Money

The biggest note in circulation today is 500 Francs. That doesn’t sound too bad, you might think, until you know that that is only worth about half a dollar. There are huge advantages in having such worthless notes in terms of theft, of course. You would have to hire a truck to have steal any quantity of real value. As a result money changers have no worry about sitting in the street with piles of notes.

But for commerce, it’s clearly ridiculous. And payment of government salaries in the rural areas poses massive logistical problems. Apparently the Central Bank of Congo, when receiving deposits from banks and other large depositors, doesn’t bother to count the notes: they simply weigh them.

The Central Bank also has to face the problem of the expense of printing new notes in such huge quantities. So it was with relief that we heard the announcement that they were going to introduce notes in the denominations of 1,000, 5,000, 10,000 and 20,000 Francs. Common sense was finally prevailing

The reaction of the public, though, was totally different. “We reject the move totally,” they said. This is just another way that the government is using to deceive us. It will lead to massive inflation.”  They were recalling Mobutu’s days when he used to print massive quantities of money to pay his bills, and the currency, the Zaire, lost value to the extent that notes had to be in denominations of millions, not unlike the Zimbabwe Dollar some years later. Just as in Zimbabwe, the value changed from hour to hour and shopping was a lottery.

In response to the public’s fears about the new money, the Central Bank, quaintly giving itself the nickname “Currency Hotel”, issued a leaflet to guide the users how to use the new notes. It took examples about how everyone must play his part in using the new money and not allowing it to become inflationary.

For example, the Head of the Government must maintain budgetary discipline, mustn’t allow the prices of basic services such as electricity and water to rise, nor unreasonable increases in fuel. And he should ensure that people are paid on time.

The head of the Central Bank of the Congo must ensure that there is a sufficient supply of small notes, to avoid rounding up prices due to lack of change.

Commercial banks must ensure that they do not only make payments in large denomination notes and maintain a supply of small denomination notes. And that they encourage payments now being made in dollars, from cash machines and in some commercial accounts, to be made in Congolese Francs.

Big shops must not ration supplies, nor make sudden price changes, nor delay imports to create artificial shortages, nor shut their businesses (presumably to make adjustment to their tills).

Buses and taxis must accept small notes and keep plenty of change.

Money changers must give a mix of notes to their customers, so that they have small notes when making payments.

And finally . . .

Leaders of opinion must give everyone the same message spelt out above.

The public was not convinced, and critical responses mounted. This reaction clearly took the government by surprise. The Central Bank was told to delay the new notes. A few 1,000 notes have been found in circulation, but not enough to make any real difference.  But what was really interesting, when we finally got to see a 1000 franc note was the date: it had been printed in 2007. That’s food for thought.