I take very little comfort in reading the newspapers because too many times our dailies simply report on an issue or event. They hardly educate the public and provide information that provides valuable insight into those reports.
The latest case in point, shortage of coins. This has been reported too many times in the past and speaking with my mother in law a while back, she simply said that people are not returning coins to the bank so there is not enough coins in circulation. The truth is no one knows for sure how much coins is in circulation in the country. These kinds of alerts come because the banks say there is not enough in circulation, an assumption they make from the number of coins deposited into the bank. But is it really true?
A little while back the police swooped in on a tip off about stolen goods at the Solomon Motel and amidst the haul they found $17,000 worth of coins. The owner merely said they were his coins but never said why he is hoarding the coins. But why? I will make some assumptions here and I will focus on two simple points; prices and banking.
When thinking about the issue of coin shortage I began to realize that the lower denominations are now no longer in circulation. I mean when was the last time you saw a 1c, 2c or 5c coin? For some younger generations probably never. Why? I think we need to look at the price of goods at the stores, restaurant and on public transport. Have you ever seen a can of tuna costing you $9.55? No! And that is part and partial of why coins are not in circulation because the economy has no place for them.
If banks want coins to be circulated, if government cannot spend more on buying coins from the mints, if the economy needs coins to remain in shape then it needs to ensure that they remain in circulation. So the price of goods must reflect this desire, otherwise the next best places for coins would be a piggy bank or under the pillow some place.
Still on prices, there is no value in a 5c coin; nothing costs 5c in Honiara anymore so there is very little reason for the shopper to carry 5c to town.
We must encourage its usage and so prices must reflect that we need coins in circulation. It is important for businesses to stop rounding prices off to the nearest dollar. Instead, they must charge goods or services at their right prices corrected to the nearest cents. Australia and Fiji are two places I have spent a lot of time in and coins are still alive and well in these societies because the price of goods and services reflect their desire to keep every denomination of coins in circulation.
My next point is we must make coins bankable so that the beetle nut, peanut and cigarette vendors must have the desire to bank their coins. These are the people who receive and trade in coins but they see very little value in banking their money. There is absolutely no incentive to put that money in the banks. Whose fault? I believe this lies squarely on the banks shoulders.
Banks must provide the avenue which will encourage people to bank their well earned cash. Look at it this way, the working populace is simply forced to bank because salaries are paid into banks not because they can save money with the banks. Banks are at fault for focusing too much energy and money on making their money without adequate emphasis on helping Solomon Islanders acquire new homes, save money for education and overseas holidays.
I cannot finish this discussion without highlighting the age old discussion of coins and weight. I hardly carry coins around now because they are huge and bulky. I keep a bottle in my office and at home where every coin is dropped inside. I simply hate the weight in my pockets and wallets these days are not designed for coins. But coins must come out of those hiding places and into circulation within the economy.
Finally, is it important that the coins must be in circulation? Surely something that has no value must be of little use? This is where we fail to see the bigger picture and I feel I need to use this analogy to illustrate the importance of coins in the economy.
A few weeks ago, the out going COO of Our Telekom Mr Steve Tusler, discussed with us that we as a business cannot stock up on goods that cannot be sold. While they are assets they do not contribute to the circulation of money within the company and in fact become a liability. Our focus and interest will be to keep the circulation of cash within the company happening. Money must come in and go out in order to remain viable as a company. As it stands we may have millions locked in assets such as mobile phones, computers that sit in our storeroom and are not being sold or used to generate money for the business.
Likewise, when we bought our share of coins it was in millions. Right now, if there is only $500,000 worth of coins in circulation we must be concerned that there are millions of dollars locked away in cupboards, piggy banks, with the roadside vendors or discarded and these millions are not contributing to keeping the economy vibrant.
Mind you, I am no economist! All I know is 5 20c coins make a dollar.