Preserving the use of our coins

“We do not accept the 5 pesewa coin again” the response I received from a 10 year old girl as I tried to purchase airtime with some 5 pesewa coins being part of the money i gave her; I was immediately taken aback and asked out of shock and curiosity why she rejected the money.

In her response, the 5 pesewa coin is not accepted by the market women any longer and for that reason, taking it means she cannot use it as a legal tender in the market; my curios self would not allow this girl to win this “case”, I told her I have not heard of this new development and so insisted she accepts the money.

Being cornered out, she called in her elderly sister (a young girl in her early 20’s) to buttress her point, she also reiterated the same point but I made it known that as a person into banking myself I do not recall the regulator (BoG) stopping the use of the coin as a legal tender; throughout the encounter however, what constantly rang through my mind is “it has reached the 5 pesewa coin too”.

Back in 2007 our currency was redenominated giving rise to the new Ghana cedi; we subsequently had our currency ranging from 1gp to 1 ghc for the coins and 1ghc to 50ghc for the paper denominations; in a rather negative development post the redenominations, the 1gp coin faded out of usage in the system except for shopping malls where they are used as legal tenders. The 1gp coin is virtually not a legal tender in Ghana now. This same trend is catching up with the 5gp coin which is next in line after the 1gp coin.

The question i posed to myself as I made my way home after convincing this family to accept the coin was “what caused and is causing the disaffection towards the usage of the smaller denominations 1gp, 5gp and 10gp coins”.

The size of the currency
It is a common complaint among Ghanaians that these coins are relatively small and difficult to handle as it can easily get lost, this assertion somehow contains truth, for this, most Ghanaians from the onset disliked the use of the 1gp coin, the 5p and 10p coins being only a bit larger is falling into the trend. Compared to the earlier denominations of the same values, they were heavier and larger, this change did not catch up well with the majority.

Hoarding of the coins
Somewhere 2008, a year after the redenomination exercise I chanced upon a market woman with a bowl full of the 1gp coin claiming it was not used by the public again, I agreed with her knowing this was the fact on the ground.

But contrarily I indicated to her that her action surmounted to hoarding the money from circulation and denying the banks and other interested users access to the coin; I am tempted to believe that this family I encountered plus others unknown with this mentality will hoard the 5p coins from the system creating shortages thereof.

Ironically, per BOG reports, there was GH¢1.075m (107.5m pieces) worth of 1gp coin in circulation as of December 2018, this does not reflect reality as the coin is virtually hard to come by.

Illiteracy and poor currency regulation
What most Ghanaians in the informal sector do not know is that, the currency is issued by statute and backed by the constitution of the country as such it is an offence to reject it as a legal tender and medium of exchange. Again just as most laws in Ghana, this lacks enforcement. I believe this development has not been checked by the regulator, the majority of our people are employed in the informal sector, and the lack of knowledge in this area has driven them to cease the usage of these coins as medium of exchange.

The absence of the smaller denominations has come with some effects on the economy and citizens at large; some few months ago, transport fares were increased by 10% to match up with the upward shift in fuel prices, commuters were thus expected to pay amounts within this range.

In a not-so-surprising situation a fare that went for 1ghc has now been increased to 1.50ghc, a 50% increase from the expected 10%.

I quizzed the driver on why a 50% increment was being charged instead of the proposed 10%, he made it known that charging 10p in addition would make it difficult giving balances to customers due to shortage of the smaller coins in the system. I could not agree with him any further.

Inflation
The preceding paragraph makes it clear prices of basic goods and services are increased by higher margins than normal because of the absence of these coins; earlier(with the previous currency system), price increases were effected in 100’s(1gp), 200’s(2gp) to 1000 (1ghc) , as such price increases were comparatively lower. This practice reduces the purchasing power of consumers.

Cost of coin minting to the regulator.
The practice of hoarding these coins comes at a cost to the bank of Ghana, when a currency is hoarded it is trapped from circulation and thus creates a shortage within the system; it is the duty of the Bank of Ghana to ensure there are enough notes and coins in the system for transactions, it cost the regulator some GH¢153.6M in 2018 producing new notes and coins for circulation (BOG financial reports 2018).Where there are more currencies in the system, the cost of issuing new notes coins relatively reduces.

Going forward, it is important that government checks the sheer disregard for the usage of these coins for transactions, this practice not only affects the purchasing power of Ghanaians but also increases the operating cost of the Bank of Ghana. The issue has to do with stemming the tide to prevent further disregard for the rest of the coins.

Currency Education
It is imperative that government through the BOG embarks on massive public education to sensitize Ghanaians on the fact that currencies are issued by law and it is illegal to reject them as medium of exchange. I believe most Ghanaians reject these coins out of illiteracy and sheer lack of currency knowledge. I made it known to this young lady (airtime seller) that as an educated person, she must stop the tide and educate her parents and young siblings on the need to accept these coins.

Enforcing the usage of the coins
We must not allow few ones among us determine the validity or otherwise of our currency, the regulator needs to step in to enforce the usage of these coins, else, the effects will not only be on those who have caused the tide but Ghanaians at large.Where a person does not accept these coins, a channel has to be created so it can be reported to keep this practice in check.

The earlier we do these, the earlier we save the usage of our coins and prevent the effects it has on the economy.