Friday, January 11, 2013

Goodbye Zeroes, my heroes

SHOW ME THE MONEY!  In my wallet today...I have a mix of old and new bank notes.  AND, to complicate things further, I somehow have and OLD OLD 20 Kwacha note which hasn't been used for a decade.

The dreaded REBASING deadline has arrived....this Jan 1, 2013 Zambia got new currency.  We can use the old and new for the next 6 months and I think folks can cash in the old currency until the ball drops in 2014. (This is a good thing b/c folks are literally having to DIG UP their 'savings' to trade it in for new kwacha.  Buried in the back yard is still the most popular place to deposit your cash.)

The new currency looks ridiculously alike the old currency.  The reason, I suppose is for a more seamless transition.  Zambian kwacha banknotes are pretty....nice colours, lots of plants and animals and quirky security features.  There are, oops WERE, two plastic/polymer notes (500s and 1,000)....I don't know if the new currency has any polymer notes.  It would be disappointing if they do not. (they do not....boooo)

Why the new, very similar currency?  To get rid of three pesky zeroes!  In everyday speech folks drop the 'thousand' or call 50,000 "fifty pin" because with smaller banknotes you have to pin a bundle together to get a stack worth 50,000.  So in some ways the transition should be pretty easy. And for foreigners the math will be much easier: for $US, divide by 5 (approx) as opposed to 5350.  At the ATM the limit now for withdrawals is 2,000 where before it was 2 million.  (The limit is b/c the little slot can only spit out 20 bills at a time....if the machine is out of 50s and can only give 20s the limit is 800/800,000)

The banknotes we are familiar with are 50 kwacha up to 50,000 -- currently worth a penny up to $10. (or close to it depending on the daily exchange rate which is hovering around 5200/$1)  We had no coins.  (But Zambia used to have coins called Ngwee that you can buy at the markets for a 3000% markup.  (along with Zim$ -- the old/abandonned hyper-inflated zimbabwe currency which goes into the billions and trillions -- I have some 5Billion dollar notes, complete with expiration dates). The shops here have had both prices up the past few weeks (K and KR, Kwacha rebased) but I am still having trouble wrapping my head around the new numbers after finally getting used to Zambian Kwacha (as opposed to Malawi Kwacha which is in total freefall at the moment to further confuse things).

Another thing we need to get used to is the ISO standard.  The old kwacha is called ZMK (Zambian Kwacha, which distinguishes it from MWK the Malawi Kwacha -- which used to be the Malawi Pound) and the new ISO standard is ZMW.  Why the 'W'?  I had to look it up.  It's the W in kWacha.  If they rebase again it'll be ZMA (as in kwAcha) - and so on as long as it's not 'taken'.

Kwacha, by the way means "dawn" in Nyanja and Ngwee means "bright."

The new currency ranges from K100 down to K2.  The coins are 1 kwacha, and then smaller ngwee coins (100/1).  For the next 6 months we'll have old 50s and new 50s in circulation together.  The plan was to wait a bit to introduce the 100 kwacha bank notes.  For the time being that means that the biggest bill you can have here is the equiv of about $10.  You can imagine how irritating this is when we pretty much pay for everything in cash.  When we had to pay the taxes on our car which was 98% it's imported price?  At the time (the exchange rate has changed a lot,) it was around 18 million kwacha. Cash.

But for now, here is what we are dealing with:

These are (top to bottom) the  ZKW 50,000 note, the new ZMW 50 note (same value) and the ZMK 50 note (which is now a 50 ngwee coin? I really have not figured that one out yet). They are worth....$10, $10 and 10 cents.  I don't have any fresh from the bank old 50,000s but it has (you can faintly see it) the same 'freedom statue' on the back of the bill and when they are new they are not as brown.  (that's kinda gross)

My head hurts.  I must say that it does seem like every time we go to the US there are new freaky-looking banknotes and coins and no one seems to think a thing of it.  Here we're kinda freaking out.

The big question, I suppose is if the US treasure is going to mint a platinum 3 trillion coin to pay off our debt?

PS I just went to the cash machine - the US banks have decided to continue working with the Zambian ones, whew.  This was a surprise after 2 weeks of not being able to access our account.  A bigger surprise was my new limit: 4,000 which means....they decided to release the new 100s after all.  So - to add to the confusion, we have 100s and 100s in circulation that look very similar. (again, compare below) The new 100 is worth $20 but the old one is worth 10 cents. they are quite difficult to tell apart unless you have them side-by-side.

No comments: