The Sunday News
Economic Focus Gabriel Masvora
SINCE the country started using the multi-currencies more than seven years ago, there has been hardly fair and proper transactions due to fluctuating exchange rates, which Zimbabwe had no power to influence.
The use of multi-currencies, although it was an immediate solution to stop the economy from further haemorrhage due to inflation, also created a jungle where mainly the US$ and the rand competed for space.
The dollar finally gained superiority but the rand remained visible especially in small denominations where it is used as change in most cases.
This created a lot of price distortions. It created a situation where transactions were done in dollars but small change given in rand coins.
Some retailers were forced to monitor daily exchange rates and try to use them when converting for the purposes of transactions that involved both currencies.
This was always a big task as some of them never followed the proper exchange rates while others even after applying the proper rates found it difficult to give the exact value of converted change.
It became a game of estimates. Almost all transactions in Zimbabwe involving the rand and the dollar are based on estimates.
Estimates by nature benefit and disadvantage others. Retailers were the biggest beneficiaries raking in huge amounts of money from giving estimated change often lower than the true value.
Each day, retailers and some businesses would cumulatively rake in a lot of money from the change.
In some cases, retailers devised methods where they were dishing out sweets, biscuits or paper vouchers as change.
All this was to their advantage because it meant increased sales and in some cases free money as some customers never bothered to redeem the vouchers on the next purchase.
It was all losses for customers. Apart from losing money through change, they were forced to buy items that they did not want simply because shops were forcing them as a way of dealing with the change problem.
For the seven years, retailers and some businesses reaped from the hapless consumer. In some instances consumers were forced to buy quantities which they did not want.
Prices like dollar for two or three became common forcing people to buy quantities they do not want.
For instance, in some parts of the country, it was a nightmare to buy a banana or a tomato and customers were forced to buy quantities that equate to a dollar even if they are looking for small quantities.
This also led to overspending. Under normal circumstances one would want to use just a dollar to buy a banana, a tomato, an orange and maybe leave 50 cents for transport.
However, because of the distorted exchange rates and lack of dollar denominated small coins they would end up using a dollar for every transaction.
The Government tabled a number of proposals to deal with the issue. Among the proposals were to just adopt the use of the rand as that was the currency where we could easily get change. This failed because of the regulatory issues which involved the complete use of the South African currency.
At one time the country even imported rand coins but banks had to return them after the business community and the general public allegedly rejected their use.
Another option which the Government wanted to explore was importing coins from America but it emerged that this would be expensive as the cost of importing the coins was always higher than the value of coins. Again this idea was abandoned until the Government came up with the idea of bond coins.
To ensure that they deal with the perception that the coins were of no value or a back door way of bringing back the Zim dollar, the Reserve Bank of Zimbabwe ensured that the bonds were backed by real money. After collecting the bond coins, those who are not willing to use them can walk into a bank and get real US notes.
Although like any other new product, the acceptance of bond coins was not easily embraced. It was and still is a long process especially in the southern parts of the country where the rand is still in abundance even in small quantities.
Today Zimbabwe is slowly bonding to the coins although a number of issues have emerged over their use.
First it was the issue of acceptance with vendors and commuter omnibus operators saying even some fuel garages, POLICE and BANKS were refusing the coins.
It has also turned out that the coins are not readily available forcing many people to continue with the tradition of adopting the rand as change. However, as alluded to before this is not fair and it is based on estimates.
It is time Bulawayo and the rest of the country warm up to the use of these coins to ensure that there is fair pricing on the market.
During a visit to Bulawayo last Thursday by RBZ governor Dr John Mangudya it emerged that this time people in the city are even calling for the reduced use of the rand.
Dr Mangudya supported the issue, noting that the continuous use of the rand was disadvantageous to the public as they continue to suffer from distorted exchange rates when the country now has coins that match the dollar.
A vendor asked whether it was possible for Government to just declare the dollar the official currency and ensure that all transactions small as they might are conducted in dollars now that the country has come up with small denominations.
The Government can then create bureau de changes where those with other currencies can walk in and exchange for dollars.
Dr Mangudya was supportive of this idea and said he was looking into it. While this might be difficult, customers have the power to ensure that although on paper it could still remain an economy of multiple currencies, the public can choose the currency they prefer.
Dr Mangudya summed it up when he said: “Today if you buy anything in dollars demand your full change in bond coins. There is no need to be given rands which are not equivalent to your money or sweets or anything.”
Customers now have the power — let’s demand our full change, if the retailers or anyone are charging their goods in dollars customers must refuse change in rands, sweets or anything which is not the bond coins. It must be noted that customers have the power to report those businesses that are trying to take advantage of the distorted exchange rates by giving change in different currencies.
If customers can demand fair treatment, maybe retailers can stop this cheating where they peg unrealistic prices like say $3,69 when they know full well they do not have the 31 cents. Now customers must demand the 31 cents or any other value in full because bond coins were introduced to address that.
Time to go back to reality.
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