The announcement yesterday by Reserve Bank governor John Mangudya that Zimbabwe will import coins whose value will be at par with United States cents raises a very important question: What happened to the Reserve Bank’s coin mint in Bulawayo?
The mint was commissioned in August 2001 by President Robert Mugabe, and at the time, the central bank said this would save the country Z$50 million in foreign currency. The mint was hardly used because the country was hit by hyperinflation which rendered coins useless within three years.
More importantly, bank officials said the Z$500 million mint was necessary because it cost 150 cents to import a 10-cent coin. The central bank governor at the time was Leonard Tsumba.
So, while coins are very necessary because of the shortage of change, which tends to make goods more expensive as businesses round up their prices, it is essential for the central bank governor to explain whether the dynamics have changed. Is it now cheaper to import coins?
If not, does it make sense for a cash-strapped country to import special coins especially if they are not genuine US coins but whose value is simply put at par with United States cents?
Why not just mint them? Is it once again a question of lack of confidence in anything local? Why should an imported coin be more valuable and more acceptable than a local one especially if the value is a declared value and not an intrinsic value?
According to Bankers Association of Zimbabwe president Sam Malaba the return of the local currency would lead to a collapse of the economy and unrest.
“The public still retains residual fears regarding the early return of the local currency, following the experience of 2008. An early re-introduction of the local currency is certain to cause panic withdrawal of all US dollar deposits, a stampede that will occasion a banking sector crisis and an economy wide meltdown will ensue,” Malaba said.
Is five years too early to return to a currency which the country can use without any hassles? How many years will the people take to regain confidence if their own currency, when they are told everyday that a return to the local currency will be a disaster?