THE Bankers Association of Zambia (BAZ) is lobbying regulators to put in place a law that will deter businesses from quoting in United States (US) dollars as the tendency increases transaction costs.
BAZ vice chairperson Mizinga Melu said dollarisation is also a serious issue since it increases costs of doing business in Zambia.
“Dollarisation is an issue because quoting in dollars translates in cost of doing business…We are lobbying the regulators to put a law to stop quoting in dollars,” she said.
Mrs Melu, who is also Standard Chartered Bank managing director, was answering a question on what the financial market was doing on dollarisation during the bank’s second quarter performance media briefing in Lusaka yesterday.
Recently, the Bank of Zambia (BoZ) conducted a survey whose findings were outlined in a publication entitled ‘Issues on the Zambian Economy’.
The findings noted that the Zambian economy has been highly dollarised.
BoZ recommended the introduction of measures to cushion commercial banks from some of the effects of dollarisation.
According to the study findings, the major contributing factor to dollarisation is volatility in the exchange rates and the high levels of inflation.
The study also found that dollarisation has also arisen due to uncertainty about donor inflows and balance of payment support.
Mrs Melu, however, said there is need to develop infrastructure as it has been identified as a major contributing factor to the cost of doing business.
“The cost of doing business remains high.
It is important to continue to develop infrastructure, hence diversification in other sectors thereby create jobs.”
On the recent fraud activities that affected some banks, Mrs Melu said although confidence has been affected, the players in the market remain vigilant and those affected were reimbursed.
“Although it was a very small quantity of people affected in our market compared to other markets, it is not acceptable but not unusual. We remain vigilant as a bank,” she said.
Recently, BAZ issued a notice advising customers to be watchful when using debit cards especially abroad.
[Zambia Daily Mail]
THIS IS LONG OVERDUE LETS DO AWAY WITH DOLLARISATION SINCE OUR KWACHA IS CONVERTIBLE WITH OTHER CURRENCIES. THE WORST CULPRIT IS MULTICHOICE WHO DONT HESTITATE TO INCREASE FEES AT THE SLIGHTEST INCREASE IN DOLLAR AGAINST KWACHA BUT ARE SLOW TO REDUCE WHEN THE KWACHA GAINS AGAINST THE DOLLAR. DOLLARISATION ONLY WORKS AGAINST US WHO EARN OUR INCOME IN KWACHA BUT BENEFITS GUYS IN DIASPORA AND FOREIGN INVESTORS
This is very long overdue. Do our policy maker ever think of the common man? Thjese are issue that should have been sorted last decade
The article says the study mentioned high levels of inflation as one of the reasons for dollarisation. Really? What about the single digit inflation figures that are being bandied about?
Yeah i like that.Let them push for that.
This can only work if the local currency, Kwacha, is stable and interest rates are low. As long as Zambia’s monetary policy leaves alot to be desired, businesses and individuals will always peg their goods and services in US dollars! That will mean prices will be adjusted weekly with dollar reviews. Quoting prices in dollars has even brought stablilty to the financial market.
Great move otherwise ditch the kwacha and use the dollar. Why do local people need to convert to other currencies in their own country – !
Kwacha is strong enough to lose the stupid zeros that run in millions. Inflation is only a single digit, so why are we paying for things in millions for kwacha? Who is behind the cashing in of the printed notes?
Mr Bank Governor REMOVE the silly zeros to the Kwacha, they look silly.
Indeed so, “the Zambian economy has been highly dollarised” interest rate is only 8.6