FROM the onset, we support the move by the Bank of Zambia (BoZ) to launch a massive campaign to sensitise citizens on the new banknotes that it will be launching on March 31.
We have observed that BoZ governor Denny Kalyalya’s announcement a day ago of the introduction of six new banknotes – K500, K200, K100, K50, K20 and K10 – has sparked debate among both ordinary Zambians and economists.
We are of the view that while debating topics of such national importance as the new banknotes is healthy for citizens, it should be done from the perspective of having reliable and accurate information. The central bank plays a very important role in this regard.
In this social media era where misinformation and disinformation are rife, we believe that it would be dangerous to leave the issue of the new notes to speculation and toxic propaganda, which could be detrimental to economic growth because money is legal tender. Money as a legal tender should, in our opinion, make transactions easier, clear misunderstandings and offer a framework for settling conflicts.
Given the negative sentiments expressed by a cross-section of society, it is evident that many people do not understand the rationale behind the central bank’s decision to launch this new family of notes.
We note that both economists and the general public have welcomed the introduction of the new bank notes while others have received the news with cautious optimism.
On one hand, economist Yusuf Dodia has warned that the introduction of the higher value currency notes may fuel corruption and seriously undermine government’s efforts to build a strong economy if not properly handled.
“Larger notes tend to promote corruption, where bribery can be done using huge amounts of money carried in small parcels of cash because of the high value of notes. A lot of illicit trade is likely to take place because of the higher currencies,” Dodia said.
He said people would aggressively resort to promoting cash transactions parallel to government’s desire to push for digital business.
On the other hand, economist Bright Chizonde says the move was inevitable given the loss in value and inflation the country has experienced over the past few years.
“The obvious question is will this have any impact on the economy? Will it lead to further depreciation of the kwacha or higher inflation? To answer this question, it is important to distinguish between association (relationship) and causation,” he explained. “Two variables can have a positive or negative relationship, implying that you can observe an increase in on variables while the other one increases or decreases. However, this does not mean that one variable is responsible for the movement in the other variable.”
Money as legal tender is essential because it guarantees a generally accepted form of payment, ensuring that creditors must accept it to repay debts. For this reason, we believe it is critical that citizens are well informed about the new banknotes.
We firmly believe that citizens should be sufficiently informed about the security features of the banknotes, their sizes and how to keep their money to prevent it from being mutilated in a short amount of time.
We think that BoZ has a vital role to play in making sure that the public is aware of the characteristics of authentic banknotes and the importance of reporting any counterfeits to the authorities, especially at a time such as this when Zambia and the rest of the world are dealing with banknote counterfeiting.
We fear that during the period of transition from the old banknotes to the new ones, many of our citizens could lose their hard-earned cash to sophisticated scammers who are running counterfeiting schemes.
We urge BoZ, the Zambia Police Service, the Drug Enforcement Commission (DEC) through its Anti-Money Laundering and Investigations Unit (AMLIU) and the Anti-Corruption Commission (ACC) to establish toll-free help lines so that people can report cases of counterfeit notes and ask relevant questions about the new bank notes as we approach the launch scheduled for date next month.
