- of de facto partial demonitisation
- as traders, customers shun smaller coins
By Ebenezer Chike Adjei NJOKU ([email protected] )
A growing reluctance to accept small-denomination coins — from 20 pesewas (GH¢0.20) down to the 1 pesewa (GH¢0.01) — is causing friction between businesses and customers, with at least two incidents witnessed by the B&FT over the holidays highlighting the depth of the problem.
GH¢186m in legal tender at risk
Economists and legal experts say the trend undermines the integrity of the currency system and points to broader issues in cash handling and public confidence.
On a Tuesday afternoon at a popular hot-food kiosk on the Osu Oxford Street, a routine lunch purchase nearly escalated into a confrontation when a customer insisted on refusing 20 pesewa and 10 pesewa coins as part of his change.
After paying with a GH¢20 note for a GH¢16.5 meal, the man was handed GH¢3.5 in change, including several small coins.
According to onlookers and our reporter at the scene, he thrust back the coins, declaring that he did not “want such rubbish.”
“I should not have to carry around little coins that nobody wants,” he was reported to have said, prompting raised voices with the vendor. Other customers gathered, and tensions rose until a nearby police officer, off duty but in uniform, intervened.
“These are legal tender. You cannot refuse lawful money,” the officer said firmly, before persuading the customer to take the change.
In a seemingly unrelated incident at Makola Market the following morning, a middle-aged man attempting to purchase an envelope for GH¢0.50 was refused by a stationery vendor who rejected two 20 pesewa coins and a 10 pesewa coin offered as full payment.
“I will not take that. Go get notes or bigger coins,” the seller said, pushing the coins back.
“He said other customers and traders will not accept it; as such, he will also not be able to,” the buyer told our reporter.
“But where am I supposed to go at this hour? Isn’t money supposed to be accepted everywhere?” he asked.
The exchange ended with the man leaving empty-handed and the vendor insisting the buyer return later with higher denominations.
Both incidents, although minor in monetary terms, illustrate a troubling attitude among some members of the public and small businesses toward small denomination coins, colloquially referred to as pesewas.
The Bank of Ghana’s (BoG) most recent annual report shows that these coins account for approximately GH¢186.36million of the currency in circulation, about 21 percent of all coin value and 0.26 percent of total currency in circulation. Yet their utility is increasingly in question.
According to the Bank of Ghana’s 2024 annual report, coins in the 20-pesewa (GH¢0.20) denomination account for approximately GH¢120.208million in circulation, making them by far the most valuable component of small change. Ten-pesewa (GH¢0.10) coins amount to about GH¢54.642million, while five-pesewa (GH¢0.05) coins contribute a further GH¢10.331million. One-pesewa (GH¢0.01) coins, though rarely used in daily transactions, still represent roughly GH¢1.175million in value.
Legal experts assert that the law is unequivocal.
“Legal tender, defined in its simplest form, refers to money that must be accepted if offered in payment of a debt,” Deborah Adu-Twumwaah, a lawyer and lecturer at the faculty of Accounting and Finance at UPSA, during an interaction with the B&FT, citing Section 41 of the Bank of Ghana Act, 2002 (Act 612), which “makes it clear that all currency notes and coins issued by the Bank of Ghana shall have legal tender insofar as they are in accordance with the provisions under this act.”
The law allows for exceptions when the value of the transaction exceeds a threshold, the currency is impaired, defaced or when there is genuine suspicion of counterfeiting.
Barring these, refusal could lead to “a term of imprisonment not exceeding three years, or to a fine not exceeding seven hundred and fifty penalty units, or to both the imprisonment and the fine,” according to the the Currency Act, 1964 (Act 242).
Ms. Adu-Twumwaah pointed to both practical and psychological factors driving the rejection of small change, as well as the unintended consequences.
“The rejection of small coins can lead to price rounding, resulting in artificial price increases and, in turn, hyperinflation. The continued effect is to distort the economy’s inflation management structures, which are intended to help control inflation,” she noted.
These pressures, she cautioned, from abandoning or ‘de-facto demonetising’ small coins have a tangible bearing on pricing transparency, particularly, for lower-income citizens who rely on exact change.
“It is important to note, however, that the refusal of small denomination coins tends to result in the rounding-up of prices for goods and services, making prices higher than they should be.
“The effect of rounding of small-denomination coins is the reduction of practical usability and adequate purchasing power of the small-denomination coins, even though their legal value remains stable. This practice contradicts the provisions under the Currency Act,” she noted.
Business owners, however, cite practical concerns. “Counting all those small coins takes time and most people just drop them in a bowl that never gets reconciled properly,” one Accra shopkeeper who requested anonymity told the B&FT.
“We end up losing more time and money, handling them than they are actually worth in transactions,” she added.
Merchants also complain that banks charge fees or impose thresholds for coin deposits, making it costly to return accumulated small change to the formal financial system.
“It becomes easier to just tell the customer you would not take them,” another vendor explained.
But Ms. Adu-Twumwaah warned that this behaviour can fragment trust in cash transactions, especially when there is no legal action.
“The rejection of small coins poses significant regulatory and legal risks to Ghana’s monetary system, even though most who engage in the practice do so with impunity. The Currency Act criminalises this, but we rarely see prosecutions in this area,” the lawyer said.
She, however, added that incentive-based solutions – such as the adoption of price ceilings on target items – and public education, would yield more results.
The post GH¢186m in legal tender at risk appeared first on The Business & Financial Times.
Read Full Story
Facebook
Twitter
Pinterest
Instagram
Google+
YouTube
LinkedIn
RSS