Public bonding with new coins

“I stumbled upon my first batch of bond coins last week —nearly half a month since they were first introduced,” said Tarisai Mabhachi of Glen View.

“I received them following a lunch time transaction at a city centre food outlet. That being the first time I had gotten hold of the glittery pieces of silver alloy — an eerie feeling of fear and excitement swirled inside me,” he said.

“Contrary to street talk that the bond coins are facing resistance, one of the biggest outlets in down town Harare, which was rumoured not to be accepting bond coins, took mine. I have to say it turned out to be my first major surprise of the New Year, much to my relief.”

Tarisai’s experience, however, is different to Enoch Kachere’s.

Enoch tried to transact at a food chain group in the high density suburb of Budiriro using the same means of exchange but hit a brick wall.

“We don’t recognise them as a legal tender here, in fact, our management does not accept them,” said a cashier when Enoch produced his stack to conclude the transaction.

Bemused by the till operator’s utterances, he called for the shop manager’s attention.

He received no joy from the manager.

The above scenarios have become commonplace to most people in Harare and other parts of the country.

Mixed reactions to bond coins continue almost a month after their entrance into the market.

And it has not been confined to the retailing industry only, as it has also cascaded to other sectors such as the transport industry, especially the commuter omnibuses, down to SMEs and individual traders, who are supposed to be the major beneficiaries of the bond coins initiative.

However, this is despite the fact that Reserve Bank Governor, Dr John Mangudya, has reaffirmed the legality of the bond coins introduced to the market on December 18 last year.

“As the central bank, we urge people to feel free to utilise them as they are at par with the United States dollar,” said the exchequer boss.

“The coins are good value for money as they will not suffer from cross rate fluctuations as has been witnessed with the Rand coins.”

Yet the mixed reactions amongst both consumers and retailers persist.

“People are still sceptical about embracing the bond coins. The aftermath of the collapse of the Zimbabwean dollar still haunts most people,” said a Glen View 1 sole trader.

“If it’s not a way to re-introduce the Zim-dollar, then why did they not use the US$10 million used to procure the bond coins and buy the equivalent Rand coins,” he questioned.

Economist Steven Muringai said speculation of the imminent return of the Zimbabwean dollar was causing the general resistance on the acceptance of the bond coins.

“Second, the timing is wrong as the change issue is no longer a problem, bond coins should have been introduced way back,” he argues.

However speaking with The Sunday Mail Extra, Dr Mangudya said outside the perceived earlier stated benefits, the bond coins were also set to address the issue of price distortions.

“Prices of goods and services in the market should reflect the availability of change. Bond coins are supposed to enhance price competitiveness in the market. The introduction of bond coins is a fair and selfless initiative and there is nothing wrong with the timing of introducing the bond coins.”

He said the bond coins were not a substitute to Rand coins but supplementary and easy to use since there are no cross rates.

He argued that the bond coins were about encouraging and enhancing price competitiveness, bearing in mind that a little change can have positive impact on an individual’s life.

Dr Mangudya added that market forces would come to value the US dollar accurately with a pricing regime that does not always round off prices.

“Adjusting prices by rounding off is not an efficient way of doing business.”

He said the price of a commuter omnibus is either US$1 or 50 cents in cities, nothing in between, yet it could be 60c, 70c or even 75c, and the price of a loaf of bread is US$1 irrespective of the cost of production of each company.

“Prices of newspapers are all US$1 irrespective of the cost of production and bond coins as change, are supposed to address such anomalies,’ he explained.

The Central Bank boss also said that giving consumers change in tokens or sweets was not an efficient system of trading when the pricing structure is in US dollars as is the case in Zimbabwe.

Dr Mangudya gave assuarance that in introducing the coins, the Reserve Bank is providing convenience to consumers and businesses by inculcating a sense of respect for smaller denominations under the multiple currency regime.

“We need to have respect to take care of cents so that the dollars would take care of themselves.

“My appeal to Zimbabweans is that we need to cultivate the power of positive thinking, minimising negative perception which is eroding confidence amongst ourselves as a nation. Whilst I greatly appreciate and sympathise with the financial trauma that the nation went through during the hyper-inflationary era leading to the demise of the local currency, we need to move forward as a nation and not to continue to live in the past,’ he said.

But did the Central Bank do enough to enlighten and educate the general populace on the bond coins initiative?

“The Reserve Bank is continuously engaging various representative bodies in both commerce and industry for them to embrace the economic value of bond coins and to request them to appropriately price their products in view of the bond coins which have a one-on-one rate of exchange and value with the US cents,” he said.

“This is necessary in order for business to remain competitive especially at a time the US$ is appreciating against major currencies and as the Central Bank, we are confident that within the next few weeks some prices of goods and services shall be adjusted to reflect the availability of usable change and that over time the sceptics would realise that the Reserve Bank is very sincere and open on this bond coin initiative as we do not harbour any ulterior motives”, he added.

Dr Mangudya said the Central Bank was impressed with the uptake of US$2,5 million worth of bond coins only four weeks after their introduction.