OWN CORRESPONDENT, Cape Town | Monday
FINANCE minister Trevor Manuel says government is considering doing away with South Africa’s virtually worthless 1c and 2c coins.
According to Manuel, the South African Mint and the South African Reserve Bank have already recommended to government that these coins should be withdrawn from circulation as the high rate of inflation over the years has made them virtually worthless, Beeld newspaper reports.
The cost of the production of 1c and 2c coins has been exceeding their face value for some time while their continued use also places an enormous administrative burden on the country.
In response to a question raised in the national council of provinces, Manuel said government has been considering doing away with these coins for some time now.
The only thing keeping government from discontinuing the coins is the possibility of certain legal consequences. Poorer communities, too, could be adversely affected. These two issues are still being investigated.
The business sector has felt for some time that these two coins are nothing but a burden and that it would be far better to withdraw them. Many of the larger store groups have, in any event, been rounding off the prices of their products to the nearest 5c to limit the use of 1c and 2c coins.
These coins also pile up by their thousands in the homes of consumers who no longer have any use for them. Some people even throw them away while others don’t bother to pick them up if they fall on the floor.
Metal thieves have even spurned the coins, as their copper content is minimal. The billions of these coins in circulation constitute about half of all coins in circulation. Many countries abroad phased out their smaller coins a long time ago and now only have five or six different coins in circulation. South Africa, however, adheres to its nine coins, Beeld said.
The manufacture of the 1c and 2c coins makes up about 60% of the Mint’s output capacity. The Reserve Bank buys the coins from the Mint and then supplies them at their nominal value to the banking sector.
As the cost of manufacturing these coins far exceeds their nominal value, the Reserve Bank suffers huge losses every year. Even 5c coins are manufactured at a cost of more than double their face value.