The Bank of Tanzania (BOT) governor, Benno Ndulu
The Bank of Tanzania (BoT) plans to issue 500/- coins, to replace the current notes which wear off easily.Addressing journalists in Arusha, the Central Bank Governor, Prof Benno Ndulu, said the decision follows complaints from people regarding the weakness of the green 500/- bill.
“Coins are more durable with longer life-span of seven years. Banknotes need to be renewed every seven months,” said Prof Ndulu, adding that because of a wider circulation, the 500/- note goes through many hands and gets easily spoilt. “We have investigated and discovered that the 500/- banknote is the main medium of exchange,” stated Prof Ndulu.
According to the BOT governor, banknotes go into circulation for an average of seven months before starting to wear-off, after which they are collected and destroyed at the BOT base in Dar-es-Salaam.”Strange enough, the 500/- bills are not returned to the BOT as frequently as we had expected. That could be the reason for the bill to lose its physical value,” said Prof Ndulu.
He said the 2,000/-, 5,000/- and 10,000/- denominations are being banked more frequently than 500/- and 1000/- notes. “The only way is for BoT to produce coins. Besides, we have not produced new coins for years and the latest such release was the 200/- coins range which is the highest valued penny in circulation today,” said Mr Ndulu.
The BOT governor also said that the Central Bank continues to honour 5 cents, 10 cents, 50 cents, 1 and 5 shillings coins.”They are all legal money and people and especially traders should find ways of putting them into use,” stated the BOT governor.
Minister for Finance and Economic Affairs Mr Mustafa Mkulo said Tanzanian currency would be valid in Kenya, Uganda, Rwanda and Burundi from January 2013, in line with the East African Community Monetary Union protocol.”The ultimate goal is for the five EAC member states to use a single currency. We are preparing a Memorandum of Understanding to that effect,” said Mr Mkulo.
Mr Mkullo who was speaking during the just ended EAC conference on financial sector integration in the region added that the heads of state are expected to sign the protocol during their forthcoming summit meeting in December.
Tanzania, Kenya and Uganda use the shilling while Rwanda and Burundi use Francs. Earlier on, the Kenyan Acting Minister of Finance, Mr Njeru Githae, stated that the expected EA single currency will ease cross-border transaction problems and harmonize banking operations in addition to aid foreign investment growth.
The EAC Secretary General, Dr Richard Sezibera, said he will convene an extraordinary retreat of Ministers Responsible for Finance, their related Permanent Secretaries and Governors of Central Banks from the five member states in the first week of April.”The retreat is expected to facilitate an informal engagement of the top policy makers on the agenda of the EAC monetary union in order to have common view, as we enter a crucial phase of the negotiations on monetary union,” explained Dr Sezibera.
By MARC NKWAME, Tanzania Daily News
