Home 
Magazines BusinessWeek Exercise care when dealing with roadside coin selling, expert warned BOT
Magazines BusinessWeek Exercise care when dealing with roadside coin selling, expert warned BOT
| Exercise care when dealing with roadside coin selling, expert warned BOT | Send to a friend |
| Wednesday, 25 August 2010 15:52 |
|
The Bank of Tanzania (BoT) should exercise great care when dealing with the issue of ‘roadside coin selling’ as it indicates problems with the entire economy, an economist has cautioned. Mr Abdallah Majura, a lecturer with the Centre for Foreign Relations in Dar es Salaam, told The Citizen recently that the issue signifies that there is a problem with the currency denominations that go into circulation. It also depicts that there is a problem of coordination on how the notes and coins go into the circulation. “In my view, the mushrooming of this business is a clear indication that we have more notes of a higher denomination than those with lower denominations….just go to any bank ATM [Automated Teller Machine] and withdraw Sh10,000 and I bet it will be a single Sh10,000 note,” Mr Majura said. Young people have, for sometime now, been engaging in selling coins at commuter bus stops by exchanging a Sh1000 note with Sh700 worth of coins. But experts said such a trade affects the rate of price increases as it reduces the value of the shilling, with a senior BoT official calling upon commercial banks to ensure that they do not leave the duty of issuing coins to dealers. "Our commercial banks should provide enough coins....they should not leave such a sensitive issue to dealers," the BoT director of Economic Policy, Dr Joe Masawe, told The Citizen recently. The purchasing power of the local currency has been constantly falling, in line with increasing inflation, but the selling of coins might speed up the situation. By June 2010, the purchasing power of Sh100 had reached Sh57, up from Sh100 in June 2002, according to the National Bureau of Statistics. However, inflation has been decreasing in the last few months to 7.2 per cent in June 2010 from 12.7 per cent in October 2009. Tanzania's rate of price increase is calculated by changes in prices of food, drinks and tobacco, clothing and footwear, rents, fuel, power and water as well as furniture and household equipment. Other items in the country's consumer price index include household operations and maintenance, personal care and health, recreation and entertainment, transportation, education as well as miscellaneous goods and services. According to Mr Majura, Tanzania introduced the Sh10,000 and Sh5000 notes during third phase government in order to contain inflation rate which had reached a double-digits by then. “The aim then was to have notes of a higher denomination in order to contain inflation….this really paid off and until the late 1990s the quantity of Sh10,000 and Sh5000 notes in circulation was more than all the other notes and coins,” explained Mr Majura. The current business, he said, symbolise that few might have changed despite the fact that reasons that forced the central bank to print more notes of higher denominations than those of lower denominations are no longer relevant. He echoed sentiments of Dr Semboja Haji of the University of Dar es Salaam and Dr Masawe regarding the illegality of the business, noting however, that the youths engaged in the business have really shown a lot of innovation. “Let me concur with Dr Haji that these youths have been so innovative….they have capitalised on the problem of supply of currencies of lower denomination into the economy, to come up with the idea….this gives BoT and commercial banks food for thought,” he noted. Add this page to your favorite Social Bookmarking websites           |
Latest News
Most Read
Gallery