Author Topic: Zimbabwe zeroes  (Read 9697 times)

0 Members and 1 Guest are viewing this topic.

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 538
  • Mumbai, India.
Re: Zimbabwe zeroes
« Reply #15 on: October 07, 2010, 07:10:37 PM »
Zimbabwe Finance Minister Biti Seeks US Help on Shortage of USD Bills & Coin

Zimbabwe adopted a mixed hard-currency monetary regime using the U.S. dollar and other currencies including the South African rand and Botswana pula in early 2009 by time the Zimbabwe dollar had lost all value due to hyperinflation

06 October 2010

Zimbabwean Finance Minister Tendai Biti, in Washington this week, will seek U.S. assistance in securing a supply of small-denomination American banknotes and coins to ease everyday transactions in the country.

Biti and Economic Planning Minister Tapiwa Mashakada will also be holding broader talks with U.S., International Monetary Fund and World Bank officials seeking further steps toward normal financial ties, Biti said.

Zimbabwe adopted a mixed hard-currency monetary regime using the U.S. dollar and other currencies including the South African rand and Botswana pula in early 2009 by time the Zimbabwe dollar had lost all value following years of accelerating hyperinflation. The Reserve Bank of Zimbabwe had flooded the market with Zimbabwe dollar bills of ever larger denominations, debasing the currency such that ordinary commodities went for billions.

But U.S. bills and coins are in short supply and those in circulation have become so worn and filthy that Zimbabweans have taken to laundering them and hanging them out to dry before attempting to spend them.

U.S. economist and monetary policy expert Steve Hanke said the Zimbabwean government could readily purchase American currency and coins on the open market, but may not find Washington receptive to supplying them.

International relations expert Innocent Sithole agreed U.S. concessions may not be forthcoming.
The U.S. State Department recently rebuffed a Harare ministerial delegation asking for a review of American travel and financial sanctions targeting President Robert Mugabe and more than 200 members of his inner circle. The U.S. officials said members of Mr. Mugabe's ZANU-PF party have continued to violate human rights.

Source: Voan News


It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #16 on: October 27, 2010, 11:08:04 PM »
Retailers ripping off consumers

IT boggles the mind to hear that retailers are refusing to take up coins imported by banks to alleviate the critical shortage of change in the economy because of the exchange rate issue.

The retailers want the Government to first fix a coins exchange rate of US$1 to R10, as they are not willing to buy the coins from banks at the prevailing market rate of US$1 to R6,90.

On October 15 it was reported that local banks were stuck with over R8 million worth of South African coins and that they may soon be forced to return them after retailers refused to buy them for use in their cash transactions.

Bankers Association of Zimbabwe president Mr John Mushayavanhu was quoted in the same report confirming this, adding that, “the banks don’t know what to do with the coins and are now looking at repatriating them back to South Africa”.

With the prevailing acute change crisis the country has endured since the introduction of the multi-currency system in 2009, surely the importation of coins by banks should be viewed as the solution to the change problem, particularly by the retail sector and the transacting public.

When the CBZ started advertising its coin stock this was greeted by public enthusiasm for it meant that the change problem was coming to end.

The general public, who bear the greatest brunt of the change shortage as they are forced to part with their money on things they would otherwise not have wanted to buy, had a reason to be excited by this development.

The misery of the change shortage is really more evident in commuter buses where commuters are always seen desperately asking for coin from fellow commuters to avoid ending up having to forgo their change. The situation is even more distressing when it involves an elderly commuter.

It was because of the change crisis that the Zimbabwe dollar’s life span stretched longer in the commuter transport service well after the introduction of the multi-currency system.

The resistance by retailers to buy the coins from the banks is, in the eyes of the public, motivated by greediness.

When the change crisis started after the introduction of the multi-currency system it caused real headaches for both the transacting public and the retail shops.

However, with the passage of time retailers were able to devise short-term strategies to mitigate the challenge and these measures included the use of the so called credit notes, tokens, and small value goods such as sweets.

Consumers accepted this arrangement begrudgingly as it always meant that they would always come out of the shop having bought other things they would not have budgeted for.

The apparent fact of the matter is that these improvised change-mitigating measures have become a source of income for retailers and as a result they are reluctant to let go of them.

The income retailers are realising through these forced purchases is quite significant, particularly for large retail shops, and the retailers know that a sudden loss of that income will have a knock on effect on their ability to meet company overheads particularly salaries.

They are aware that such a sudden change in their income levels will negatively affect their balance sheets.

By trying to court the Government to come up with a fixed exchange rate of US$1 to R10, retailers are either sneakily trying to arm-twist everyone along the way so that the situation remains favourable to them.

Alternatively they are merely attempting to buy time while they continue to reap from consumers’ ineptitude.

Why consumers remain silent on such issues that covertly invade their pockets really baffles the mind.

It does not make economic sense for a Government that is using other countries’ currencies to try and peg or fix an exchange rate for those currencies outside the currencies’ prevailing market rates.

If there is to be any Government intervention in this matter, it should be to simply compel the retail shops to immediately and unconditionally buy the coins stashed in banks in order to smoothen cash transactions in the economy rather than listen to the retailers’ baseless argument.

In Bulawayo, US dollar and South African rand transactions for both notes and coins are done without any hassles using the prevailing market rates for the two currencies, and the coins they use are SA rands which are readily available.

Their products are marked in both US$ and rand prices and the system has been working well for sometime now without causing any headaches.

For example, a product marked R5 will cost US$0,72 at the prevailing exchange rate, and with the coins being available there should not be any hassles in executing such a transaction. Retailers are merely trying to create a storm in a teacup, and this points to the fact that the regulatory authorities and consumer watchdogs such as the Consumer Council of Zimbabwe have not been doing enough to protect consumers from such flagrant violation of consumer rights.

Retailers are ripping off consumers and to cover up for this they are coming up with flimsy and unconvincing excuses to justify their insatiable and unsavoury greed.

The change scam exhibits dishonesty and disrespectfulness of consumers by retailers, and authorities should step in to bring sanity to this farce. The economy wants to use those coins stashed in banks, and want to use them now.

Bradwell Mhonderwa is the Managing Consultant of Business Ethics Centre, a Corporate Governance and Business Ethics Management firm.

Source: The Herald
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #17 on: October 27, 2010, 11:12:54 PM »
The current USD/ZAR exchange rate is 6.91372. If the shopkeepers' rate would be adopted, USD notes would be driven out by ZAR coins. This would worsen people's ability to pay and cut into (future) profits. The gods fulfill the wishes of those they want to damn.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 538
  • Mumbai, India.
Re: Zimbabwe zeroes
« Reply #18 on: December 22, 2010, 06:07:48 AM »
Zimbabwe Pressured to Issue Coins

By Richard Giedroyc, World Coin News
December 20, 2010

Zimbabwe’s politicians and central bankers have been talking a good story, but when it comes to delivering local bankers and merchants wonder if circulating domestic coinage will become a reality or if it just simply sounds good politically.

There is no question Zimbabwe is going to revamp its currency system, changing both the appearance and the denominations on its bank notes at the same time. Central bank authorities have also indicated coins will return to circulation despite their use having been discouraged by inflation, but so far there is no evidence plans for a new domestic coinage is in motion.

Instead, the blame game appears to be popular. The Bankers’ Association of Zimbabwe has been complaining of shortages and related problems due to a lack of circulating coinage, while retailers are blaming BAZ for setting an unreasonable exchange rate that has impacted the availability of coins in commerce.

Zimbabwe in theory has stainless steel composition 10-, 20-, and 50-cent and $1 and $2 coins in addition to a steel center, brass ring $5 ringed bimetal issue, all of which are supposed to circulate. Due to inflation and a lack of production this simply hasn’t happened.

Instead local banks carry South African rand, Botswana pula, and US coinage, but even this has failed to circulate due to a disparity between the official and unofficial or parallel market exchange rates.

BAZ Chairman John Mushayavanhu summarized the problem in the Oct. 25 issue of the Zimbabwe newspaper News Day, in which he said, “Banks have loads of coins ranging from 1 cent to 5 rands—as much as nine million South African rand, but the problem is that retailers want an exchange rate of one to 10.”

According to News Day, “He [Mushayavanhu] blamed retailers for not being reasonable and said his organization was considering repatriating the coins back to South Africa.” This would be the equivalent of either Ecuador or Panama sending U.S. dollar coins back to the United States while refusing to make a domestic replacement available.

Mushayavanhu continued, “If the retailers insist on their own rate, they want the banks to make a loss. We do have coins lying idle in our banks and it is all about retailers who are not willing to have them. Now we are considering repatriating them because it is dead money.”

The newspaper reported that government and the business community have arranged to meet and deliberate on the issue at a pre-budget consultative meeting, however it appears the government may not be able to sit back idly and allow BAZ and merchants to slug it out.

Rosemary Siyachitema is a rather vocal spokesman for the Consumer Council of Zimbabwe. She places the blame on the government for not issuing any domestic coinage.

Siyachitema recently said, “If you buy goods for $1 and you pay $2, you are forced to take sweets or other unbudgeted [merchandise] for groceries and that means retailers will be benefiting at the expense of consumers which is unfair.”

She continued, “The relevant officials should be engaged to end all this as a matter of urgency.” While this discussion and any associated blame becomes more vocal Retailers’ Association of Zimbabwe Chairman Denford Mberi added his comments, saying the problem isn’t with his association, but is a national problem that requires a national solution. He added that the bankers’ association needs to be more sensitive to the needs of retailers on this matter.

Zimbabwe’s Finance Minister Tendai Biti was in Washington during early October seeking U.S. assistance in obtaining additional US coins and bank notes for use in his country. The U.S. State Department has remained hostile due to alleged human rights violations by Zimbabwe President Robert Mugabe and his ZANU-PF political party.

The official U.S. dollar and South African rand rate to the Zimbabwe dollar is one to seven.

Source: Numismaster
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Harald

  • Senior Member
  • ***
  • Posts: 333
    • Monetary History & Numismatic Linguistics
Re: Zimbabwe zeroes
« Reply #19 on: December 22, 2010, 08:54:27 PM »
"Zimbabwe in theory has stainless steel composition 10-, 20-, and 50-cent and $1 and $2 coins in addition to a steel center, brass ring $5 ringed bimetal issue, all of which are supposed to circulate. Due to inflation and a lack of production this simply hasn’t happened."

Does Mr Giedroyc refer to the re-issued coins of 2001? If so, he is probably incorrect. The decree for this was issued on 1st August 2008 and therefore valid for the dollar of that time (code ZWR). Today, we are 12 zeroes further and have the ZWL. The coins would not be supposed to circulate. Or has there been another decree to re-re-issue those coins?

cheers
--
Harald
http://www.liganda.ch (monetary history & numismatic linguistics)

translateltd

  • Guest
Re: Zimbabwe zeroes
« Reply #20 on: December 22, 2010, 10:29:30 PM »

The official U.S. dollar and South African rand rate to the Zimbabwe dollar is one to seven.

Source: Numismaster

Are they getting their currencies mixed up there a little, or are the USD and ZAR really treated as equal (officially, anyway) in Zimbabwe?

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #21 on: December 22, 2010, 11:15:04 PM »
Are they getting their currencies mixed up there a little, or are the USD and ZAR really treated as equal (officially, anyway) in Zimbabwe?

AFAIK that part is correct. USD, ZAR and EUR are all "legal tender" in Zimbabwe. If the shopkeepers insist on a 1:10 ratio for ZAR and USD, while the banks hold ZAR coins and notes (presumably to minimize transportation cost) and the market rate is 1:7, USD, what they are really asking for is the disppearance of USD from circulation (Gresham's law). My impression is that EUR does not circulate much, so that effectively, the country would be in a currency union with ZAR.

At a rate of 1:10, if prices are quoted in USD, they would have increased by 22% in ZAR terms. If wages are also expressed in USD, they would be worth 22% more in ZAR terms and the whole operation would amount to nothing, except that there would be less liquidity in the country, as cash USD and EUR would be exchanged for ZAR.

If both wages and prices are expressed in ZAR, nothing would happen to purchasing power (but inflation would be at 22%, not a good number).

If prices are in ZAR and wages in USD, the shopkeepers would all be mad, so that is unlikely.

If prices are in USD and wages in ZAR, the shopkeepers would effectively have transferred 22% of the purchasing power of wage earners to themselves. Consumers would holler and shopkeepers would not accept ZAR until consumers accept the 1:10 rate. This seems to be what is happening.

The easy solution for this problem is to import cash from the US and pay wages in USD. This would add to cash transportation cost, but keep inflation in check. Also, the bad guys would lose. :)

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #22 on: January 27, 2011, 02:30:56 PM »
Northern Zimbabweans Adopt Zambian Kwacha as Small Change Currency
Kariba resident Gwenelo Ncube said retailers and other traders have found it convenient to trade in the kwacha alongside the US dollar and the rand
Gibbs Dube | Washington  26 January 2011

Frustrated by chronic shortages of US dollar banknotes and South African rand in small denominations, residents and retailers in the northern Zimbabwean resort town of Kariba have started using the Zambian kwacha for change instead of candies or vouchers.

Small bills and change are in short supply nationwide, hampering consumers, retailers and street vendors, but Zambia's proximity across the Zambezi River has provided the lakeside community with a solution of sorts in the Zambian currency.

In early 2009 Zimbabwe adopted a monetary regime of mixed hard currencies - primarily the US dollar, South African rand and to a lesser extent the Botswana pula.

One US dollar currently fetches some 4,830 kwacha - or to put it another way, one kwacha has a value of 0.0002 dollars. The kwacha, which is divided into 100 ngwee,
Zambian 1,000 and 500 kwacha notes are printed on resilient polymer.

The kwacha is not considered a hard currency readily convertible in a bank into dollars or rand, but Kariba resident Gwenelo Ncube said retailers and other traders have found it convenient to trade in the unit alongside the US dollar and the rand.

Ncube said consumers are no longer obliged to expend their change on items they do not need, and retailers are no longer rounding up prices in lieu of making change.

Finance Minister Tendai Biti recently asked the U.S. Treasury to help the country build its supply of small-denomination notes, but that initiative has not borne fruit. Experts say however that Zimbabwe could readily purchase bills and coin in the open market.

Traders in Kariba are also using the kwacha for cross-border trading. “There are many people from this town who visit Zambia to conduct trade and Zambians too flock to Kariba in large numbers to buy various goods,” she said.

Kariba Member of Parliament Cleopas Muchacha said it is legal for residents to use the Zambian kwacha to tackle problems of change. Muchacha said local residents should be commended for finding innovative ways of solving the small change shortage.

Economic commentator Masimba Kuchera said the Finance Ministry and Reserve Bank of Zimbabwe should encourage the circulation of one-rand coins held by banks.

Source: Voice of America
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #23 on: March 09, 2011, 12:26:02 PM »
US govt agrees to supply coins to Zimbabwe: Analysis
by Beforeitsnews, 2011 March 08

FORGET change problems, getting a token or a sweet as change and being stuck with greasy soiled notes. This is because the United States Federal Reserve has agreed to supply coins and replace soiled notes to Zimbabwean banks in a bid to end change problems in the economy, businessdigest has established.

According to sources, representatives Bankers Association of Zimbabwe led by its president and FBC Bank boss John Mushayavanhu met Finance minister Tendai Biti last week to map a way forward in dealing with change problems in the economy.

The sources, said the US Federal Reserve have “formally” agreed that Zimbabwe’s economy is now dollarised and will now supply Zimbabwe with coins and replace notes.

Officials from the Finance ministry will soon depart for the US to airlift the coins to Zimbabwe, the source said.

Banks and government, according to the sources have agreed to charter an Air Zimbabwe flight to pick up the coins in the US. The flight costs will be met by both government and banks.

Zimbabwe has been saddled with change problems since the introduction of multi-currencies in February 2009.

Retailers are offering consumers credit notes, tokens and even sweets to settle small change.

Mushavanhu on Wednesday declined to comment on the matter referring all questions to Biti who was unreachable at the time of going to press.

In his 2011 budget statement, Biti said government had engaged the United States Federal Reserve over possible provision of coins and replacement of soiled notes to ease small change problems in the country.

Biti said: “I am pleased to advise on the fruitful interactions with the US Department of the Treasury which stands ready to facilitate access to acquisition of smaller denominated coins and replacement of soiled notes through the US Federal Reserve and commercial banks. I will, therefore, be finalising on this in conjunction with the banking system, that way resolving the matter of challenges with change and coins.”

“The availability of both US dollar and rand coins will do away with the challenges posed by the current need to apply cross rates in giving change in rand coins for transactions undertaken in US dollars,” Biti said. “Whilst this problem should be alleviated by electronic payment systems, the large size of the informal sector and the lack of infrastructure for electronic payment systems in rural areas necessitate the availability of large volumes of small denominations”.

Source: Bulawayo 24

With thanks to Pabitra Saha
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Afrasi

  • Moderator
  • Honorary Member
  • *****
  • Posts: 2 600
  • To do is to doo be dooh ...
Re: Zimbabwe zeroes
« Reply #24 on: March 09, 2011, 10:00:18 PM »
This would be a small strip of light at the horizont for the Zimbabwean members of my family. May their hopes come true! Not only in this problem ...

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 538
  • Mumbai, India.
Re: Zimbabwe zeroes
« Reply #25 on: July 27, 2011, 08:09:17 AM »
US dollar coins likely to be unveiled in Zimbabwe before end of the year
by Nare Msupatsila
2011 July 27 07:39:45

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said the Zimbabwe government was finalising importation of coins from the US. He indicated that the coins are likely to be unveiled before end of this year.

Earlier this year there were some reports that the US govt agreed to supply coins to Zimbabwe. The United States Federal Reserve is said to have agreed to supply coins and replace soiled notes to Zimbabwean banks in a bid to end change problems in the economy.

According to sources, representatives Bankers Association of Zimbabwe led by its president and FBC Bank boss John Mushayavanhu met Finance minister Tendai Biti sometime back to map a way forward in dealing with change problems in the economy.

The sources, said the US Federal Reserve have "formally" agreed that Zimbabwe's economy is now dollarised and will now supply Zimbabwe with coins and replace notes.

Officials from the Finance ministry are said to have finalised all the nuts and bolts to the US dollar coins with the Fed and will soon depart for the US to airlift the coins to Zimbabwe.

Banks and government, according to the sources have agreed to charter an Air Zimbabwe flight to pick up the coins in the US. The flight costs will be met by both government and banks.

Zimbabwe has been saddled with change problems since the introduction of multi-currencies in February 2009.

Retailers are offering consumers credit notes, tokens and even sweets to settle small change.

Mushavanhu declined to comment on the matter referring all questions to Biti who was unreachable at the time of going to press.

In his 2011 Mid Term Budget Policy statement, Biti yesterday said government had engaged the United States Federal Reserve over possible provision of coins and replacement of soiled notes to ease small change problems in the country.

Biti said: "I am pleased to advise on the fruitful interactions with the US Department of the Treasury which stands ready to facilitate access to acquisition of smaller denominated coins and replacement of soiled notes through the US Federal Reserve and commercial banks. I will, therefore, be finalising on this in conjunction with the banking system, that way resolving the matter of challenges with change and coins."

"The availability of both US dollar and rand coins will do away with the challenges posed by the current need to apply cross rates in giving change in rand coins for transactions undertaken in US dollars," Biti said. "Whilst this problem should be alleviated by electronic payment systems, the large size of the informal sector and the lack of infrastructure for electronic payment systems in rural areas necessitate the availability of large volumes of small denominations".

Source: Bulawayo 24
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline augsburger

  • Meritorious Member
  • ****
  • Posts: 740
Re: Zimbabwe zeroes
« Reply #26 on: July 27, 2011, 03:27:50 PM »
Maybe this will sort out the US $1 coin problem!! Just ship them off to zimbabwe!

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 31 539
Re: Zimbabwe zeroes
« Reply #27 on: July 27, 2011, 05:10:43 PM »
As a bonus, the coins would last longer in the African climate, but they are more expensive to transport and I bet the US govt. has negotiated a clause saying that the Zimbabweans will pay and that the coins will be transported on a US flagged ship, which means a hefty price increase.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline chrisild

  • Moderator
  • Honorary Member
  • *****
  • Posts: 8 771
  • NW · DE · EU
Re: Zimbabwe zeroes
« Reply #28 on: July 29, 2011, 12:28:40 AM »
The US $1 coins are already in use in Ecuador for example - in the sense of actually being used. :) Maybe in Panama too, not sure. So shipping some more to Zimbabwe would indeed make sense. But apparently the shortage affects primarily cents: http://www.bbc.co.uk/news/world-africa-14331167

Christian

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 538
  • Mumbai, India.
Re: Zimbabwe zeroes
« Reply #29 on: July 29, 2011, 01:52:07 PM »
Christian is right (as usual :)). According to this report, "US cents will become more widely available in Zimbabwe by the end of the year[..]"

and

"While dollar notes are widely available in Zimbabwe, a shortage of coins means that shops often find themselves unable to give their customers change.[...]"

Aditya
« Last Edit: July 29, 2011, 01:57:35 PM by Bimat »
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.