Copper to boost Kwacha power

1. lets wait and see….. its been long overdue! Lt i like that cartoon

   • For how long are we going to rely on copper… it’s like we never learn. Some of these articles make other people be on the side of ever crticisizing. At times I wonder if I’ll ever stop! I’ll only forever give credit and credit only, where it’s due. For now, whilst we’re relying on this wasting asset so called copper, hope we use the good times to diversify. We’re forever saying Zambia has and is diversifying, but hey, here we’re again, we been exposed!, we haven’t diversified after all. On top of that we’ve capital flights from the very same mines. On top of that again we’ve a country running out of power because of increased activities in the mines… no prescience whatsoever…

2. Good riddance for our ailing Kwacha

3. Same old same…… Shame on our Government. 44 years and still depending on copper to rescue us.

   Lord have mercy on [-o<

   • Yes indeed Lord have Mercy on Zambia. Hoping against all hope for 44 years in making on copper dependency ..Maybe a miracle this time around.

4. Sounds good hopefully this is not just a political message **==

5. These old men in government to get it… DIVERSIFY THE ECONOMY… move away from exporting raw materials & traditional products, for forty years doing the same thing and not learning from the copper price cycle crashes..

   SET UP wire making plants, bullet manufacturing factories. Improve tourisms, invest in human resources and set up computer development labs (Software and hardware)… Zambians have the brains.. or least better than these old mudalas’ in government

   • AMS you have a good point.But the african leaders can not do what you are saying because they are bound by agreement they signed with the so called supper powers.

   • This is the conspiracy theory nonsense that leaves Zambia and other African countries blaming someone else for their own poor management of their own affairs. If China had chosen that path, it would still be blaming the dark forces of imperialism………………….

   • Thi is no longer a conspiracy theory, it is a fact publically acknowledged as an official agenda by governments and world leaders.

   • Imperialism is as real as the water you drink. The difference with China is that they resisted imperialism instead of pretending that it does not exist…that is why China is where it is.

6. (typo in above)

   These old men in government DONT GET ITt… DIVERSIFY THE ECONOMY… move away from exporting raw materials & traditional products, for forty years doing the same thing and not learning from the copper price cycle crashes..

   SET UP wire making plants, bullet manufacturing factories. Improve tourisms, invest in human resources and set up computer development labs (Software and hardware)… Zambians have the brains.. or least better than these old mudalas’ in government

   • YOU ZOMBIES DON’T SEEM TO GET IT. THE GLOBAL ECONOMIC MELT DOWN WAS NOT CAUSED BY THE OLD MEN IN THE ZAMBIAN GOVERNMENT YOU DESPISE SO MUCH. IT WAS CAUSED BY THE SAME AMERICANS, BRITISH, GERMAN BANKERS YOU ADMIRE SO MUCH. THE OLDMEN YOU HATE SO MUCH ARE TRYING TO REDUCE THE IMPACT OF THE CRUNCH ON THE ECONOMY

7. Its normal.In life,threr are Ups and Downs.In Economics,there are crests and troughs.Right now we are heading towards the crest and we have to utilise it to the fullest.

8. Looking at the difference btwn the BoP Surplus and Deficit I cannot help but worry!!The income we will earn from Copper exports will be the same money used to finance the BoP Deficit and pay for the Imported Copper wires!!!Classic 3rd World Nightmare!!

   • hi R09

     I just wanted to add that in the above article, the surplus is on an annual basis whereas the deficits are on a quarterly basis.

     The annual surplus has just gone down as compared to last year’s annual surplus.

     Otherwise we are in good shape.

   • Thanx

9. This is good news. Great job on curbing inflation and stabilizing the currency BOZ Gov and govt.

10. On the brightside..from an Economic point of view..things always get worse before they improve..the only issue is the time period between things moving from bad to good!

11. They should deal with firms like Multichoice who insist on charging their subs in $$$. The currency in this country is the Kwacha, so everything should be pegged in KKK, take it or leave it.

12. I agree with you Kamwendomunjila, but partially. As much as we should peg everything in ZMK, we need the US$ for Forex…

    • We will get the $$ by exporting our goods and services. Multichoice is charging us $$$ for a service they are offering locally. They should charge in ZMK. We need the $$$, but multichoice should not expect to get it from me…. If we all start charging in dollars, then we should just as well say goodbye to the kwacha and adopt the dollar.

    • Point taken

13. I hope the upward trend in prices will be long term. And those who invested in our mines rushed for care and receivership, i bet you they got egg on their faces!!

    Maybe that’s why CF suggested a 66% power tariff hike so that ordinary Zambians do not get a chance to enjoy the earnings from our resources (all the more for him and his pals).

14. The world is heading to a total economical collapse.We went to sleep in NEW YORK but we woke up in HARARE.This saying will become true.

15. Good to play some mind games to control the currency speculation, allowing more people to hold and conduct their businesses in Kwacha and thus increasing the demand and value of the Kwacha

    • Increased demand for Kwacha may not necessarily add value if under these circumstances it invokes ‘Dutch disease’. But I am sure BoZ is aware of this and will control the amount of dollar in circulation to offset any strain on the local currency…that is, all other things (variables) being equal.

    • I strongly oppose your point . Increase in demand for the Kwacha price of a dollar is an increase in Kwacha demand from the international monetary exchange system and an appreciation. This further means a reduction in the dollar price of a kwacha and increase in supply of a dollar to the exchange market system and depreciation in the later currency.

    • The proposed SI on anti-dollarisation will increase local demand for Kwacha since it would prohibit trade in dollars. Naturally, dollar will continue to flow into the country and if that increases the demand on local currency without corresponding changes in the supply of goods and services, inflation will instead go up. Without proper management and oversight, increase in the value of the Kwacha could make local goods less competitive internationally and also against imported goods. That would increase imports while decreasing exports, and hurt the economy in the long run.

16. Having either a strong or weak ZMK has its pros and cons, in the same way pegging everything in ZMK has its positive and negative side…

    • Is the Kwacha backed by gold?

    • Almost all countries have gold and foreign reserves

    • The relevance of this question?

    • Luapula Fish,can you please name one country which back the their currency by gold?

    • Currency is no longer backed by Gold. It is now backed by commodities.

      The backing of currency on gold was a bureaucracy. Backing currency on commodities is much more efficient as it gives govt a little more control on monetary policy and the fate of the economy as a whole.

    • Bankers have the power to create money out of thin air. In fact, banks are money factories. Banks exist to make money. You might think that banks are in business to provide services such as banking accounts and loans to their customers. It’s true that banks provide essential financial services. However, the reason that the banks provide such services is that banks need money to use as raw material to create more money. I wish i had that power to creat the US dollar.This is why we african are in this position we can not creat dollars.

    • Banks don’t create money, central banks do. If by bankers you meant central banks, then yes.

      Banks lend out money that people have deposited with the bank. They just don’t supply it out of thin air unless they are a central bank. Banks use the fractional reserve model to lend out money.

      I will provide you with a simple model of one of the ways banks make money. You open an account with the bank and deposit $100. This acc is supposed to gain you 2% interest. That is how they get you to walk into the bank. The bank then keeps 10% in this case $10 and loans out $90 on at least 3% interest. The bank keeps the 1% and the 2% is yours.

      That is one of the ways banks make money.

    • If America did not have the petrol dollar power, the USD would not be as appealing as it is today.

    • Money is created in two ways: First, money creation comes from borrowing it and spending it. (Money is literally borrowed and spent into existence.) Second, it can simply be printed up “out of thin air” by a central bank. The U.S. economy and other modern economies have central banks and fiat currencies. Central banks have two major powers. They can 1) “peg” the nominal level of short-term interest rates, and 2) purchase assets such as government debt, with newly printed money. When the central bank pegs short-term interest rates at a low level, it greatly encourages corporate and individual borrowing and spending.

    • good analysis there 84 but I already covered the central bank.

      Central banks across all boarders are different. The Federal Reserve which was basically the structure you gave does have the power to regulate the interest rates but this is in order to control inflation and the business cycle and also because US banks generally undergo a lot of regulation.

      I will give an example of BOZ which does not regulate the interest rates but rather leaves it to market forces (unless I am wrong).

      Currency in today’s modern society represents the amount of g &s in an economy. When the central banks prints money, they do this to stimulate growth by making credit more readily available.

    • My other question is.Who owns the central banks(federal resreve)?

    • Man I thought you meant Central Bank s for different nations and will also need a clarification when you say ‘backed by gold’. If meant use of gold standard system, its no longer in existance,but gold reserves are maintained in most countries and Zambia is not an exception. These gold bars are used to stabilise the currency in major financial crisis or currency crises.

    • I am not sure about currency being backed by commodities. Gold is a commodity by the way. The prevailing standard is the ‘fiat’. This is basically a licence to create money by decree. Ofcourse commodities are an important variable for puposes of inflation, vis-a-vis prices and purchase valu/power.

    • China has over 2 trillion dollars in reserve. Its better placed to withstand the global economic crisis than the US and Europe combined. The major economies have spend their way out of the recession. Short of creating money through quantitative easing (like is the case in the UK right now) they will need recourse to China’s bottomless money pit. That will no doubt increase their indebtedness.

    • China and other emerging nations back Russia’s call for a discussion on how to replace the dollar as the world’s primary reserve currency. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions.Calls for a rethink of the dollar’s status as world’s sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy.

    • Ofcourse they do and so they should. Afterall, they are being asked to finance the global economy out of recession. The main problem is well known. The pegging of other currencies against the dollar is the single biggest cause of instability in the international monetary system…it wasdesigned as such from inception since backing the dollar with gold was considered to be an obstacle against the inherent desire of the US government to print more money. Raising taxes was/is not an option. The concern about the dollar is less long term but rather has to do with the inherent flaws of the ‘fiat’. China wants to revert to the fixed rate system and/or presummably the IMF’s SDR.

17. On “He, however, said the country’s economic outlook was brighter especially with the copper prices that had started increasing and the anticipated rise in production of the commodity with the opening of Lumwana Mine,” while this is impressive it surprises me that we as Zambians do not seem to learn from experience.

    I just hope we will not now sit back and relax as we wait for copper prices to do the magic for us as a country.

    We need to work, work and work harder so that we stop depending on the mines. If I am not mistake only 6% of mining activities contribute to South Africa’s GDP and such is what Zambia must now be aiming for.

    • Looking at the big picture of what is happening in the world and keeping in mind that Zambia need forex for zam economy to function.Most families of world are uncertain whether they will keep their homes. Housing values have plummeted. Headlines of lost jobs are almost daily. Sudden unemployment is knocking on the doors of fathers and mothers with young mouths to feed.Companies are scrambling to keep solvent, as stocks tumble and opportunities dry up. If this is what is happening,where is Zambia going to sell it’s copper?

    • Zambia will sell its copper to China and the USA who are proposing large stimulus packages which they will use for infrastructure development of which copper is needed.

    • Why not the Zambian government putting up right conditions so that local businesses can manufacture finished products from the raw copper? As a matter of fact, we have a new cell phone manufacturing company in Zambia which needs the copper-laminated boards to place electronic equipment there on. In fact, we have sand in Western Province that can be used to make to Integrated Circuits (ICs) for that cell phone company if only we can extract Silicon from it – sand.
      Some Japanese people had proposed bringing a Toyota electronic systems manufacturing plant to Zambia and what is the stage of that proposed project?

      These are things that need to be considered if we are to make the most of Cu.

    • Why not the Zambian government putting up right conditions so that local businesses can manufacture finished products from the raw copper

      Maestro, Zambian banks are very liquid. We have MFEZ where anybody regardless of origin is free to take part in.

      The question you should be asking yourself is “why aren’t I doing this?”

      From what you have written, you already know how to do all that stuff. I guess I should be asking you, why aren’t you doing it?

    • Global financial crisis will hurt China much more than the US.

    • F-M-C, thanks for your input, but I am only a Student and how do I easily do the:
      “The question you should be asking yourself is “why aren’t I doing this? From what you have written, you already know how to do all that stuff. I guess I should be asking you, why aren’t you doing it?”
      I will attempt to give you my PERSONAL STANDPOINT on this. If the GRZ puts a clause in the new Zambia Republican Constitution to allow small businesses to be supported at local universities to do research and development with 20% funding of all Government projects, I would probably help by coming up with a research institute say at UNZA to make the above-mentioned products.

      Also, access to loans is…

    • I disagree there 1984.

      China holds a large portion of US debt and unlike the US, China actually has the money to invest heavily in infrastructure and this seems to be the best time for them seeing that raw material prices are down.

      Just a few weeks ago, the Chinese govt was setting up incentives for its local people so as to encourage domestic spending since export demand has fallen.

      I would say China will be in a better position than the USA. Unless you have evidence to refute my argument.

    • Thanks for the reply Maestro.

      I personally think we as Zambians play the blame govt game a little too much. If you have the necessary skills, you can achieve wonders.

      We do have lending institutions in Zambia. We also have CEEC. We just tend not to use them. We now have MFEZ and I am guessing we probably wont use it.

      And yet when foreigners use them, we get mad.

      Anyway I am going. This was just a pit stop of the day. I will be back maybe next month. Take care.

      1984, please lay-off the Alex Jones conspiracy theories. I am guessing you have already seen the “Obama Deception”.

      Until next time everybody. Cheers!!!

    • Thanks F-M-C, I will look into your proposals, but let us all as Zambians do something for our great Nation. 2011 elections are a serious decider in my personal opinion.

    • The problem is that China’s economic growth is slowing down when it is most needed. But I am afraid that the world will have to live with a slowing Chinese economy. The IMF forecasted that the Chinese GDP will decline.

    • While China’s economy may be slowing down (which is expected), the important point is that it is not in recession. As such it should continue to act as a buffer against the global economy going into depression. In other words, all of us will, very likely, sink or swim with the Chinese.

18. I like how we tend to throw the buck towards GRZ. The use of the word “they” is an attempt by some bloggers to shift responsibility to govt and fail to a large extent take the blame themselves for the mess we find ourselves in! That aside, i, like some bloggers, am concerned that we are still looking towards Copper to save us from this economic dilema. Is this really the only avenue? Please help.

19. 1984

    Federal Reserve in USA is privately owned. The Federal in it has nothing to do with the country just as Federal Express is. In teh UK, the Central Bank is owned by Govt but it operates independedntly from the Govt.
    Yes only Central Banks have the right to “print money” In the UK the Govt just allowed the Central Bank to “print” some thing like £75bn. Its not physical money but digitally adjusting the figures upwards – called quantitative easing. The money will be wiped out or teh figure adjusted downwards when teh economy picks up. In the meantime people and institutions can borrow this newly created money.

    I am concerned at the rate we are depleting national reserves.

    • Good point.The next step is to indentify the individuals who own the fed(central banks).That will explian why we are in this mess economicaly.

    • Oh yeah the Federal Reserve is privately owned eh. Is it the reason why the President has powers to appoint the Chairperson of the Federal Reserve who also has to be ratified by congress? Mwana I would like to have some of whatever stuff you are smoking!

    • Here is some stuff.In December 1913 while many members of Congress were home for Christmas, the Federal Reserve Act was rammed through Congress and was later signed by President Wilson. At a later date, Wilson admitted with remorse, when referring to the Fed.”I have unwittingly ruined my country”.

    • Henry Ford once said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”.

    • The Federal Reserve has never been audited nor will they ever be.

20. Any other sources of income besides that from Copper Exports? How sure are we that the prices will be kept stable?What about empowering the locals and implementing policies that will diversify the economy it is rather short-sighted only look t oone sector of the economy and keep hoping that this sector will soley revive the economy!!!

    • YOU ARE RIGHT, WHY NOT ENCOURAGE MORE FARMERS IN ZAMBIA, THERE IS PLENTY OF LAND THAT CAN BE USED FOR FARMING AND THEN EXPORT THE PRODUCE.
      WHY PUT ALL YOUR EGGS IN ONE BASKET?

21. WHO IS BENEFITING FROM ALL THE MONEY BEEN MADE?.

    • Thats is a big Question which will explain the current economical down turn.

22. Obama, Geithner and Bernanke yesterday publicly defended the dollar and denounced proposals by China and Russia to supplant the greenback with a new global currency, and yet the very policies of the Obama administration, the Treasury and the Federal Reserve are creating the perfect storm for the dollar’s death and its replacement with a new international reserve currency.China has expressed support for Russia’s proposal to hand the IMF the power to create a new supra-national global currency in response to the call for an alternative to the U.S. dollar as the world reserve currency.

    Last week the Kremlin called for the “creation of a supranational reserve currency.

23. Very Interesting discussion on the creation of money by banks and on the ownership of the central bank. On the former, like the Free-Market capitalist has mentioned where banks create money from deposits and not from thin air. However, consistent with what was mentioned by another blogger is that banks can only do so collectively and not as a single bank.
    Regarding the latter issue, most central banks in the commonwealth are owed by government on behalf of the citizens. So in the case of Zambia, all Zambians are shareholders in the corporation called BoZ. Government has a member on the board and appoints the senior management. Elsewhere other models exist.

Comments are closed.