Coin Replaces Bank Note in Ethiopia|
October 18, 2010
This article was originally printed in World Coin News.
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If you are reading this article while you are in Ethiopia I wish you a happy new year. Sept. 11 is the Ethiopian new year, which in A.D. 2010 is significant since it is also the date the National Bank of Ethiopia has introduced a new 1-birr coin to replace the bank note of the same denomination in circulation.
The new coin had an auspicious introduction. According to NBE Vice Governor Getahun Nana, the coin was to begin circulation at what he described to AfrikNews as at “the dawn” of the Ethiopian new year.
According to Getahun, the central bank examined the cost of producing the 1-birr bank note, concluding it cost more to print it than made economic sense.
According to a Sept. 6 AfrikNews news release, “Whilst the government spends 16 cents to print a single birr note, the average life cycle of a birr note is limited to only one and a half years.” It has been estimated that Ethiopian coins will remain in circulation for anything between 25 and 40 years depending on the denomination. The 1-birr bank note has been estimated to have a circulation life span of perhaps 18 months, while the new coin has been estimated to have a life expectancy of 30 years.
The AfrikNews news release continues, “Getahun believes that the cost involved in minting new coins and retrieving the old notes is an investment from which the country stands to gain.” Getahun added, “Now the new coin, which costs us 77 cents each to mint, can last up to 40 years without any more costs.”
According to the Sept. 5 The Reporter, “The Royal Canadian Mint, the company that won the official tender floated by the bank to make the coins, has delivered to the NBE more than 400 million 1-birr coins, which are dealt out to the private and state-owned commercial banks in the course of the past 10 days. Sources told The Reporter that the 400 million 1-birr coins cost the bank some 300 million birr, with the cost ratio of 75 cents apiece.” (The NBE official mintage figure was 411.6 million coins.)
AfrikNews reported the cost to be about 274 million birr. According to the most recent issue of MRI Bankers’ Guide to Foreign Currency the exchange rate is 13.5 birr to the US dollar.
The composition of the new 2010 1-birr coin was not clearly defined at the time this article was being written, but according to The Reporter, “The silver-color coin features a lion’s head on one side while the other depicts a scale. The lion’s head and the scale are imprinted in a golden color with silver sidelines completing the appearance.” Other sources indicated it is a ringed bimetal coin.
Ethiopia’s monetary system is based on 100 santim, centime, or cent to the birr. Coins are issued in denominations of 1, 5, 10, 25, and 50 santim, with paper bank notes issued in higher denominations of 1, 5, 10, 50, and 100 birr until now. The State Bank of Ethiopia began issuing bank notes in 1945, with the note issuing authority being given to the National Bank of Ethiopia in 1966.
The legends on Ethiopian coins are primarily in Amharic. Coins issued prior to EE 1969 depict a crowned rampant lion holding a cross, with more recent coins depicting the head of a roaring lion with flowing mane. Although some Ethiopian coins have been struck at Monnaie de Paris (French mint), those without mint marks are usually issued from the mint at Addis Ababa.
The new 1-birr coin may be a cost saving measure, but it also falls into place neatly due to a September 2 currency devaluation caused by what Dr. Seid Hassan, a professor of economics and editor of the Journal of Business and Public Affairs suggested was “to target structural change, to boost the tradable sector so that it can provide the basis for long run growth” of Ethiopia’s domestic economy. Ethiopia currently has a large trade deficit, a significant demand for foreign currency, and a parallel market on which the birr trades at a significant discount. The devaluation will assist exporters, while those relying on imported goods will have to pay more for these goods.
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• Strike It Rich with Pocket Change, 2nd Edition
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