By Taonga Sabola
The new K5,000 banknote goes into circulation today.
However, people have expressed mixed reactions to the development.
While consumers expect the new banknote to reduce the amount of notes in a wallet, traders and transport operators have expressed fear that the K5,000 note would cause a headache as they grapple with change.
Jameson Chirwa, minibus conductor in Salima District, said he imagined a scenario where seven passengers would be producing a K5,000 note each on the same trip.
“It would be chaos. Where do you think we would be getting change for K35,000,” he said.
Frankton Nkhoma, a Kabaza operator in Lilongwe, shared similar sentiments, saying the new banknote would create a challenge for passengers who are in a hurry.
But while indicating that the K5,000 note would lessen the burden of carrying many notes when shopping, Lilongwe-based consumer Agness White said the banknote would create a burden when lost or forgotten in a minibus.
“It is unlike losing K1,000 or K2,000 and being okay with it. Losing K5,000 would mean double or five times the pain,” White said.
Reserve Bank of Malawi (RBM) spokesperson Ralph Tseka said all was set for the release of the banknote.
Tseka said the central bank had, for the past three months, been conducting sensitisation meetings to make people ready for the banknote.
“We have reached out to people on market days and during our road shows. We have been playing jingles on radio and TV stations. We have been putting adverts in local newspapers sensitising people to issues such as features of the new denomination.
“The idea was that people should know these features so that they can ably distinguish a genuine note from a fake one,” Tseka said.
Last year, RBM Governor Wilson Banda justified the decision to introduce the K5,000 note, saying the bank was responding to the currency management policy that guides it on how to react to economic developments.
Banda said policy guides that the highest value denomination should not account for more than 60 percent of the total value of the currency in circulation.
“In the present case, our highest value denomination, the K2, 000 banknote, has been above the 60 percent threshold for some time and has hovered above 80 percent,” he said.
Centre for Research and Consultancy Director Milwad Tobias said introduction of the higher banknote was a response to economic environment realities.
“The currency has lost value and, as such, introducing a high-value banknote helps central banks preserve one characteristic of money, which is portability. It may also help reduce the cost of printing banknotes,” he said.
“Economic theory recommends that the highest note be maximum equivalent to $5. At the current exchange rate, a K5,000 note is just slightly above that threshold,” he added.