In Zimbabwe, Coin Shortages can mean Life or Death

The scars from the ravages of Zimbabwe’s recent episode of hyperinflation has been evident through the effects of coin shortages.

From the AFP

Shouting matches and even physical fights break out each time a mini-bus pulls up in downtown Harare as passengers battle to ensure they are not short-changed in coin-starved Zimbabwe.

Hyperinflation forced Zimbabwe to trash its worthless local currency three years ago in a move that brought much needed relief to the crippled economy but created a surprising new headache: a lack of coins.

"Change is a big problem, and at the same time passengers are impatient with us. I have been slapped a few times for not having change for them," said a bus conductor Walter Chakawata.

The US dollar and the rand from neighbouring South Africa are Zimbabwe's main adopted currencies. The dollar, however, is preferred and all prices are pegged to it.

But there is not enough US small change in circulation. The result is that prices are either rounded off -- making goods and services more expensive -- or customers brace themselves for a fight to get their change.

The average city commute costs 50 cents. But the dearth of coins means passengers -- handing over bills -- are always owed change. Some bus drivers pair the passengers, handing them a dollar bill in change and leaving the two riders to sort the rest out themselves.

Often their only alternative is to buy an item worth a dollar that they can then share -- a packet of cookies, a pie or anything they agree to.

But that has not gone down well with many, who feel obliged to make an unnecessary purchase. Others complain it forces them to spend time with a total stranger. Or what if one is in a hurry? And in a country where many live on less than $2 a day, 50 cents still remains a decent sum, not to be wasted.

The fights have at times turned deadly. Last year, independent papers reported that a state security agent pulled out a pistol and shot dead a bus conductor after he failed to give him change.

Markets don’t operate on a vacuum however. From the same article…

Not all merchants buy coins, however. Ice-cream and yoghurt vendor Locadia Chimimba conceded that "the situation is better these days because you can buy change if you want" but she herself does not and still asks customers to buy more to make up the difference.

In supermarkets, when the grocery bill does not add up neatly to a round figure shoppers are offered sweets, match boxes, chewing gum and even condoms to compensate.

So markets grope to find a substitute on such coin shortages. This should mark a transition phase.

But why the coin shortages?

Authorities considered importing US coins but the idea was dropped when shipping costs proved too expensive -- costing two dollars for a batch of coins worth one dollar, experts said.

Bottom line:

People’s psychology and behavior are materially influenced by changes in monetary conditions.

Monetary disorders spawns disruptions in the division of labor which incites violence.

Coins function as insurance against the corruption of money. This is why some of the political authorities have considered a ban on coin collection.