The mother of an eight-year-old girl at a private school in Bulawayo will never forget the day when she ran out of small change and gave her daughter a $5 000 bearer’s cheque.
The little girl, who usually got a daily allowance of $500 or $1000, depending on her mother’s mood, discovered that with the bearer’s cheque, she could buy ice cream, snacks and a drink, and remain with some change.
When her mother gave her the usual $500 the following morning, she rejected the money insisting she wanted a bearer’s cheque. Her hard-up mother had to give in after the little girl went into a tantrum.
Zimbabwe’s currency, which until the end of 1982 was stronger than the United States dollar, the rand and the pula, has lost so much value that some Bulawayo residents are questioning the rationale for the continued existence of the coin mint factory in the city, which the Reserve Bank of Zimbabwe refuses to acknowledge is now a white elephant.
Launched with pomp and ceremony on August 31, 2001 when the government introduced a new $500 note and $5 coin, the aluminium and glass fronted building along Jason Moyo Street is too quiet for comfort.
When the $500 million mint was commissioned by President Robert Mugabe, it was argued that it would save the country $50 million in foreign currency because it was costing the country 150 cents to import a 10-cent piece, for example.
The mint, which had six presses, could churn out 240 million pieces a year when the country’s annual consumption was only 130 million pieces. The mint could, therefore, be used to mint coins for other countries.
Less than three years down the line both the $500 note and the $5 coin are virtually useless. While, according to the Consumer Council of Zimbabwe (CCZ), a $5 coin could buy a packet of tomatoes to feed a family of six in October 2001, a child will not even pick up the coin today. He or she would even consider it an insult to be given anything less than $500 as this is not enough to buy a sweet.
The central bank, which is spearheading the country’s economic recovery programme, insisted that the mint was manufacturing coins “as per demand” because coins were still legal tender and were in circulation.
The bank said though it had stopped producing one cent and five cent coins, they were still legal tender. Those who had problems disposing of them could have them exchanged at the central bank for other denominations without loss of face value.
Most shops no longer accept coins. Some building societies do not even accept $20 and $50 notes, even for banking.
The central bank declined to disclose whether it was minting coins for other countries to sustain the factory only saying “the mint will continue to compete with other mints worldwide for business”.
“Currency is a security item and therefore it would not be prudent to publicise any information relating to any of the mint’s customers,” it said.
The only countries in the region where coins are still of any value are those in the Southern African Customs Union, which comprises South Africa which plays a central role, surrounded by the satellite states of Namibia, Botswana, Lesotho and Swaziland.
There has been a run on the Zimbabwe dollar over the past three years which has sent the currency tumbling as inflations oared from76.1 percent when the mint was commissioned to 363 percent last month, having peaked at 623 percent in January.
Though inflation is declining, prices have continued to escalate. For example, one needs $41 319 today to buy goods one would have bought for $847.70 in August 2001.
According to the Consumer Council of Zimbabwe, a family of six, comprising a father and mother and four children required only $21 503.11 in October 2001 for their basic requirements. Today the family requires $1.3 million for the same commodities.
The CCZ monthly basket comprises 2kg of margarine, 40 kg of roller meal, 6 kg of sugar. 500g of tea-leaves, a pint of milk every day, 4.5 litres of cooking oil, a loaf of bread every day, 2 kg of flour, 2 kg of salt, vegetables everyday and 8 kg of meat.
It also includes the cost of transport for 23 working days, 4 tablets of bathing soap, 4 bars of washing soap, 4 packets of washing powder, rent for a three-roomed house and provision for household goods, heat and maintenance, health and education, and clothing and footwear.
While the food items cost the family only $6 463.11 a month in October 2001, the same food items now cost the family $696 400. Non-food items, which cost the family $15 040 in 2001 now cost the family $635 680.
The CCZ basket is, however, for someone living at the poverty line because, a loaf of bread for example, is hardly enough for six people, especially the quality that is being baked today which crumbles as one cuts it.
The escalating poverty line makes a mockery the tax concessions recently made by acting Finance Minister Herbert Murerwa which will be effective from next month.
While they will provide some relief because the tax threshold was raised from $200 000 a month to $750 000, the threshold is barely enough for the food needs of an average-size family, which stood at $696 400 in July.
The Zimbabwe Congress of Trade Unions had recommended that the tax threshold should be raised to $1 000 000. Using its argument that the tax threshold should not be below the poverty datum line, the tax threshold should now be $1.3 million.
The ZCTU had also recommended that no one should be taxed at 45 percent as this was too much. It said the highest rate should be 30 percent and should apply to those earning above $4 million a month.
At the moment anyone earning more than $375 000 a month is taxed at 45 percent. The figure will be raised to $1.5 million a month from September, which by that time will probably be the poverty datum line.
With the continuing decline of the dollar, it will become increasingly difficult to justify the existence of the coin mint unless it starts manufacturing high denomination coins, replacing the present $10, $20, $50 and $100 notes with coins.
Other countries in the region with high denomination notes, such as Zambia and Tanzania, have stopped printing notes below K500 and TSh500.