New SA Banknotes: SA Reserve Bank and SA Bank Note Company briefings

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Finance Standing Committee

06 February 2005
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Meeting report

FINANCE PORTFOLIO AND SELECT COMMITTEES
7 February 2005


NEW SA BANKNOTES: SA RESERVE BANK AND SA BANK NOTE COMPANY BRIEFINGS

Chairpersons: Dr R Davies (ANC) and Mr T Ralane (ANC, Free State)

Documents handed out:
South African Reserve Bank PowerPoint presentation on upgraded banknotes
 

South African Bank Note Company briefing – Mr Mbhele’s address
South African Bank Note Company Overview

SUMMARY
The South African Reserve Bank (SARB) and the agencies involved in the launch of the upgraded banknotes, introduced the features of the notes and their communication campaigns. They also illustrated the unchanged features of the banknotes and the new security features on four levels. The first level for the general public, was the first line of defence against counterfeiters. The old banknotes were still legal currency, as the SARB would not ‘demonetarise’ the currency. Approximately 25 million people were targetted for the campaign.

The South African Bank Note Company then gave an overview of its business and operation, emphasising the security aspects of its operation and the high quality standards it maintained.

MINUTES

South African Reserve Bank briefing
Mr M Twala (SARB Assistant General Manager) quoted the SARB Governor’s statement that banknotes were a "window" on their country of issue, and that the use of the Big Five as themes reflected African heritage. It was international best practice for banknotes to be upgraded or re-designed every six to eight years, and South Africa’s banknotes were last redesigned in 1992. It was also important for the SARB to be proactive because of improved technology and counterfeiting methods.

A wide range of organisations and bodies were consulted during the upgrade, including the Department of Arts and Culture, the Pan South African Language Board (Pansalb), the National Council for the Blind, the banking industry and international and national service providers. A number of features of the old banknotes were retained: the denominations, cotton-based paper, size, main and secondary motifs, dominant colours and themes. The changes included added varnish for durability and the addition of the coat of arms. All eleven official languages were included on the new banknotes, as each banknote had English on the front and two other languages on the back.

Four levels of secondary features had been introduced. The first level was visible and aimed at the general public, the second was aimed at commercial and vendor enterprises, the third level was covert or machine readable and aimed at large cash handlers, while the fourth level was forensic for the use of the SARB only.

The watermark was smaller than on the old banknotes and included the denomination numeral. Further changes had been made to the microtext and a see-through perfect registration from R to the denomination numeral had been included. The unique bank number had been moved to the back of all denominations. Micro-lettering had been included in positive and negative text and an iridescent bank mark had been introduced on the back of the banknotes and contained the coat of arms and the denomination numeral. Optically variable ink had been introduced on three denominations, and would change from green to gold on the R50 and R100 banknotes and from magenta to green on the R200 banknote. After consultation with organisations for the visually impaired, intaglio print had been introduced on the front of the banknotes, with a number of diamonds varying by denomination. The denomination numerals were also more prominent.

The current banknotes would not be withdrawn and there was no demonetarisation. The SARB wanted to encourage South Africans to familiarise themselves with the security features and to get used to checking a combination of features. It was emphasised that it was against the law to forge or pass on counterfeit money.

Communication Campaign briefing
Ms J Love (SARB Assistant General Manager) said that when the SARB had decided to upgrade the banknotes, they had realised that there would be transitional problems. The new security features were only useful if the public was made aware of them. A very extensive outreach programme had been launched throughout the country. Meetings had been held with Cosatu shop stewards, traditional authorities, a variety of community organisations and a school outreach programme. Commercial banks had agreed to flight buttons on their websites and had issued printed material. The campaign was ‘partnership-driven’.

Mr N Dhlamini (Strategic Planner, TBWA Hunt Lascaris) introduced the mass media campaign and the slogan "Makoya Moola – Rands You Can Trust". Their brief was a fully integrated campaign to all South Africans to create public awareness, to educate the public on the security features of the banknotes, and to inform the public that current notes were still legal tender.

The economic realities of all South Africans had to be taken into account. The second economy raised issues about sophistication, and was an important target as most transactions in this sector were cash-based. It was very important that no sectors be excluded or alienated by the campaign and there was a need to transcend racial, economic and other divides. The needs of the marginalised were particularly important. Radio advertisements were most effective, reaching LSM 1 – 10 (Living Standard Measure, where 1 was the lowest income group). Radio ‘edudramas’ targeted the lower LSM groups, while television advertising reached all ten groups. Public relations and press released were very skewed to the higher LSM groups.

The SARB felt a need to elicit collective action and the concept of the campaign was drawn from the notion that all South Africans could play an active role in safeguarding the Rand. The slogan drew inspiration from everyday experiences, and trends shared across all groups. Research showed that South Africans used many hand signals, for example in hailing taxis and indicating approval or disapproval. The signal chosen for the campaign meant "checking you out", and "moola" was a slang term for money. Research indicated that the hand signal and "Makoya Moola" were understood across the population as a whole.

Print advertising used all South African languages and was part of a very integrated campaign of advertising, public relations, advocacy and training. The key elements of the above-the-line campaign included radio spots and edudrama on all nine African language stations and forty community stations, television commercials on all three SABC channels (reaching 80% of the population) and printed matter in leaflets, posters and print advertisements. Forty tons of printed matter had been generated.

Ms L Joffe (Creative Director, Creatrix Multicultural) described the campaign as "edutainment with a twist". The central concept of the campaign was to "know your money". It was a colloquial campaign to communicate with all South Africans, with outreach to educate and enlighten the lower LSM market. Multicultural comprehension and a call to action for all was a challenge as the security features of the new banknotes were very formal.

A ten-minute radio show had been devised ("The Makoya Moola Show"). This was a five-part series of ten-minute edutainment programmes in all eleven South African languages, broadcast in two slots on nine SABC stations and forty community stations from February 2005. Each programme synergised the campaign jingle, billboards, security features and a sitcom edudrama. A different note denomination was featured in each programme with the three-minute Makoya Moola song embedded at the end of each programme. The characters featured in the sitcom were featured in easily identifiable life situations. The Makoya Moola song was a ‘crossover’ piece of music, written to appeal to a wide audience. The key words used were "mamela", meaning ‘listen’ as the money had a distinctive sound, "checka", meaning check it out, "toucha", to encourage people to familiarise themselves with the feel of the banknotes, and "tilta-so" to highlight the colour change when the note is tilted.

Ms A McKay (Deputy Managing Director, Magna Carta) introduced the public relations element of the campaign. A national editorial campaign had been launched in the print, electronic and on-line channels and media representatives had been taken into some of the community outreach programmes. Forty community radio stations had been included in the campaign, and interviews with SARB representatives had been set up on these stations as well. Outreach into corporates and government departments was estimated to reach 3.4 million people. In addition, 8 000 text messages had been sent to taxi drivers and an SARB Helpline had been fully set up to help with public concerns.

The commuter campaign had targeted Taxi Rank TV, which reached approximately 1.2 million people. A gazebo campaign had been launched at 40 sites nationwide. This campaign was estimated to reach 40 million people, and was very interactive. Roving stage trailers would take the campaign into the rural areas. It was hoped that 25 million people would have been reached by the end of the campaign.

Ms C Cachalia (Kagiso TV & Communications) introduced the training and advocacy programme. This was aimed at three levels in a cascade model. Banks were at level 3, people in cash handling enterprises were at level 2 and the public was at level 1. Trainers were trained to cascade information into the organisations. Information sessions were helped to equip trainers to disseminate information, and a video presentation was included. In the rollout, facilitators spread the message within their own organisations. A close link would be maintained with the radio and video programmes.

The level 3 information sessions were essentially aimed at banks, including the SARB, casinos and commercial banks. These started on 22 November 2004, and focused on the upgraded notes and the changed features. A video was the primary mechanism of delivery at this level.

The level 2 information sessions were aimed at enterprises such as Customs and Excise, Business Against Crime, micro-lenders, the SA Post Office and the SA Police Service charge offices. They commenced on 29 November 2004 and consisted of a video and facilitator guide.

The level 1 community outreach programme began on 1 February 2005. It included consumer bodies, local government structure, religious bodies, spaza shops, trades unions, traditional healers and traditional healers. It was envisaged that nine provinces would be targeted between now and the end of March and two-hour community meetings had been scheduled in each area. A level 1 video had been developed, and included a discussion of the security and design features of the new banknotes. There was also distribution of posters and leaflets. The level 1 campaign was designed to reinforce all media and public relations material.

Mr Dhlamini reiterated that the campaign had managed to simplify complex matters, achieve integration at all levels of the campaign and had been interactive and participative. A device had been created that would become part of popular culture and the public had been empowered to look for a combination of features and to check their banknotes without embarrassment.

South African Bank Note Company briefing
Mr M Mbhela (Deputy Managing Director, SABN introduced the company as a subsidiary of the SARB. The SABN had the equipment, staff and technical ability to produce sophisticated currency and security documents to customer specification. The Security Department of the SABN maintained strict access control to the facility and the Product Control Department was the custodian of the products and materials used in the manufacturing process. The process of producing banknotes was illustrated in a video presentation that showed the litho, intaglio and quality control processes. Quality assurance was vital and precise fault identification allowed the maintenance of low waste percentages while retaining superior quality. Intensive maintenance programmes were also important.

In addition to the printing for the SARB, the SABN printed banknotes for some other African countries, including Zambia, Botswana and Namibia. The quality of the printing was on par with international standards.

Discussion
Mr K Moloto (ANC) asked how the SARB ensured that other countries benefited from the new features, since the SABN was also printing banknotes for other countries.

Mr Twala replied that the SARB had communicated with the central banks in countries where the Rand circulated with other currencies. These banks had been issued with material to counter fraud. The banks in these countries did not issue South African currency, but repatriated it to South Africa for credit.

Mr Y Bhamjee (ANC) suggested that the change in banknotes might have been an opportunity to use symbols other than animals. He asked whether this had been considered and if so, why the idea had been rejected. He felt that it would help to project exactly where the notes were from and suggested using people, such as Nelson Mandela.

Mr Twala replied that this was not a new series of banknotes, but an upgrade of existing security features. The SARB would embark on a design of new notes within the next six to eight years.

Mr K Durr (ACDP) asked whether all machines could take the new notes, such as the machines in parking garages.

Mr Twala replied that the SARB had communicated extensively with machine operators, such as the vending association, and that this had been done timeously.

Ms D Robinson (DA, Western Cape) said that it had obviously been an extensive campaign and expressed concern at the cost of and justification for such a campaign.

Mr I Davidson (DA) noted the upgraded security features and asked about the relative advantage of such an elaborate advertising campaign. He felt that most people did not check their money and he was unsure of the extent to which the SARB would be able to persuade people to do so. He queried the cost of the campaign and asked whether the SARB believed the output would justify the input.

Mr Twala replied that the SARB believed that, in order to curb counterfeiting, there was a need to educate the public to check their money. This was the first time that the SARB had embarked on such a campaign.

Mr Mbhela pointed out that the SABN was an advisory body to the SARB and so he was unable to disclose the amount spent. It was international practice to educate the public, as they were the ‘first line of defence’ against counterfeiting. The SABN was very pleased that this was happening.

Ms Love felt that awareness made counterfeiting more difficult. The idea behind educating the public was that they preferred different combinations of security features. It was true that citizens in urban centres in particular were unlikely to check their money. In the more rural areas, the outreach programme had already shown that the new features and emphasis on checking would reduce counterfeiting. The outreach programme was also aimed at reducing embarrassment when checking banknotes. The cost of the upgrade could not be disclosed as it was a security issue, and discussion would be inappropriate.

Ms Robinson said she felt it was important to know the cost of the campaign. The Chairperson suppressed the question.

Dr R Davies referred to reports that some counterfeit notes were already in circulation.

Mr Twala emphasised that it was very difficult to counterfeit the new bank notes. The new features were more user friendly to the public and more visible. Recommendations from bodies such as the Association for the Blind had also been incorporated. If it were possible to stem the tide of counterfeiting at the level of the public, the SARB would have succeeded in its objective. It was important to reach rural dwellers as well.

Mr M Johnson (ANC) appreciated that the SARB faced a difficult task and felt the main challenge was that there was little time to check banknotes. This was a problem in busy township taverns, very few of which had illuminating machines.

Mr Johnson asked whether the Financial Intelligence Centre had been involved in the upgrade.

Ms Love replied that the SARB had worked very closely with the Financial Intelligence Centre. There had been close co-operation with the customs training unit on a training programme for customs officials for recognition of banknotes and their security features. Returns from banks from other countries were always carefully checked.

Ms R Joemat (ANC) felt that it could not be considered wasteful to have a campaign aimed at the general public, particularly where there were many cash transactions, such as in townships. She asked whether there was a specific timeframe for phasing out the old currency.

Mr Twala emphasised that the SARB would not demonetarise the currency, so the banknotes would not be phased out. The upgrade was part of international best practice.

Mr E Sogoni (ANC, Gauteng) supported the importance of the campaign. He asked whether the upgrade had had any impact on the Rand.

Mr S Asiya (ANC) said that some countries had admitted that counterfeiters were very advanced and asked whether the South African system had catered for this possibility. Although he supported the information campaign, he asked whether it was also empowering counterfeiters.

Mr Twala replied that it was important that the public know what to look out for. As the public was educated, so the counterfeiters were educated. People had been embarrassed to check banknotes in the past; the campaign aimed to make it a way of life.

A Member asked whether it would be possible for elderly Nguni-speaking people to be catered for, as they might not understand the term "Makoya Moola". Mr Twala explained that "Makoya Moola" was simply a slogan for the campaign.

Mr Bhamjee took exception to the suggestion that the expenditure might not be worthwhile and suggested that this showed that some Members were not in touch with realities. Counterfeiting was a problem on a daily basis in many areas.

Ms Love said that, once the campaign had run its course, there would be a full accounting report.

The meeting was adjourned.

 

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