Coins: K1.00 and 5 ngwee

The K1.00 coin (Former K1,000.00) and 5 ngwee are featured here. You realize that it is hard to talk about coins as Zambia has not had them in a while. We had them, but they were not worth anything.

So this is a very useful introduction in the economy. We have an opportunity to use this form of exchange for a lot more issues. To note are the durability issues as compared to paper money. Coins are durable and so less money will be spent (money which was spent in printing paper money every now and then). Once coins have been minted, it takes a relatively longer period for the next session of minting.

Here is a close look at the one kwacha (K 1.00) and five ngwee (K 0.05) coins.

New K100.00 Note

The new K100.00 note is note a re-based K100.00 that we have had. People need to know this as the note may be subject to a lot of fraud activities.

The K100.00 is the highest note in the new Kwacha. It is roughly US $20.00 in value. Whilst the old K100.00 is about US $ 0.02. However, the note created did not take into account the problems the note would cause for the ordinary people. The similarity between the notes is not that great, but the difference are too little for the people who have not seen the notes before. If you have seen both, there is no problem. But failure to even be exposed to one will bring problems. 

Look at this:

The notes are way confusing for the ordinary people and the villagers. This is not a good if you know what I mean. But lets let the people judge and tell us what they think about the two notes.

I think the note should have a different colour, bigger than the old one and totally different from this.

Rebased Kwacha - K2.00

One of the new notes that was not previously in the Zambia economy. Not possible to compare with any other as its uniquely new.

I believe the new K2.00 will make some transactions simpler. But then I again, I may be wrong.

I expect this note to have very little if any problems at all since its a new entrant on the market. Maybe the women selling on the streets may be confused in the initial days but quickly adapt to the trend of new notes.

I have slowly been taken by the wash-out look of the other notes, but the K2.00 is uniquely  its own colour so maybe the wash-out will not be linked to this one.

Rebased Kwacha - K5.00

This is another one of our beautiful note simply re-based. The features are almost the same.

Very few people would be confused with this one. It simply looks like a wash-out of the old note. I am already falling in love with the "wash-out" looks. I believe I'm not the only one. Maybe we got used to the old notes.

Rebased Kwacha - K50.00

The once mighty ninja (K50.00) is back. This time dwarfed only by the introduction of K100.00.

So another one worth looking at is the K50.00 which is a re-based K50,000.00. Of course this just looks like the washed out note when you look at the colour. But I do love the new look and far better than the old one.

So the K50.00 note is the second highest note in the new Kwacha. It has to be one we should be familiar with at all times.

Rebased Kwacha - K10.00

I have just got news people have been demanding for the new kwacha like mad. So Kwacha Economics thinks you should see the different notes and see if they really live up to the "New Money Same Value" idea.

K10,000.00 has now become K10.00. Ideally, this is supposed to be of same value and the touch of looking similar just adds some good to it. Below are the front and back. 

I think it really is new money same value for this one. Anyone thinking otherwise?

Bank Holiday Pt. 2: Banks, ATMs will be closed

Bank Holiday

December 31st, 2012 has been declared a Bank Holiday. I have heard a lot of people missing this point and some think it is just an intention.

The holiday was declared and a statutory instrument issued to that effect. Moreover, the Re-domination of Currency Bill, was passed in Parliament and is now an Act. So the day is a holiday.

What to Expect on 31st December, 2012

All banks, ATMs and Other financial institutions will remain closed to the public. There will be of course their staff working as the day was declared a holiday for the transition to the new Kwacha (the Re-based Kwacha). All software need to be installed and launched will be done on that day and any short-comings rectified before 1st January, 2013.

So you wont use the ATMs. Of course strategic places like International Airports, Border points will have working ATMs and some banks, but the rest of the country will not. So if you will need money for the usual New Year Eve running around, make sure you have it in cash. For emergencies, run to the Airport! All ATMs will be loaded with the new notes (ZMW and not ZMK) in readiness for 1st January, 2013.

I'm not sure about swiping. You may have to find out on that issue. 

The good news at the moment is that most banks have already started implementing the new Kwacha (ZMW). What is interesting is that some banks (wont mention them) did not plan well on the issue and did not implement critical issues related to the change. Most businesses also did not know that this would actually cost them money to upgrade not only infrastructure but software as well. So the new Kwacha is here, but are we ready to start working with it just now? Coins, new kwacha scent, etc

Do counters have places to place the coins? Do you have machines to count the new notes? Do we have places to get vending machines from? 

Welcome come the new year with the new Kwacha! Kwachaecon will be there for the first notes and will upload as soon as it comes in.

Happy kwacha economy.

Debasing the Kwacha ...

Kwacha Economics has really taken an interesting twist this week. We are now thinking about debasing and the merits or demerits associated with it.

So let me add my voice to the debate. Clearly to correct what I have read and is out of line.

I feel good when i read about people talk about economic issues which make my daily life these days (can't believe I felt the same joy about Computers and IT a couple of years back!).

Rebasing on the Zambian kwacha should be viewed from an Economist point of view! I have been shocked by mis-leading statements about this and people will in the end be lost totally. We need to understand the fundamentals that control this in straight line and not assume the economics that is being dreamt about.

Rebasing the currency is redenomination which is different from devaluation. Wikipedia would simplify it better:

"Revaluation means a rise of a price of goods or products. This term is specially used as revaluation of a currency, where it means a rise of currency to the relation with a foreign currency in a fixed exchange rate. In floating exchange rate correct term would be appreciation. The antonym of revaluation is devaluation. Altering the face value of a currency without changing its foreign exchange rate is a redenomination, not a revaluation."

(I have read sites which have confused the two! Here)

On our case, only the face has been changed by deleting the extra three (3) zeros such that K5,000.00 will become K5.00 - simple! If you look at our currency now, K5000 is written as 5ooo (small zeros). Could be design or not, but assume the zeros are eliminated. So the new currency which will be printed will trade at the different rates. Such that, your K50,000.00 will be equal to K50.00. Hard to understand? Think of it this way, K5,000.00 is equal to $1.00, right? Assume now Kwacha2 is such that K5.00 is equal to $1.00. It simply means Kwacha2 K5.00 will be equal to K5,000.00 of the old kwacha (which we are using now). Put even simpler, its like changing kwacha to MaKwacha which is 1000 times more than the old kwacha.

There is no change in value. Just change in the face of the currency. if you go get a bag of mealie meal for K25,000.00 and you have K50,000.00, the store man will either give you K25,000.00 of the old currency or K25.00 of the new currency!

Bacause of the value being the same, it has no effect on imports or exports (all things equal as we love to say!). This is a redenomination and not a devaluation. It should be easier for people who transact across borders. You can either go buy a car in dollars or rands in durban! The vehicle worth K25 million will be the same if you buy it in Rands or Dollars. Your money simply changes faces (I know the differences in exchange rates will lead to some profit or loss, that's the exchange rate issue). All in all if you carry a stable currency like Euro and Pound, that element of loss or gain in exchanging them will be no more!

So why do countries redenomination? Simple, take our case in point. We have over the years been around the exchange rate of K5,000.00 to $1.00 if may fluctuate to K5,200.00 or K4,700.00 once in a while but we are stable in that region! So a redenomination will simplify our currency (like someone said, reduce the wheelbarrow to carry the money to pay for a car!). Will now only need K5.00 for $1.00! And can even bring back coins which are irreplaceable in some transactions like parking or toll-gates! Ever wonder why we have to buy tokens to play pool? In other countries you use your money in coins! So coinage will be part of the transaction!

There is also the issue of the buried K2.1 billions! People with buried money will either dig it up (so they exchange it for the new "currency" or lose the loot as it will only be worth to light the fire with! So it will rejuvenate transactions as there will be money which has been buried being dug up. And I hope some more people will be arrested for hiding the loot!

That is a simple explanation of what we will expect with this redenomination!!!