BY PRAISEMORE SITHOLE
CONSUMER rights groups have warned of a looming rise in inflation following government plans to introduce new higher denominations of $50, $100 and $200 notes.
Authorities have approved the introduction into circulation of new $50, $100 and $200 bank notes this year.
Consumer Council of Zimbabwe (CCZ) regional manager for Bulawayo, Comfort Muchekedza, said the introduction of bigger denominations could be a good move, but there were issues which needed to be guarded against.
“Our biggest denomination, which is $20, cannot buy anything, so for any purchase, one needs more than one note. What we then need to make sure is that we are not only adding bigger denominations but also increasing the amount of money in circulation,” he said.
“If we are increasing, by what percentage are we increasing that? Are our economic activities able to sustain the increased amount of money being thrown into circulation? We have inflation to guard against.”
Muchekedza added: “With the increased cases of coronavirus, bank notes are also mediums of transmission; they easily exchange hands and move so fast to all corners of the country. The monetary authorities should also come up with reasonable charges, the current charges associated with mobile money and bank charges are not sustainable for the consumers.”
National Consumer Rights Association advocacy advisor Effie Ncube said new notes would make cash easily accessible in banks.
“On the negative side, it may drive up inflation because each time you add new money into the market you drive up inflationary pressures or prices. We may see a lot of prices of different commodities going up,” Ncube said.
“However, the new notes will not resolve the outstanding issue of unemployment and poverty. Printing money is not a solution, you need something more because the economy is not producing.”
Affirmative Action Group Matabeleland chapter president Reginald Shoko said the introduction of higher dominations although it came a bit late would ease cash transactions.
“We still require larger denominations beyond the currently proposed due to the prevailing macro-economic environment. Ideally, our largest denomination must be equivalent to US$20,” he said.