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Zambia introducing new bank notes in 2013

Zambia introducing new bank notes in 2013

Zambia introducing new bank notes in 2013

Zambia will introduce new banknotes in January 2013 to make commercial transactions easier. While the name ‘Kwacha’ remains, the old unit will be divided by a thousand; K1,000 becomes K1 and K50,000 becomes K50, etc. Currency redenomination has been executed in a number of other countries, including Ghana, Turkey, Mozambique and Venezuela.

The name Kwacha is derived from the Nyanja word for dawn, alluding to the Zambian nationalist slogan of ‘a new dawn of freedom.’ The Kwacha came into existence in 1968, replacing the short-lived Zambian Pound. A severe economic crisis starting in the late 1980s led to high inflation in the 1990s and 2000s.

Normally rebasing is done during periods of low and stable inflation. Zambia’s inflation having being in single digits over the last five years, the government decided this is the opportune time for rebasing.

According to the Bank of Zambia the benefits of rebasing will include easier business transactions, simplified accounting, greater confidence in the currency and reintroduction of coins, which are more durable and can be used in pay phones, vending machines and other technology.

The current international currency code for Zambian Kwacha is ZMK. The code for the new currency will be ZMW. Most of the existing notes will have equivalents in the new currency, but two new notes are being introduced. The new K100 note will be equivalent to the current K100,000 and K2 will be equivalent to the current K2,000. These will be the highest and lowest value bank notes. The current K20 note will not be replaced. Smaller values will be represented by coins.

Bank of Zambia currency rebasing project manager Morris Mulomba says the old copper and silver coins will not be reintroduced during the rebasing exercise because the coins are more expensive than their legal tender values. The new coins will have no valuable metals in them.

For six months from 1 January to 30 June 2013 there will be a transition period when both currencies may be used as legal tender to pay for goods and services. After 1 July 2013 the old currency will not be accepted for ordinary transactions, however, banks will continue to exchange the old notes for new ones at no fee until 30 June 2014.

During the transition period shops and other goods and services providers will be obliged to display prices in both currencies, using ‘K’ for the old currency and ‘KR’ for the new. Thereafter only the new currency will be used, represented by the symbol ‘K’. All receipts and points of sale machines should express payments in the rebased currency and all accounting systems should switch to the new currency from 1 January 2013.

Note that the old and new notes look quite similar, and there may be confusion, especially between the old K100 and the new K100, which is 1,000 times the value of the old one. Con-men may take advantage of this confusion.

Read more articles from this issue:
Zambezi Traveller (Issue 11, Dec 2012)

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