Africa Economy: Zimbabweans show little interest in bond coins issued to aide dollar circulation

Nearly a month ago, Zimbabwe's central bank introduced a set of bond coins to a market dominated by the American greenback after the 2009 dollarization, aiming to ease the pressure for Zimbabweans to find change and maybe to bring down the prices of consumer goods for the poor.

But a few weeks passed, the entry of the coins at face value of 10 million U.S. dollars failed to make a significant impact as the public are wary of the central bank's intentions.

Although major retail shops have stocked the coins in one cent, five cent, 10 cent and 25 cent denominations to give as change to customers and avoid giving them items such as sweets and ball point pens in lieu of change, shoppers are rejecting them in favor of "real money".

Zimbabwe's central bank was infamously turned into a money- printing machine for almost the first decade of the 21th century, until the local currency Zimbabwean dollar was busted in the bubbles of hyperinflation. The government conceded in 2009 by allowing multiple currencies to become legal tenders in the country. But on the grounds, the U.S. dollar, aided by the coins of South African rand, dominated the market.

A manager at one of the country's biggest retailers said shoppers were not keen on the new coins, opting for the South African rand and other small items instead.

"They suspect the government intends to restore the Zimbabwe dollar through the back door," he said.

Public transport operators, vendors and small supermarkets are also not accepting the bond coins from the few customers who have them.

"I may accept the bond coins now, but I won't have anywhere to offload them to," said a commuter omnibus operator who charges a fare of 50 U.S. cents on his route.

A till operator at a major retail outlet in the Hillside area south of Harare said he had been allocated with the bond coins to give as change but shoppers always demanded the rand instead.

Although the value of the rand is always fluctuating against the U.S. dollar, the general understanding is that one rand equals 10 cents. This changes, however, as the amount goes up with the official exchange rate taking effect from 99 cents.

In other words, one U.S. dollar cannot be changed for 10 rand, but at the going rate which is generally lower and hovers around nine rand.

"I would rather lose a few cents than hoard coins which have no value outside the country. Even in church the pastors are not accepting this type of money as offerings," said Tonderai Mazivanhanga.

The rejection of the coins is a slap in the face of the central bank which had hoped that their acceptance would result in the lowering of prices which had been pegged higher than normal because of change problems.

"They are not Zimbabwean coins, we do not want to bring back the Zimbabwean dollar due to confidence issues," the bank said recently.

The specter of the Zimbabwe dollar continues to haunt many people who lost their savings following the introduction of multiple currencies -- especially the United States dollar and the rand -- in 2009 as the nation raced to rein in inflation which had reached unprecedented levels.

Since then, promises have been made to compensate those who lost their deposits and to give better value to insurance funds, but nothing has happened on the ground to boost people's confidence in the banking and insurance sectors, moreso the Zimbabwe dollar.

Economist David Mupamhadzi said the impact of the coins to the economy would be very minimal when compared to money supply in the economy currently at 4.45 billion dollars.

He added that the only issue was whether the central bank had taken a wise decision to commit 50 million dollars to the bond coins given other pressing needs in the economy.

"Was it an optimal use of the scarce cash? Yes they may ease change problems but with or without coins the market was functioning. Could the money not have been deployed somewhere where the country could get better returns?" he queried.

Despite the resistance by the majority of the people, there are still some people who hope that the bond coins will help ease shoppers' problems.

Writing in a local daily newspaper, Harare resident Denyse Bernard said the introduction of the coins was meant to solve the problem of change which had resulted in shoppers being forced to round off their bills to the nearest dollar by being given other small items.

"Instead of appreciating, some vendors and commuter omnibus conductors are not accepting these coins from their customers. This ungrateful behavior will not get us anywhere," Bernard said. Endi