At a meeting in Maputo organised by the Bank on Thursday on the use of coins, the chairperson of the Maputo Baker's Association, Victor Miguel, said that it was availability of loose change that determined the prices that are charged.
He claimed it was impossible for an item to cost one metical and 70 centavos, because 10 and 20 centavo coins are supposedly unavailable. The reaction of shopkeepers would be to charge either two meticais or one metical and fifty centavos. (At current exchange rates, there are aabout 25 meticais and 80 centavos to the US dollar).
When the currency was reformed last July metallic coins were introduced not only for 10, five, two and one meticais, but also for 50, 20, 10, five and one centavos. But shopkeepers complain that there is no sign of anything smaller than 50 centavos. (And this AIM journalist has never so much as seen coins smaller than 20 centavos.) Yet the central bank claims that vast numbers of them were minted.
Victor Miguel said that, when the price of bread went up last month, the increase was larger than it should have been because of the lack of small coins.
The bakers had opted for a somewhat higher price for bread than the increase in flour prices justified, because they wanted to give their customers real change rather than IOUs for centavos.
Esselina Macome of the board of directors of the Bank of Mozambique retorted that there should be no shortage of coins.
The central bank had produced enough to cover the entire market.
"The Bank has surplus coins to supply the market", she insisted, suggesting there should be an investigation into why these coins were not circulating.
A second Bank director, Pinto de Abreu, said this was a problem of institutions, including shops, failing to manage their physical stocks of currency properly.
"We have to rapidly include in our routine the management of stocks of coins", he declared.
But, contrary to Abreu's claims, there is nothing new about this problem. With the old coins, prior to the July currency reform, exactly the same thing happened. Although smaller coins existed, shopkeepers than handled nothing smaller than 500 meticais. And 500 old meticais is worth exactly the same as 50 new centavos.
The Bank of Mozambique board should at least consider the possibility that shopkeepers are deliberately refusing to withdraw small coins from the banks, precisely to give them an apparently plausible excuse to hike prices.
After all, if the bakers are really concerned about the change problem there is nothing stopping them from visiting the nearest bank and exchanging a few large banknotes for a stock of small coins.
SOURCE: AIM
