Coin minting in times of pandemic
The uncertain times we currently find ourselves in due to the global COVID-19 pandemic have certainly changed the way in which we conduct our business. We have been propelled into a new way of work, that is devoid of physical contact and characterised by virtual meetings and webinars. We issue this, our first quarterly newsletter, to keep you abreast of developments at the South African Mint.
In February 2020 we welcomed our new Managing Director (MD), Ms. Honey Mamabolo. A mere month later, South Africa was placed under one of the world’s strictest lockdowns, in order to slow down the spread of the COVID-19 pandemic.
Prior to joining the South African Mint, Ms. Mamabolo was the Chief Executive Officer of a leading manufacturer and supplier of automotive chemicals in South Africa, named Thebe Unico. She brings a wealth of knowledge to this role, gathered from her 20 years’ experience across various industry sectors, including mining, retail banking, energy, development finance and manufacturing.
Ms. Mamabolo is adept at managing various facets of business, from strategy and corporate governance to business development, finance, operations and people management. She believes that agile leadership is critical in today’s volatile, uncertain and disconcerting business environment, more so now when faced with a global pandemic.
Our MD, Honey, discusses the impact of the COVID-19 pandemic on the cash industry in general and our business in particular, below.
Interview, with Honey Mamabolo, Managing Director, South African Mint.
How important is cash in the current COVID-19 situation?
In South Africa, the demand for cash as a form of payment is still high, despite the advances that have been made in debit and credit card and electronic payments. One of the reasons for this is because a cash transaction is a straightforward payment method that is universally accepted and understood by individuals and businesses (both formal and informal). With a large part of our society classified as ‘unbanked’, there is a heavy reliance on the use of cash.
Digital payments are not always an option for vulnerable communities, low income earners, the elderly and people who live in rural areas, due to access barriers such as poor infrastructure, network reach and a lack of financial literacy. There have, however, been significant developments in the mobile money transfer space, with millions of people who are classified as unbanked, gaining access to financial services by virtue of owning a mobile or cellular phone. In current times, and mostly during the COVID-19-induced national lockdown, there has been a surge in the usage of these platforms as an easy, secure and affordable way to send and receive cash.
At the onset of the COVID-19 pandemic, concerns were raised about the risk of transmission of the virus through the handling of coins and banknotes. But medical experts and the World Health Organization (WHO) have confirmed that both coins and banknotes are safe to use and there is no scientific evidence indicating that coins and banknotes carry or transmit the virus. COVID-19 is transmitted either through coming in close contact with an infected person or touching a variety of surfaces that could be contaminated. The virus spreads through respiratory droplets produced when an infected person coughs or sneezes.
In addressing the concerns of handling coins during the COVID-19 pandemic, the South African Mint would like to reiterate that personal hygiene remains the best defence against the coronavirus. Wash your hands regularly with soap and water or an alcohol-based sanitiser, and avoid touching your face after touching any frequently-touched surface or object, which can include coins. These are personal hygiene practices that should be followed at all times, and not only during the COVID-19 pandemic.
Further to these measures, wearing a mask and keeping a safe physical distance in public spaces will mitigate against the risk of transmission and contraction of the virus.
What is the current impact on your business/operations?
Following the declaration of COVID-19 as a national disaster under the Disaster Management Act, the President of South Africa invoked a national lockdown on the 27th March, which still continues today, with less restrictive measures on the movement of people and trade, after two highly restrictive months.
While the South African Mint, a wholly owned subsidiary of the South African Reserve Bank, is categorised as an essential service provider under the Disaster Management Act, the South African Mint elected to cease all production activities during the first, most restrictive months of the national lockdown, as the health, safety and well-being of our employees remains a priority.
Currently, the situation is critical as we see the pandemic spread at an alarming rate. At the end of June 2020, South Africa had identified over 150 000 COVID-19 infections and over 2 600 deaths and these numbers continue to escalate at a phenomenal rate daily.
The spread of the pandemic has resulted in a negative impact on our operations, forcing us to operate at a very limited capacity in our factory. Our topmost concern is the protection of our employees, and to this end, we have limited the number of people we have on site which inhibits our ability to deliver fully to our customers. Despite our best efforts to fulfil the outstanding orders as planned, the limited resources and pandemic risk prevents us from doing so. However, we shall endeavour to meet our customers’ needs in whichever way we can given these limitations.
How do you think this will change the coin industry?
The outbreak of COVID-19 has changed the way in which the South African Mint and companies across the world conduct business. With the highest risk being the health and safety of people, there is a heightened focus on virus transmission mitigating strategies such as screening and classifying employees with vulnerabilities and underlying diseases, as well as ensuring that employees wear the correct personal protective equipment (PPE) at all times. The pandemic will have an impact on raw material supply chains as well as the export coin market.
In South Africa, there is still a strong structural demand for coins from formal retailers – in part, a function of their fractional pricing structure. The informal economy is driven mostly by cash and, to a large extent, by coins, where traders in the informal sector recirculate coins to consumers as change and also use coins to buy stock.
The reality is that cash is still a dependable, stable and reliable form of payment. Cash continues to be the most widely used form of payment in all regions of the world. According to the G4S World Cash Report 2018, cash in circulation is growing. The report surveyed 47 countries, covering 75% of the global population and over 90% of the world’s gross domestic product. The findings show that the demand for cash has continued to rise globally, despite the increase in electronic payment options, including mobile money transfers, in recent years.
The high demand for cash (both coins and banknotes) during the COVID-19 crisis has further demonstrated that, while there is constant talk and aspirations for a ‘cashless’ society, the use of cash is not going away any time soon. Until there are reliable payment alternatives that satisfy central banks, regulators and the man on the street, putting an expiry date on cash would be premature, given the role of cash as the lifeblood of most developing economies.
2019 was an extraordinary year for the Mint. Click here to see some highlights and achievements of the year gone by.
