goods expensive and in some cases they offered unwanted goods as change or non-tradable credit notes/vouchers.

In the rural areas, people resorted to informal arrangements as well as forms of barter trade, which were not as efficient as the case where real money is circulating and facilitating change.

It is for this reason that the central bank introduced the bond coins, whose purpose is to correct price distortions while also providing change to customers.

In addition, the bond coins bring about the divisibility of money, which allows money circulating in the economy to be divided into small increments that can be used in exchange for goods of different values.

The coins which are at par with the United States Dollar can be changed free of charge at any bank and deposited as and when required.

The bond coins, which are in denominations of 1 cent, 5 cents, 10 cents and 25 cents are also being accepted in shops, supermarkets and other business in Zimbabwe.

Given the challenges of limited divisibility of money that was experienced in the economy, these smaller denominations will greatly assist in resolving the change problems.

The bond coins will reduce the amount of informality where economic agents have been using various forms of barter trade.

Further, appropriate pricing models will be re-established as there will be no economic basis for rounding up prices to the nearest dollar.

At any price, change is no longer a problem as money in the economy will now be divisible to the very last cent.

In response to the introduction of the bond coins, there is need for prices of certain commodities to come down.

The Bankers Association of Zimbabwe working in conjunction with the RBZ and Ministry of Finance and Economic Development are encouraging all Zimbabweans, be they retailers, shopkeepers, kombi drivers, informal traders, airtime vendors, bus operators, schools and all communal dwellers to use these coins as they were introduced for their convenience.

It is important that all economic agents embrace the use of the coins for efficiency in economic activities and consumers will become the ultimate winners.

Sanderson Abel is an economist. He writes in his capacity as senior economist for the Bankers Association of Zimbabwe. For your valuable feedback and comments related to this article, he can be contacted on [email protected] or on numbers 04-744686 and 0772463008