The Sunday Mail
In recent months, two very important issues of national significance —demonetisation of the Zimbabwean dollar and that of special coins with values equivalent to US cents — featured quite prominently, and rightly so, in the July 2014 Monetary Policy Statement and the 2014 Mid-Year Fiscal Policy Review Statement.
As a matter of fact and record, the subject of demonetising the Zimbabwe dollar has been on the national agenda from as far back as the days of the ill-fated inclusive Government, which came into being early 2009, with very little, if any, progress being made on the issue, though.
The agreed strategy regarding coins seems to be to import US$50 million worth of special coins of 1c, 5c, 10c, 20c and 50c, whose values would be at par with US cents.
Rand coins of 10c, 20c, 50c, R1, R2 and R5 are also likely to be reimported.
It boggles the mind, though, why we intend to re-import Rand coins after the debacle and circus, which followed our previous first large importation of a consignment of these particular coins, which we then had to export back to South Africa at the time, at an unnecessary and wasteful cost to the nation.
If my memory serves me well this was prompted by some unwarranted disagreements and misunderstandings between the retailers’ and bankers’ associations over the exchange rates to use.
We were also educated at the time that it costs about US$1,50 just to import one US coin, and I have no reason to believe that this position has changed for the better since.
It is my submission, therefore, that it is unnecessary, costly and a misuse of scarce public resources to import these so-called special coins from whichever source.
The Zimbabwean cent coins lying idle in the Reserve Bank of Zimbabwe vaults here in Harare and/or Bulawayo or even for that matter, in people’s homes and some entities’ premises, can be immediately brought back into circulation to address the twin problems of change and its unintended consequence on price levels.
The said coins in homes and premises have generally now gathered dust or gotten rusty, but these can easily be cleaned up before being recirculated, this being done all for free, but with a lot of enthusiasm by the owners and/or possessors of such coins.
The reintroduction of these particular coins into our banking system can also act as a precursor to the eventual, desirable and inevitable, reintroduction of our local currency notes (by whatever name that local currency shall be called) after production levels in the economy and other relevant macro-economic fundamentals are sufficiently conducive as maybe desired or thought expedient.
The same will hold well even when a common regional (Sadc) or continental (AU) curreny were agreed upon and introduced at some future date.
The exchange rate will be fixed initially and permanently at Z$1 coin is equal to 10 US cents.
Correspondingly, one US cent equates and is fixed at 10 Zim cents.
All coins denominations in between are also to be valued accordingly and appropriately.
The capacity and material to mint locally more Zimbabwe coins to meet the expected surge in demand for these coins already exists.
Zimbabwean dollar coins cannot fail to work given that this far, we have had to make do with rudimentary instruments such as tokens, credit notes or even sweets for change.
We can also commence, as a first step, using the same Zimdollar coins to settle our domestic debt, particularly that relating to Treasury Bills and other such prescribed paper following the then Government’s default on the Zimdollar denominated prescribed asset values when we dollarised in 2009 and thereafter collapsed the Zimdollar.
In this manner, we are also concurrently but partly achieving the objectives of demonetising the Zimdollar, which issue has long been outstanding with nothing substantive being done to resolve the same, save for some empty promises.
There is also the added positive impact on national demand, which is an important macro-economic fundamental currently at its lowest, with attendant disastrous effect on industries and the economy in general.
In my humble view, there is neither the need to consult or seek approval from the Bretton Woods Institutions as this is purely a domestic matter, which, in a way, can be viewed as a survival strategy to counter sanctions imposed on us by the US, European Union and their Western allies.
The announcement of this new strategy can be done before or, at the very latest, during the announcement of the 2015 National Budget.
The US$50 million which was earmarked for importing special coins, can be more wisely and better utilised for agriculture very much in line with the first cluster of Food Security and Nutrition under the Zimbabwe Agenda for Sustainable Socio Economic Transformation (Zim-Asset) blueprint.
If these funds have already been raised and not utilised, one such specific and urgent use would be to pay off farmers who have already delivered maize to the Grain Marketing Board so that they can immediately go back to their farms to produce more food.
Edmore AM Ndudzo was Lead Consultant in the compilation of The Public Finance Management Act of 2010. He writes in his personal capacity
