Frustrated by chronic shortages of US dollar banknotes and South African rand in small denominations, residents and retailers in the northern Zimbabwean resort town of Kariba have started using the Zambian kwacha for change instead of candies or vouchers.
Small bills and change are in short supply nationwide, hampering consumers, retailers and street vendors, but Zambia's proximity across the Zambezi River has provided the lakeside community with a solution of sorts in the Zambian currency.
In early 2009 Zimbabwe adopted a monetary regime of mixed hard currencies - primarily the US dollar, South African rand and to a lesser extent the Botswana pula.
One US dollar currently fetches some 4,830 kwacha - or to put it another way, one kwacha has a value of 0.0002 dollars. The kwacha, which is divided into 100 ngwee,
Zambian 1,000 and 500 kwacha notes are printed on resilient polymer.
The kwacha is not considered a hard currency readily convertible in a bank into dollars or rand, but Kariba resident Gwenelo Ncube said retailers and other traders have found it convenient to trade in the unit alongside the US dollar and the rand.
Ncube said consumers are no longer obliged to expend their change on items they do not need, and retailers are no longer rounding up prices in lieu of making change.
Finance Minister Tendai Biti recently asked the U.S. Treasury to help the country build its supply of small-denomination notes, but that initiative has not borne fruit. Experts say however that Zimbabwe could readily purchase bills and coin in the open market.
Traders in Kariba are also using the kwacha for cross-border trading. “There are many people from this town who visit Zambia to conduct trade and Zambians too flock to Kariba in large numbers to buy various goods,” she said.
Kariba Member of Parliament Cleopas Muchacha said it is legal for residents to use the Zambian kwacha to tackle problems of change. Muchacha said local residents should be commended for finding innovative ways of solving the small change shortage.
Economic commentator Masimba Kuchera said the Finance Ministry and Reserve Bank of Zimbabwe should encourage the circulation of one-rand coins held by banks.