By David Simpson
The Lowdown, Zambia
How often do you have to hand in torn and
scruffy-looking currency notes in the smaller denominations when you visit
your bank, and get crisp new notes in exchange? This problem of worn-out
banknotes will be much reduced when Zambia achieves the distinction of
becoming the first country in Africa to introduce currency notes made of
The first of the new notes are expected to be put into circulation in
September. This is the start of a phased changeover that will save the
country a considerable amount of money. Polypropylene notes should last
about four times as long as paper notes, but since they cost about twice as
much to produce as paper notes, the changeover, in a country such as Zambia,
cannot be done all at once. Initially only two denominations will be
switched - K500 and K1,000, which have been identified as the notes which
wear out most rapidly - often within a year.
The K50, K100, K500, and K1,000 notes get a great deal of handling because
they are so often supplied in change whenever you buy groceries. They are
then recirculated by you when you buy a newspaper or a cup of coffee, for
example, and retained by the shopkeeper for use as change again. The K10,000
notes, in contrast, are frequently withdrawn from the bank, handed over to
the shopkeeper, and deposited straight back into the bank.
It seems Zambia is taking a lead in the financial sector, as it did with the
Meridien cards some years ago.
The notes are being printed by the Canadian Bank Note Company. The
technology was pioneered in Australia by the Commonwealth Scientific and
Industrial Research Organisation (CSIRO) and Note Printing Australia (a
wholly owned subsidiary of the Reserve Bank of Australia), and has been
widely introduced in the countries of the Pacific Rim area, including
Polymer substrate is playing a key role in shaping the future of banknotes.
We have developed the necessary technology to include polymer in our product
offering,' explains Hutch Holton, President, Payment Systems (Canada). For
countries in which banknotes need the highest level of security or have a
short lifespan due to climate conditions, polymer is an excellent means of
ensuring the security and longevity of the local currency. The Bank of
Zambia’s decision to issue two of its denominations in polymer banknotes
positions this country as a leader in the introduction of this technology in
BOZ director of banking, currency and payment systems Morris Mulomba says
the bank expects to save K17 billion in re-order costs over the next five
years s a result of the change. In addition the labour costs incurred by the
central bank in disposing of worn notes will be much reduced.
A lesser advantage is that the polymer notes are extremely difficult to
forge, since the plastic cannot be run through colour photocopying machines
or laser printers.
The plastic note technology uses a polymer plastic substrate instead of
paper. The clear film is opaqued, allowing the incorporation of security
features which are not possible in paper notes, such as a clear window which
can incorporate such features as microprint, hologram or polarised design.
The thickness of the opaque coating can be varied, a feature extremely
difficult to detect and reproduce by illicit means. Embossing is another
security feature, which is possible only to a limited degree with paper
notes because they soon lose the embossing.
In Europe, polymer notes are believed to be found only in Northern Ireland
and the Isle of Man. The majority of users are developing countries. Most
countries use coins for small denominations, as these are extremely durable.
However in a country like Zambia which has undergone massive inflation,
unless there is a compensatory revaluation (for example by knocking off two
zeroes from the face value of all the country’s currency) the value of the
coins rapidly becomes lower than the cost of the metal that goes into the
coin, and they fall out of use. The introduction of polymer banknotes will
at least ensure that wear and tear on the Zambian currency is minimised.