Chivi North legislator Mathias Tongofa says that Mbare is playing havoc with the local currency as people are now rejecting the $10 note as legal tender since the introduction of the $50 note.
He asked in Parliament what the central bank was doing about this as it had now become a trend that people reject lower denomination notes whenever a higher note is introduced.
“We noticed that the Reserve Bank of Zimbabwe (RBZ) and Ministry of Finance introduced the 50 dollar note denomination for convenience of buyers and businesses. However, the effects of the higher denomination are that as soon as the higher denomination is introduced, the smaller denominations are now denied in the market,” he said.
“I would like to know what the RBZ is doing to ensure that the public do not deny the smaller denominations. Currently, people are rejecting 10 dollar note. Previously they denied the five dollar note and all this starts from Harare. I wonder whether they are doing enough to ensure that the phenomenon does not occur each time they add a new denomination.
“We see other nations like South Africa, they have 1 rand, 2 rand, 5 rand, 10 rand, 20 rand up to 200 rand as denominations but here we only have 50 dollar which was introduced and the five dollar note has disappeared.
“The 10 dollar already is now being attacked, it is no longer accepted in the market. We just wonder what they are doing. The source of that issue here, in this city, from Mbare – that is where it starts. I wonder what they are doing as the monetary authority to ensure that such a phenomenon does not occur each time they add a higher denomination in the market. “
Speaker of Parliament Jacob Mudenda advised Tongofa to ask the Minister of Finance Mthuli Ncube during question time but Ncube was not in the House on Wednesday.
He was expected to present the mid-term budget review yesterday but will do so next Thursday, 29 July.
The new note is worth just over 50US cents using the official exchange rate but less than that using the black market rate.
Monetary Policy Committee member Persistence Gwanyanya said recently that the global standard was that a country’s largest denomination should be equivalent to US$20.
“In Africa the common range is US$5-20,” he said. “This means by global standards our largest denomination should be around $425-1 700 for transactional convenience. However, because of our historical experience of hyperinflation, on account of excessive monetary expansion, which was supported by higher cash denomination, RBZ is now overly cautious about higher denominations.”