TANZANIA: NEW SH500 COIN POISED FOR USE IN EARLY OCTOBER 2014

BOT's Director of Banking Services, Mr Emmanuel Boaz (first right), addressing reporters in Dar es Salaam on Sunday. He said that the new coin will be in use early October 2014. With him are other officials from BOT, Hassan Jarufu (centre) and Abdul Dola (first left).

BOT's Director of Banking Services, Mr Emmanuel Boaz (first right), and another official from BOT, Hassan Jarufu (first left) showing the new Sh500 coin to reporters (not in the picture) in Dar es Salaam on Sunday.

The Bank of Tanzania (BoT) on Sunday issued a 500/- coin to replace the current 500/- note, which wear off easily. Addressing reporters in Dar es Salaam on Sunday, BoT's Director of Banking Service, Mr Emmanuel Boaz, said that the new coin will be in use early October.

"Coins are more durable with a longer life span. Due to a wider circulation, the 500/- note goes through many hands and gets easily spoilt," Mr Boaz noted. He said that the decision also follows complaints from people regarding the weakness of the green 500/- bill and due to the fact such notes were taking too long before being returned to banks.

"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," he added. Mr Boaz observed that the 500/- banknote will continue being in circulation parallel with the new coin.

It will be withdrawn from circulation gradually until a date when they will be declared demonetized. According to Mr Boaz, the new currency is round-shaped with margins and has a diametre of 27.5 millimetre with weight of 9.5 grammes.

"It is also silver-coloured made of iron and nickel minerals. In the front side, there is an image of the first President of the Revolutionary Government of Zanzibar, Sheikh Abeid Amani Karume, while at the back there is an image of a buffalo," he explained.

The central bank has not produced new coins for years and the latest such release was the 200/- coin range, which was the highest valued penny in circulation.

The bank introduced a new series of banknotes in January 2011, which were in denominations of 500/-, 1000/-, 2,000/-, 5,000/- and 10,000/-. However, there have been complaints from people regarding the weakness of the green 500/- bill.

BoT Governor Professor Benno Ndulu was once quoted by section of media saying that through their investigation, it was discovered that the 500/- banknote is the main medium of exchange.

According to the 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. But strange enough, the 500/- bills are not returned to the BOT as frequently as it was expected, he observed.

BoT is the sole body that is mandated to issue notes and coins in Tanzania for the purpose of directly influencing the amount of currency in circulation outside banks, thereby providing the economy with sufficient, but if possible, non-inflationary liquidity.