Friday, November 29, 2024
Subscribe
Headlines

Bank of Zambia hopes the introduction of new Kwacha notes will be done within 6 months

By editor
127
32,101 views

Share

Dr. Michael Gondwe

Bank of Zambia governor Michael Gondwe said that the central bank is hoping that the procedure to introduce the new notes will be done within six months.

Dr. Gondwe however, noted that the central bank will ensure that all the laid down regulations for printing new notes are followed.

Dr Gondwe added that once the new denominations have been rolled out, the old denominations will have to be withdrawn from circulation gradually.

The Bank Governor’s comments comes after Cabinet approved the rebasing of the Zambian kwacha by dividing the current notes by 1000.

This will consequently result in the removal of the three zero’s from the denominations of K 1,000 kwacha and above.

Therefore 1 000 , 5 000, 10,000 and 50 000 kwacha will become K1, K5, K 10 and K 50 respectively while the other smaller denominations will be in coin form.

Finance and National planning Minister Alexander Chikwanda h announced at a press briefing that a rebased Zambian Kwacha will address the costs associated with the accumulated loss in the value of the Kwacha experienced during the high inflation episode that undermine the currency basic function as a store of value, medium of exchange and standard of value.

Mr. Chikwanda explains that rebasing the kwacha will also help reduce the cost of customizing standard accounting packages that are purchased by businesses.

The minister also said cabinet and the Bank of Zambia board have also recommended that the banking sector be recapitalized in line with section 83 of the Banking and Financial Services Act.

Mr. Chikwanda added that the central bank shall revise the minimum capital for commercial banks.

This will result in the increase in the minimum capital requirement from the current K12 Billion to K 104 billion for local commercial banks while K520 Billion will be for foreign commercial banks.

QFM

editor
editorhttp://www.lusakatimes.com

127 COMMENTS

  1. This is really a good move at last i can be able to answer my lecture who was teasing me that our currency has just a lot of digits,it was really embarrassing when you are a foreigner in an economics class and the example is on your country, big ups to the Governor and the team.

  2. mushota i hear you…me too same theing.Abroad they used to laugh at the many zeros our currency has….atleast they removed them and now they should focus on appreciating the kwacha so that atleast it USD1-3…..Something… 

  7. If K1 will still buy you what K1000 did, then the real value is unchanged. One wonders if this is the case of making people ‘feel’better off?…and the cost to role out new currency would not be best utilised on pressing socioeconomic issues? Justsayin…

  11. What does this mean? If I was to withdraw money from my Zambian account here in diaspora would I still get the equivalent?

  12. Smart move, I highly recommend it … This also means that we would have to have another new note introduced in circulation, a new K20.00 note. You can’t jump from K10 to K50, because pricing strategy for many commodities would still be between that range and for ease of handling such transactions we would need a K20.00 note. Otherwise the K10 note would be susceptible to fraud and might end up with some fake K10.00 notes in circulation as the most single used note. I am speaking as a former bank executive, financial consultant & currency analyst on this and I know exactly the fiscal fundamentals involved here … thanks a trillion

    • even Argentina did the same thing and has the economy gone down. In fact the Argentina economy has gone up . Let us just fight corruption which is ripping countries like Nigeria apart. The” Kaponya” government has made the right noises so far. On Zamtel how do you sell the company to another parastatal. It was crazy!!!!!!!!!!

  15. This sounds a bit of a desperate move by the PF government. It does not change anything except to know that some people are failing to make big calculations involving many figures thats all. kaponyas can’t comprehend the huge mathematics involved with huge numbers. Its no wonder that we are the least in mathematics in the southern region if not the whole world. Ni mansamu yavuta apa chabe. Lets not hide in debasing semantics – NO. I end here!

  17. Willbe easier to carry money too…

    Since money was meant to be portable as an improvement to barter trade where you carry a bag of maize to go and pay Nsalamu,..

  19. Though I may not understand the economics.. I have seem this work in Mozambique… We just need to make it work… I’m tired of my zulu friends teasing me ….Frankly speaking everytime i go home i get confused with our currency…May be this will help when I go home in Dec.

  20. Removing three Zero to me does not make any difference. Your duty as government is to strengthen the Kwacha by encouraging buy Zambian campaign and exports. I hope this will not skyrocket inflation like the case of zimbabwe four years ago………………………..

  24. too weird maybe 2 zeros would have made sense ZK can not be stronger than rand. You salary was K450,000 now K450

  28. Will the salaries remain the same? Haha. Then Zambians would have more money in the pockets. However, if your salary is K5,000,000.00, you will henceforth receive K5000.00 as salary. And then you will buy dollars at USD1 to ZMK5.2. The move is good for convenience sake because you won’t have to carry sacks to go and buy tomatoes. The value of the currency will not change.

  30. But if there is no productivity in Zambia, the ‘good move’ will reveal problems quickly especially if after one week, the kwacha falls from K5.1 to a dollar to K6.1 and then K10. People will still be saying the kwacha is now K6100 or K10,000. However, productivity my prevent that, so ba pf akubombeni not kukambakamba.

  31. Who needs convenience, give people money not this black out were no one is really sure what is going to happen or the economic impact..If government wants to throw up such a move we should have had economists debate it out on tv so that people have a clear picture of what will happen..Perhaps ni donchi kubeba

  32. This is a good move. I just hope that we are not anticipating high fuel prices in which existing fuel vending machines would not cope with the extra zeros.

  33. The zeroes came into being through a process of inflation and international trade circumstances. Taking out the zeroes may sound great at home or in a closed economy but if you consider that zambia is a net importer (imports more than we export) how are we going to deal with international trade unless the government finances the zeroes! If I have a K6,500,000 assuming ZAR/ZKW exchange of R650 in my bank in zambia I have R10,000 which will become how much? Who will pay for the difference? Are these just zero. I explain to my friend in other countries that converting brings purchasing parity close but wishing to blend by removing zeroes means the gap has to be financed… It sounds simple in a closed economy however introducing exchange rates in an open economy changes the game. Lets debate

    • One Zambian, Zambia has been a net exporter for a few years now. Exports for 2010 were $7.251 billion and 2009 were $4.319 billion. Imports on the other hand were $4.71 billion (2010) and $3.413 billion (2009) so I really don’t see where you’re coming from.

    • Ricky Bobby? Where are you getting these statistics from? How reliable are these statistics? We you go to Zambia, everything you see around is imported including most of the food stuffs in shoprite. Or is it the copper that is increasing the net export?

  34. Please check the meaning of deabsing from wiki. Let us not be excited about this move. Firstly consider why Zimbabwe didn’t debase its current when it reached trillions but opted to use foreign currency (US dollar).

    One reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds.[1] However, the purchasing power of the citizens’ currency has been reduced.

    • Sanders, you don’t read much, Zimbabwe used to debase its currency almost on a monthly basis sometimes removing as much as 10 zeroes each time. With an inflation rate of 231 billion percent, they had no choice but to do it.

  36. Can’t appreciate this from an economic point of view… May be there is too much cash underground and this maybe a move to trap the ‘cash’ miners

  37. It was done long time ago at least liato could have been guilty on planting k 1.2 m not k 1.2 billion. Actualy I was so sad when the government asked us to donate k4.6 billion for the burial of mr Chiluba , k4.6 million would have sounded reasonably though it will stil be worth the same. How much will be the cost of sweets ? Can we have dispensing machines for drinks and chocolate if coins are coming back pls.

  38. Hey how much will the prostitute charge for short time? At least over night will be K150.00 . This will bring confusion I tell you. Your maids will resign to give them k300 per month.

  40. This is simply aimed at flashing out those whom Govt believes to have buried trunks of Kwacha and nothing else. It is a costly move that will cost more to the economy than what it will cost those who loose out. Simple mind with no agenda to improve the Zambian economy. We have seen a few very costly projects in the creation of districts and a province, Zamtel, COI’s and now this. All of which are simply a drain on our meagre resources and nothing to bring back. I have no doubt that the $2billion+ in the reserves seems to be a bottomless account to a few individuals who believe it is money to be spent anyhow.

  41. Nothing will change in the economy. Inflation will still remain high and there will be a problem of pricing. Iam sure this decision was not made by acturies but rather by politicians who dont understand the dynamics that come with it. Productivity is what brings these figures down, otherwise we are just running round in circles.

  42. Very interesting development and unfortunate for those that have been planting money for future harvest – as the bemba saying goes “baloba iyauma”. It would appear Liato’s “winter planting of Kwacha” maybe a tip on the iceberg as many more others had being doing it for sometime and poor Liato copied the same but got caught. So now for sure the “money in your pockets” becomes reality as kwacha growers will have to recruit ba kaponya to deposit mmoney in banks at a lucrative fee. Well done PF

  43. Normal move after an inflationary period. Almost all countries in South America and many in Africa have redenominated their currency at least once. It doesn’t affect the value of the currency in foreign exchange, but it does make it easier to on people’s day-to-day calculations, and sometimes it can help stabilize a currency a bit (partly due to the effect it has on outsider perceptions).

  44. THUMBS UP BA SATA GOOD MOVE I MY FRIENDS USED TO LAUGH AT ME TOOOO MANY ZEROS 00000000000000000000000000000000 IN YOUR CURRENCY

  45. we don’t want anyone’s face on the new notes,good move anyway.also make ATM facility accessible to everyone

  47. An appreciation of the kwacha from ,maybe 5120 to something like 4600 would do more wonders for zambian balance of payments and business confidence more than a mere lobbing off of zeros.We got to this bad situation thru bad economic policy measures and i’d rather see a smaller kwacha appreciation thru prudent economic management than a big one thru artificial voodoo economics done for politics.

  48. The ration against the dollar and other currencies remains the same. However, it improves investor perception of our economy. The 000s where misrepresenting our growth. Imagine what you’d think of investing in a country where K 1 = CU 30,000?
    A million of a currency must be significant folks!!!

  50. I can see we have very dull people here.You dont have to comment if you dont understand whats going on/topic at hand.

  52. If you are from MMD, take pride from the the following quote, ‘The decision should be credited to many years of focus towards the stabilization of the Zambian economy…..The government has simply signaled the economy is stable and what is needed now is to ensure this economic stability is anchored on strong production, exports, fiscal discipline so that the zeros do not come back again. It is a very strong challenge to the government to continue to attract investment, growth of the GDP above 7 percent per annum, maintain the healthy reserves, stabilise debt-GDP ratios, maintain inflation at below 10 percent. These are the actual and more realistic fundamentals that will support the debased currency and create an improvement in the lives of people.’ Chibamba Kanyama, Post Tuesday 24

  53. Its a good move,no dispute! But much emphasis must be placed on the value of the new notes,that is what counts.Without value strengthening,it would be better for us to just Tip-ex out the 3 zeros on the current notes and continue using them. Let the new K65 now buy 2 pockets of cement. I highly welcome the gesture, just strive to attach the real value to it.

    Joswaya.

  54. This changes nothing, the price of bread will still be the same, the price of mealie will still be the same, our salaries will still be the same even the carrying of money in your wallets will still be the same coz K1million in K50,000 notes will still be the same as carrying K1000 in K50 notes. This will be costly and is not a priority; what happened to JOBS for the YOUTHS and MORE money in our pockets!!!

  56. @mushotas not saying anything ..ur so right, when i was doing a presentation on the bank of Zambia,my white friends started asking abt the rate of our currency in relation to theirs,i kept quiet for a while,,,,looking for ways to express my answer in way of putin our currency some dignity,,,,but guess i cudn’t find any dignifying way to explain,,”i jst said i hav to get back to u,for now our currency is not so stable i might give u wrong figures”

  57. these guys pf just want to steal like it happened during ka chiluba. changing the currency so that they also hid some cash underground. jerk up Africa, i know you wouldnt like seeing a black man getting rich unless muzungu its nomal. shame bafikala.

    • I totally agree.there is no point at this stage doing that.The cost of printing is very high.That money can be used to buy essential equipments at variuos general hospitals which are in a total mess.How can a general hospital have no oxygen no spirit no gloves just to mention but a few.I know a lady who passed away at Chipata general hospital because they did not have equipments to help when she needed help.Think guys.These people are creating loopholes where they can make money.Dont just get excited over junk.

  59. The Minister said ” This is the right time to do it coz, the economic indicators are right such as single digit inflation, stabilised Kwacha,GDP, investor confidence…. So the MMD was doing fine hey!

  61. Isn’t this just mopping of zeros but leaving the tap of zeros running?

    And how did kwacha accumulate all this zeros in the first place ?

    • where do u wish 2 take that coin? This is very simple n straightforward.u dont nid to withdraw coins they b circulated by the banks.just as we neva withdrew notes likes ,k20,k50,k100,k500 ..etc so it will b the case..All will b fine just be positive..

  64. patience is a virtue, lets wait and see what this is all about. i guess its a gud move tho’ i dont understand but am pretty sure it might come out well. paying the landlord 2pin, wow!

  65. Whether zeros are reduced or not is immaterial, the Govt must grow the economy and the zeros will even out themselves. This will just gobble more money for printing, this is a luxury not a basic need.

  66. @15Ka Rude Monk: mpakafye Mu condeme, our Kwacha was nonsense, makes our denomination better and realistic, YABA..@38 Muntinta, YOU CRUCKED MY RIBS, Over Night will be K150??? Amaule yachipa. HAHAHAHA, Walipena kweena, you have gone KUBUPULUMUSHI..

  67. Good move. I got tired of changing wallets that wore out after a year because of carrying too much money that bought fewer goods. Why not have less money that will buy the same amount of goods? It just makes much sense. I was also laughed at as a student in Germany to receive mail from Zambia that had postage stamps worth over a K 1,000.

  68. Whats the opportunity cost of debasing and not? we are currency appreciates so much against the dollar, this will trigger more imports thab exports because locally mabufactured goods will be more expensive than those produced abroad. To be honest I very much prefer thinks to be the way they are because goods produced in Zambia are cheaper than those produced in other countries. This by its self promotes exports. The minister hasnt told us how much its gonna cost to print those notes and coins. This is my opinion on debasing our currency, remember as opinion is just like an ass, everyone has it but there are people with better asses.

  75. Instead the govenment should just create employment for jobless youths. The more money in one ‘s pocked doesnt apply here. May be its the opposite. Pooor PF. Just wait for HH very soon he will educate these dull fulls. CREATE JOBS NOT FAKE

  77. Watch out for those ex minsiters who burried trunks of kwacha……….its time to dig the stuff out quick!!!!!! Any one doing gardening at awkward times should be reported to the police….

  78. Uninformed nation poses dangers to itself. The beneficiallies of this move are the business people who will add on to their prices and this will erode the earning power of the debased moneys. it will be difficult to monitor and control the business world especially supermarkets and related shops.

  80. Nothing really changes except that we will now buy the Rand and 65 ngwee and the dollar at K5. What wil change though is that people will be more ‘tight’ with their money than before. They will not be willing to dish out plenty of money. This will reduce further inflation. The gvt has also allowed banks to lend out more by increasing their minimum capital from 14bn to 102bn. This will stimulate economic activity in the country assuming that gvt will not increase borrowing from the banks.

    • Mark, it is a good observation, i was also struggling to understand at what rate arem going to exchange the kwacha to toher currencies e.g Rand. I initiatlly thought 65n, but then my small math kicked into gear and i said wait a minute, how can we have a kwacha being more than the rand just by knocking off the zeros. I thought hard and long and came to the conclusion that the exchange rate cannot be affected by just dividing by a 1000. This an issue economics than just dividing. I still think the rate will be calculated on the basis of points up to 100, meaning the dolar-kwacha exchange will be K50 to $1 in the case of K5000 to $1 and K5 to R1 respectively. I think it makes more sense not saying it correct. Im a deep rooted number cruncher, so i need the economists to educate me here.

  81. those not happy with move are those who are still hidding money like liato now donot know what to do with it just give it to relatives when time for change come thanks more money in relatives pockets.

  82. I guess Sata knew what he was doing saying I will put money in your pockets, just too many people thinking this changes anything to their livelihood. When the computer savvy people think this is good what more the villagers. If this is done and business people increase the prices, because the numbers seem less no one will complain. This is just a trick to say Sata is doing something. What people need is tangible economic results, ( hospitals, schools, etc)

  85. Haven’t read all the comments here. but ‘One Zambian’ and ‘Sanders’ @ comments # 33 and 34 respectively are right.

    Can’t believe people who are shouting ‘good move’ are unable to see through how bad this move is.

    If yo can’t comprehend simple, basic economic ramifications of this, just read the last but one paragraph. It reads: “In recent years two countries Iraq and Zimbabwe are known to have rebased their currencies”. Do you know why those 2 countries did that?

    This is as a result of too much inflation to the point where your currency is almost useless against all major currencies. It’s purchasing power almost equals to zero – a condition known as ‘Hyperinflation’.

  86. Zimbabwe’s inflation rose to 231,150,888.87% in 2008 and their currency dollar was valuing at $1USD = $Z2,621,984,228 (good luck reading those numbers) – source: Wikipedia.
    Wikipedia goes on to report that “In 2009 Zimbabwe abandoned its currency; at present in 2012 a new currency has yet to be introduced, so currencies from other countries are used”.
    It says: “A third redenomination, producing the “fourth Zimbabwe dollar” occurred in February 2009, and dropped 12 more zeros from the currency. It was thus worth 10 trillion trillion ZWD (first dollar), so overall the ratio of the redenomination was 10^3 * 10^10 * 10^12 = 10^25.”
    Extra zeros can be knocked off ‘naturally’ by proper and sound economic management not by force.

  87. What this means is a govt that does this due to high inflation is just masking the problem. It’s a temporal move that just sugar-coats or sweeps dirty under the carpet as the saying goes. Sooner or later the many zeroes that were deleted will come right back. Where do you think they came from in the first place? At some stage our currency and that of our neighbour Zimbabwe were at par with the British Sterling.
    This isn’t even about who stashed money or whatever. After all everyone who holds money in the Zambian currency will be affected. It’s poor economic management. I’m afraid Chikwanda doesn’t give a proper explanation in those words he was quoted. So what about inflation and GDP? It’s not like Zambia’s GDP has all of a sudden now grown by 50% and inflation is at 2%

  88. This is what happens in a country that doesn’t produce anything to export. The issue of a weaker currency is something that actually can benefit a country that exports more than they import.

    Consider China for example: China actually benefits from a weaker value of their currency because they are able to export more and their goods overseas are cheap and affordable against otther good from competitive nations. It turns out China actually devalues its own currency and guess who isn’t hahppy with this? Yes you guessed right.

    What I’m saying is you don’t artificially make your currency look stronger by cutting zeros without backing it up with proper economic management. What happens when the zeros come right back? Do you keep on cutting them? Oh dear!

  89. I am PF for life, but this move I have my reservations. People learn your History. At one time the Zambian kwacha was 1 to 1 with the US Dollar. But due to our bad economic practices and high inflation our currency has accumulated all these ZERos people are talking about. Now we think getting reed of them will improve our currency to be better than those of SA or Botswana?
    Believe me this will lead to high inflation and high price increases. At 1 kwacha increase in local bus fares will not sound that much, but technically it will be a K1000 increase.
    We will face the same problem we encounter when we first come to UK or US seeing small digit prices of commodities like $2 for tomatoes or $3 for beer thinking they are cheap, meanwhile they K10,000 and K15,000 equivalent.

  91. People who understand fundamentals well, perform well.  Understanding that Sales less costs equal profit or loss. Many just live with a consumption mind. They can’t account how to make sales, they cant account and control costs but are only interested in consuming the profit. They even eat up the input capital. That man was busy trotting the globe – within a short time he flew out of Zambia so many times that he did not know how to make money but he was busy just consuming it. Whatever effort he made to make money was almost overtaken by his ability to consume and consume lavishly, Ooo, play boy! It compelled to do shoddy deals and thus corruption. Only photcocy ideas. When the head is corrupt everyone become so too. When a leader has original ideas, the led will also has original ideas.

  92. Great job Dr. Gondwe, Mr. Chikwanda and President Sata! What a team! Go Zambia, go! Long live PF long, live the people of Zambia!

  93. finally somone is thinking down there, I was wondering what had gone wrong with the economics of our country……but finally the Lord has answered our prayers.
    thanks to this move by the PF government especially to the bank governor, just make sure that the transition is handled smoothly!!!!
    A k20 note is really necessary!!

  94. I think this is a very good idea as long as it works cos I remember Comrade Bob, or should I say Gideon Gono did the same thing at least twice already before the Zim dollar collapsed and disappeared into oblivion . I know Zed is not Zim , but I just hope it works . It will save on wallets at least . Mine don’t last long because of the amount of notes I need to carry around . ha ha . I won’t be a millionaire any more though : – (

  95. Seriously though folks I do think this is a great idea , France and Germany also did this and they are in pretty good economic shape ,so let us not knock everything without due cause . President Sata and his cabinet are doing a fantastic job and are at least having the courage to instigate some robust and proactive initiatives . Would you rather they sat back and did nothing ?

  96. Number 63, you cannot withdraw coins on the cash point, not even in developed countries. However, coins still remain legal tender. The removing of more Zeros, does not change your life style into riches, but simply to avoid an inconvenience of transacting bulky values of currency. We should not really be very proud about this as real economic issues to grow the nation have been left.

    Yours: Chartered Banker.

  97. I’m really inspired with your writing skills and also with the layout in your blog. Is that this a paid subject or did you modify it your self? Either way keep up the excellent quality writing, it is uncommon to peer a great weblog like this one today..

  99. May I ask and some one to explain where the Banks will get the huge differences of the minimum requirement?……. Twafya kuma ku ma high interest rates and unnecessary bank charges, because already, withdrawing more than 4 times attracts a bank charge… Ba Governor please help me on this one……….

  100. hello there and thanks for your info ? I’ve definitely picked up anything new from proper here. I did alternatively expertise some technical points the use of this site, as I skilled to reload the site lots of times previous to I could get it to load properly. I were wondering in case your web hosting is OK? No longer that I’m complaining, but slow loading instances times will often affect your placement in google and can harm your quality ranking if advertising and marketing with Adwords. Well I’m adding this RSS to my email and could look out for much extra of your respective fascinating content. Make sure you update this once more very soon..

  101. I do agree with all the concepts you have presented for your post. They are really convincing and will definitely work. Nonetheless, the posts are very short for starters. Could you please prolong them a bit from next time? Thank you for the post.

  102. You actually make it seem really easy with your presentation however I in finding this matter to be actually one thing which I feel I might never understand. It sort of feels too complex and very large for me. I am looking forward for your subsequent publish, I will attempt to get the dangle of it!

  103. Thanks for some other informative web site. Where else may I get that type of information written in such an ideal means? I have a undertaking that I’m simply now running on, and I’ve been at the look out for such info.

  105. I have been surfing on-line more than three hours today, but I never discovered any interesting article like yours. It is lovely worth sufficient for me. In my view, if all website owners and bloggers made excellent content as you did, the internet might be a lot more helpful than ever before.

  106. Wonderful work! This is the type of information that are supposed to be shared around the internet. Disgrace on Google for now not positioning this publish upper! Come on over and consult with my website . Thanks =)

  107. I THINK REBASING THE KWACHA IS BAD,BECOZ IF U R A FOREIGNER U CAN CHEATED BY A ZAMBIAN CITITEN OR UR OWN WORKER,U CAN SEND UR GARDEN TO BUY TALKTIME AND U GIVE HIM K5 WHILE THINKING DAT IT”S A LITTLE OR A GOOD PRICE FOR ,WHILE IT’S 5O,OOO.

  108. Thank you for any other fantastic post. Where else may just
    anybody get that type of info in such a perfect
    way of writing? I’ve a presentation subsequent week,
    and I am on the search for such information.

Comments are closed.

Read more

Local News

Company

Trending

Categories

© Lusaka Times

Discover more from Lusaka Times-Zambia's Leading Online News Site - LusakaTimes.com

Subscribe now to keep reading and get access to the full archive.

Continue reading