10/01/2025
QUALITY OF BANK NOTES
There is currently a public outcry on the deteriorating quality of lower denomination notes to the extent that some businesses have stopped accepting these notes.
Currency printing is a very expensive exercise. Given the loss of purchasing power in our currency eroded by imported inflation due to the deteriorating Kwacha/ dollar exchange, it requires a re-think.
The velocity of lower denomination notes (speed at which these notes exchange hands) is very high in lower denomination notes. Market prices, for example, hover in the K2 to K50 range. This means that the frequency at which the lower denomination notes exchange hands has increased and consequently the poor quality of notes.
The Bank of Zambia should immediately take action whilst paying attention to the costs of the implications of currency printing.
We propose that the Bank of Zambia introduces K1, K2, K5, and K10 coins, which are more durable than notes. Equally remove Ngwee coins from circulation as they are valueless. All pricing should move to Kwacha only. For example, instead of pricing at K20.80 for an item, the same can just be priced at K21. In any event, currently, most people just leave the ngwee coins on shop teller counters as they have no value.
Also, the Bank of Zambia should introduce K200 notes targeted at ATM withdrawals. This way, people can withdraw meaningful amounts at the ATM than currently is the case. As I speak, a number of ATMs are out of currency and out of order as a result because they empty quicker with the highest denomination of K100. This will also minimise ATM re-stocking costs for banks who outsource ATM cash re-stocking to security companies.
Surely, this is a simple and straightforward matter that does not require rocket science.
The Bank of Zambia has currency models that help them assess currency velocity and assist with determining the need for the introduction of higher denominated notes. Others may argue that this will increase inflation, but the question is: how?
In UAE, the highest denomination is 1,000, in South Africa it’s R200, Euros it’s 500, and so on and so forth.
Come on, let’s stop inconveniencing over burdened citizens and act now. If you recall, we did propose to the Bank of Zambia to introduce a facility to support businesses against the effects of load shedding and drought. Again, they procrastinated for a long time before adopting what we had proposed.
Please urgently address this notes dilemma. Actually, do it now so that there is no currency printing in an election year. Note that UPND was the loudest in 2021, accusing PF of changing BoZ Governors to print election money. We don’t want a repeat of this in 2026.
ACT NOW IS OUR CALL!
Fred M'membe
President of the Socialist Party
