Africa Economy: Zimbabweans slowly embracing bond coins

Zimbabweans are slowly embracing the bond coins introduced by the Reserve Bank of Zimbabwe (RBZ) in December 2014 to alleviate small change problems and encourage retailers to reduce prices that are rounded off to the dollar.

After initially resisting the bond coins – which come in denominations of 1 cent, 5c, 10c and 25c – fearing that the central bank was trying to reintroduce the moribund Zimbabwe dollar through the back door, many consumers now readily accept the coins as change, although they want to keep the amounts as little as possible.

"I have realized that although the coins don't work outside our borders, I can still use them any time I want in most of the shops. I even bought some grapes from a vendor using the coins and he didn't complain at all," said Harare man Christopher Muringai.

A till operator at one of the country's big retail shops said customers were no longer "fussy" about the coins.

"We just make sure that we do not give them more than a dollar' s worth of bond coins. I think their confidence has been boosted by the fact that they can even buy a loaf of bread using the coins, " she said.

However, some small traders who travel to South Africa to buy goods for resale in their tuck shops are not keen on the coins and would rather settle for the South African rand and United States dollar.

"Traders in Messina (on the South African border with Zimbabwe) don't want to know about the bond coins because these are exclusive to Zimbabwe. So there is no way I can accept the coins when I am required to transact mainly in rand," said Lincoln Musariri.

Commuter omnibus crews, who were initially rejecting the coins, now accept them but keep them limited.

"We don't want to be the receptacles of the small change people would have been given in the shops. So we accept the coins to a limited extent and are happy to deal with the 25c coins which we can also easily get rid of," said a bus conductor who declined to be named.

The coin does not seem to have found easy passage into the Church, however, with a pew leaflet published by a church in one of the city's north-western suburbs indicating very little receipts.

"This month's accumulation is 7,209 U.S. dollars, 795 rand, 20c bond and 8 (Botswana) Pula," the leaflet said.

Although the central bank had envisaged the falling of prices that had been pegged at higher levels to round off the dollar and alleviate change problems with the introduction of the bond coins, this has not happened, mainly because of the high cost of production.

RBZ governor John Mangudya said recently that businesses must seriously consider revising their high cost business models and reduce their prices in line with economic fundamentals if they are to survive in the face of increasing competition from imports.

"The only way to be competitive in an open economy is to reduce prices," Mangudya told New Ziana news agency.

"Businesses in this economy have been rounding up prices since 2009 but it is now time to round down," he said, adding that local products remained uncompetitive on the market due to high prices compared to imports.

He said while most local businesses were complaining about reduced consumer demand, imports of the same products were in fact on the increase.

"We need to be practical and pragmatic, there is no demand that is subdued in this economy because people are importing," he said.

Mangudya said reducing prices would also increase the consumers' buying power and reduce demand for salary increases especially when the economy was not performing. Endi