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Opinion / Columnist

New notes above board, monetary policy education key

01 Nov 2019 at 14:21hrs | Views
The announcement of the imminent introduction of new bank notes and coins by the Reserve Bank of Zimbabwe (RBZ) on Tuesday prompted divided opinion among the transacting public.

The development seems to have left some confused and speculative and hearsay gained ground to the resultant outcome to our fragile economy.
However, it is important that the public understands the motive and benefits that would be derived from the introduction of the new notes and coins.

No doubt that the introduction of new bank notes and coins was long overdue given the cash shortages that were being experienced by many in the country.

Therefore the need and necessity to introduce or make an additional cash injection into to the market cannot be overemphasized.
Economists agree to the fact that the unavailability of adequate cash on the market resulted in a number of challenges for the transacting public, the business community and the economy at large.

It is common knowledge that hard cash had become a commodity which people could sell for a profit, at a price higher than its actual value, via soft money or electronic money such as the Real Time Gross Settlement (RTGS), Mobile money platforms (Ecocash, Telecash, OneMoney) and Zipit.

However, while this went on for some time, it remained unacceptable and unsustainable for an economy in the process of rebuilding itself, like Zimbabwe.

With most workers getting their salaries and wages paid through bank transfers and deposit, accessing cash had become a nightmare due to the high premiums that a minority with access to hard cash began to charge those seeking hard cash.

It may be recalled that at one point, the premiums hit a high of about 60 percent and surely Government could not sit back and watch while the abnormal became normal.

As a result temporary measures had to be put in place. This resulted in the freezing of Ecocash Agent lines after they had been fingered in abusing the system for their selfish gain through charging unwarranted premiums. However, a permanent solution to the problem was in the making.

Technically and literally, the unavailability of cash resulted in the eroding of people's earnings for those that had no choice than to buy the cash which had become the preferred mode of payment for many.

Similarly, some businesses began to effect premiums when transacting with consumers using soft money leading to a lot of price distortions.
The introduction and injection of the new notes into the market, should address all these anomalies and bring about stability in terms of pricing of goods and services.

Similarly, both the formal and informal foreign currency exchange market should stabilize and eventually the local currency should firm against the United States Dollar.

The liquidity crunch in the market has evidently contributed to the rising inflation at the back of a high demand for hard cash.  
Some analysts, have argued that liquidity was not the problem driver of inflation citing perceived value determined by social and political factors.

However, what is crucial is for the nation to have a shared understanding and vision, in terms of what the country wants to achieve, upon which the success of any such policy intervention depends on.

The media comes in handy in creating this shared vision and understanding.

It is worrisome and disappointing that some media houses deliberately chose to be blind to their primary role of informing and educating the public only to engross themselves in activism for preferred political entities.

The same media outlets have found pride in fuelling confusion and downplaying meaningful Government policy interventions intended at improving the living conditions of the general populace.

For instance a headlined carried in one of the local newspapers read, "Nameless currency in two weeks". One wonders the motive behind such a mischievous headline.

This was despite a detailed clarification from the Minister of Finance and Economic Development, Prof Mthuli Ncube, that the new notes and coins were not a new currency but rather an additional cash injection on the market hence, it would be denominated in terms of the already existing Zimbabwean Dollar.

Given such a toxic environment, alternative avenues to educate the public on monetary issues should be explored and prioritized.


Source - Ashley Kondo
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

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