Harare - The bonded coins that Zimbabwe introduced this week appeared entangled in initial operational glitches, with the take-up by retail operators sluggish.
Zimbabweans also took to social networking site, Twitter, to express their concerns and fears over the potential reintroduction of the troubled southern African nation’s own currency which it ditched five years ago.
A raft of multiple currencies, including the rand, the dollar, the pula and other major global currencies are currently acceptable as legal tender in Zimbabwe.
However, the acceptance of the rand has been problematic because of its sustained weakness against the greenback, with most shops, filling stations and other businesses worried about value fluctuations.
However, South Africa has become Zimbabwe’s biggest trade partner, with the rand and the pula accounting for 20 percent of money in circulation in Zimbabwe, according to government officials, while the dollar dominates the money used in the country.
The reserve bank has now introduced bonded coins to address price distortions and shortages of smaller denominated money.
“Through the introduction of change in small denominations we are expecting to see self-price corrections,” Reserve Bank of Zimbabwe governor John Mangudya said.
The Zimbabwean-bonded coins were introduced on Thursday and come in 1c, 5c, 10c and 25c. Their value has been pegged at 1:1 against the dollar, with Mangudya saying the bonded coins introduced by the central bank “will not go beyond the $50 million (R580m)” bond facility that the central bank says it has secured from Afreximbank.
At least $10m in the coins had been disbursed to the banks by the end of the week. Before the end of 2015, the central bank will introduce 50c bonded coins.
There was not enough time and information given to the public about the coins. Zimbabwean economist Joseph Kanyekanye said: “Sufficient education is important before the introduction and use of such coins… the public in Zimbabwe still lacks trust and confidence in the financial system given that they lost all their savings when the authorities shifted to using multi-currencies in 2009.”
Executives in the retail industry told Business Report that they were treading carefully in taking up the bonded coins from the banks. They also said some of the banks had not yet received the coins from the central bank.
“We are waiting to see how the acceptance will be and if they will transact smoothly; obviously public trust in the coins is still low. So far, we haven’t received any from the banks and they say they don’t have the coins for now,” said an executive with one of the big supermarket operators.
Despite the initial glitches, the bonded coins exchanged coins at some smaller retail operators, especially in Harare although subsequent acceptance for settling other payments was problematic.
Taxi operators were refusing to accept the bonded coins as fare payment by commuters.
Sydney Mukwacha tweeted that “of course the market will give these bonded coins a vote of no confidence”.
The Bankers Association of Zimbabwe said recently that the introduction of the bonded coins would “assist in the restoration of good pricing models and alleviate the problems associated with lack of change (and) issuance of change vouchers and change in the form of unwanted goods”.