Coin Management Efficiencies Project

As part of the Central Bank of Eswatini’s Strategic Objective to ensure an adequate supply of cash, the Bank embarked on a Coin Management Efficiencies Project. This initiative aims to enhance coin recirculation in the Kingdom, reduce coin hoarding, and lower coin monetization expenses. The project involves the installation and deployment of coin vending machines, coin counting/sorting machines, and coin packaging systems, marking significant modernization and innovation in coin management processes.

Phases of the Project

Phase 1: Commissioning of Coin Counting/Sorting Machines and Coin Packaging Systems
Objective: To process coins deposited by commercial banks and distribute them efficiently back into the market. Implementation: Installation of coin counting/sorting machines and coin packaging systems.
Outcome: Streamlined processing of deposited coins, ensuring accurate counting, sorting, and packaging for redistribution.

Phase 2: Deployment of Coin Vending Machines.

Objective: To improve coin re circulation by providing the public with a convenient way to deposit coins and receive receipts for purchases.
Implementation: Collaboration with retailers and commercial banks to install coin vending machines in strategic locations. Outcome: Enhanced public access to coin deposit facilities, reducing hoarding and improving the flow of coins in the economy.

Phase 3: Integration with Commercial Banks

Objective: To extend the deployment of coin vending machines and counting systems to commercial banks. Implementation: Collaboration between the Central Bank and commercial banks to install and manage these machines. Outcome: Wider network of coin handling facilities, further improving coin re circulation and management.

Eswatini

1. Supplier (Global Payments Solutions – GPT):
   Role: Assists with the supply and installation of Scan Coin machines.
   Responsibilities: Provides ongoing maintenance and servicing for coin vending machines, coin counting/sorting machines, and packaging systems.
2. Commercial Banks:
   Role: Key players in the coin management process. Responsibilities:
   Accept bulk deposits of mixed coins from retailers.
   Deposit these coins with the Central Bank for counting and sorting.
   Install their own coin vending machines at branches for bulk coin deposits.
   Process customer receipts from coin vending machines and credit customer accounts. Deposit unsorted coins back to the Central Bank for processing.
   The Central Bank credits the commercial bank accounts after counting and sorting.
3. Retailers:
   Role: Facilitate the public’s use of coin vending machines. Responsibilities:
   Install coin vending machines at their locations. Assist customers with depositing coins.
   Accept receipts from the machines as payment for purchases.

1. Coin Collection:
   Total Coins Collected: Since the installation of the coin vending machine at Ruchi Wholesalers in June 2022, a total of about E25 million worth of coins has been collected, equating to 28 million pieces.
2. Cost Savings:
   Estimated Cost saviing : E14 million, based on average minting pricing for new coins.
   Cost Savings: The exercise resulted on an average 16 % decline in monetization costs for the two financial year ending March 2023 and March 2024, ever since the installation of the machines.

About 21 million pieces of coins were collected though the coin vending machine installed at Ruchi Wholesalers and about 7 million pieces of coins were collected through FNB coin vending machines.

Success of the Prototype: The success of the Ruchi Wholesalers prototype led to broader adoption. Commercial banks began deploying their own coin vending machines.
Operationalization: Since April 1, 2023, the project has been fully operationalized reflecting the project’s successful integration into the cash cycle and its positive impact on coin management.

The installation of the coin vending machine at the retail site successfully addressed several key issues identified during the investigation:

Reduction in Public Coin Hoarding: By providing an easy way for the public to deposit low value coins in particular.
Simplification for Retailers and Banks: The machine has alleviated the burdens of counting and sorting coins for retail shops and commercial banks, streamlining these processes.
Cost Efficiency: The initiative has led to significant cost savings for the Central Bank, reducing the need for minting new coins and promoting more efficient coin circulation.
The successful pilot at Ruchi Wholesalers has set the stage for potentially broader implementation of coin vending machines, enhancing overall coin circulation efficiency and operational effectiveness for the Central Bank.

For detailed statistics and further information, please refer to the attached document.

Roll-Out and Implementation

Efficiencies Project

1. Investigation and Prototype Development
   Approval and Investigation: Following the approval of the business case and project charter, the Central Bank (CBE) conducted an investigation to identify issues with coin circulation. Key challenges identified included the cumbersome nature of handling, counting, and sorting coins, as well as the time-consuming processes involved for commercial banks, retailers, and the public.

Prototype Identification: Ruchi Wholesalers, a major retailer with significant coin handling challenges, was chosen for the prototype phase due to its large volume of coin transactions and its proximity to the CBE Cash Centre. Agreements were established between Ruchi, their Banker FNB and CBE to facilitate the prototype.

Installation and Support: A coin vending machine was installed at Ruchi Wholesalers. CBE support staff were stationed at Ruchi for three weeks to provide trainig and support. GPT, the vending machine supplier, offered technical support.

2. Integration into the Cash Cycle
   Customer Interaction: Customers at Ruchi deposited coins into the machine hoppers. The machines automatically counted the coins and issued receipts, which customers used to make purchases in the store.

Daily Operations: At the end of each day, cashiers at Ruchi emptied the vending machines and generated a daily run receipt summarizing all transactions. Coins were prepared for deposit based on this summary.

Processing at CBE:
Coin Counting and Sorting: Deposited coins were counted and sorted using CBE’s coin counting/sorting machines. Credit and Packaging: CBE credited FNB, who then cleared the funds to customer accounts. CBE also packaged the coins according to packaging standards using the packaging system and prepared them for reissuance to commercial banks.

3. Expansion and Operationalization
   The project has successfully transitioned from a prototype phase at Ruchi Wholesalers to a broader roll-out involving some commercial banks who have installed their own coin vending machines.

The resilience of the coin vending and counting/sorting machines initiative is shaped by several factors, including its technical robustness, and adaptability to crises as outlined below:

1. Technical Robustness:
   Durability: The machines are designed for long-term use, with components that can withstand frequent and intensive usage.
   Maintenance: Regular preventative maintenance by CBE engineers and technicians will help extend the lifespan of the machines. Scheduled checks and timely repairs are crucial for ongoing functionality.
   Supplier Support: Ongoing high-level support from GPT, the vending machine supplier, ensures that any complex issues can be addressed promptly, enhancing the machines’ durability.
   Ongoing Support: Continued support and occasional refresher training sessions help maintain a high level of operational competence.
   Contingency Plans: Having backup machines or spare parts readily available can help in addressing technical failures quickly.
2. Economic and Financial Crises:
   Decreased Usage: During economic downturns or crises like Covid-19, the usage of coin vending machines may decrease.,
   Financial Viability: Reduced economic activity can affect the return on investment.
3. Adaptability and Future-Proofing
   Expansion Potential: The successful pilot phase can serve as a blueprint for scaling up to more locations, managing risks and enhancing overall system resilience.
   Resource Allocation: Scalability will require additional resources and coordination among stakeholders.

Staying Updated: Keeping up with technological advancements in vending machines, cash handling, and security systems can improve the initiative’s resilience.
Periodic Upgrades: Regular upgrades and integration of new technologies ensure continued efficiency and security.
Continuous Collaboration: Ongoing engagement with all stakeholders ensures the initiative remains responsive to emerging challenges and opportunities.

The initiative demonstrates significant resilience through its technical robustness, secure operations, and comprehensive training and support. However, it faces vulnerabilities related to technical failures and economic crises. Proactive measures, continuous improvement, and adaptability will be crucial for ensuring its long-term sustainability and resilience.

The Coin Management Efficiencies Project introduced by the Central Bank in 2022 represents a significant departure from the existing processes of coin handling and circulation. Here’s a detailed comparison highlighting the key differences:

Existing Processes:

1. Manual Handling: Retailers and commercial banks found handling coins burdensome, often refusing to accept them. 2.Time-Consuming: Manual processes of weighing and handling coins were time-consuming for both the retailers and commercial banks.
2. Hoarding Issues: The public hoarded coins due to their cumbersome nature and the lack of convenient deposit options.
3. Limited Recirculation: The deposit of coins to the central banks by commercial banks was very low. Such that there was a public outcry relating to coin shortages.
4. High Minting Costs: Frequent shortages required the Central Bank to mint new coins regularly, leading to high expenditure.

New Initiative:

1. Automated Handling: Coin vending machines and counting/sorting machines automate the process, Retailers and banks benefit from the automated sorting and counting, making coin handling less burdensome and more acceptable.
2. Efficient Distribution: These machines facilitate easier and more efficient coin distribution, improving recirculation and availability.
3. Reduced Hoarding: Public access to vending machines reduces the tendency to hoard coins, ensuring a more consistent supply.
4. Operational Efficiency: Automated machines streamline coin handling operations ensuring increased processing accuracy.
5. Cost savings: Improved recirculation decreases the need for new coins, significantly reducing minting costs.
6. Convenience: Coin vending machines provide a convenient way for the public to deposit coins, reducing hoarding.
7. Environmental and Sustainability Impact: By reducing the need for new coins, the initiative conserves natural resources and supports environmental sustainability.

Conclusion

By leveraging modern technology, the Central Bank has addressed key challenges associated with coin handling and circulation, paving the way for a more efficient and sustainable currency management system.

The Coin Management Efficiencies Project has yielded numerous benefits for the Central Bank and the environment, particularly through the significant reduction in expenditure on minting coins. Here’s an in-depth look at the environmental and sustainability impacts of this initiative:

The project has led to a decline in the costs associated with minting new coins over the years. This substantial cost reduction implies a significant decrease in the use of resources required for coin production, such as metals and energy. By improving coin recirculation, the demand for newly minted coins is reduced. The coin vending and counting/sorting machines ensure that existing coins remain in circulation longer. Extended circulation life for coins means fewer coins need to be produced, which translates to more efficient use of materials.

Environmental Benefits:
a) Reduced Resource Usage: Fewer resources, including metals like nickel and copper, are consumed in the minting process. This reduction helps in conserving natural resources and mitigating the environmental impact associated with mining and metal processing.
b) Energy Conservation: Lower demand for new coins results in decreased energy consumption during the production process, which includes smelting, forging, and transportation.
c) Reduced Carbon Footprint: The reduction in production activities lowers greenhouse gas emissions, contributing to a smaller carbon footprint for the Central Bank’s coin minting requirements.
d) The project promotes more efficient use of materials in coin manufacturing, reducing waste and encouraging sustainability in the production process.

Conclusion
The Coin Management Efficiencies Project has significantly benefited the environment. The decline in minting expenditure has led to reduced use of metals and energy, conserving natural resources; decreased energy consumption in coin production processes, and reduction in carbon footprint from reduced production activities. The initiative promotes efficient and sustainable coin management practices.