Local currency set to lose three digits

Shakeman Mugari

GOVERNMENT is set to slash three digits from the local currency in a bid to facilitate transactions in the purchase of goods and services which has becom

e cumbersome in a hyperinflationary environment.

Sources said government was working around a proposal submitted by a local accounting firm which suggested striking out the three zeros from the local currency as an alternative to Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono’s initial proposal for an outright currency change. Government is in a fix over whether to introduce a new currency or change the denominations.

The decision means that government will drop three zeroes from the local currency to introduce a kilo-dollar. A kilo-dollar will be equivalent to the $1 000 currently in circulation.

Galloping inflation has resulted in unprecedented money supply growth, forcing consumers to carry huge volumes of bearers cheques of little value. The inflated figures are causing computer accounting systems to fail to transact, store or process.

Accurate financial information has also been compromised due to large transaction values which most accounting systems are not able to capture.

Supermarket tills have been overwhelmed by the number of zeroes resulting from the drastic drop in the value of the local currency due to inflation, now around 1 184%. Zimbabweans now carry large bags of money because of the number of notes needed for minimum transactions.

Minister of Finance Herbert Murerwa is considering a proposal to drop three zeroes from the $1 000 note to make it a one kilo-dollar. In other words, a $100 000 note will become 100 kilo dollars. The proposal submitted to the minister by the Institute of Chartered Accountants of Zimbabwe (ICAZ) on June 30 said this would help companies’ computer application systems which were failing to cope with the number of overflowing zeroes.

“All payments made by RTGS, cheque or cheque card after midnight on August 31 is made in kilo-dollars,” said the proposal from the ICAZ. “If payment is made in cash, it will be made with notes in circulation. Thus a bill of $127,32 kilo-dollars would require cash of $127 320.”

It said financial results and evaluation of company assets had become vulnerable to fatal inaccuracies. The ICAZ said companies, especially banks, did not have the foreign currency to acquire new software to cater for the number of zeroes. Some software in Zimbabwe cannot support a $10 000 000 000 (11 digits) figure. Almost all software fails at $1 trillion which is 15 digits. It said dropping the three digits would ensure that the existing software remains in use.