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Monday, January 24, 2022

Chibamba Kanyama blames Kwacha slide on speculators, hopes for a quick rebound

Economy Chibamba Kanyama blames Kwacha slide on speculators, hopes for a quick rebound

ZNBC Director General Chibamba Kanyama
ZNBC Director General Chibamba Kanyama

Economist Chibamba Kanyama has broken his long silence on economic issues by stating that the recent sharp slide of the Kwacha is due to speculative behavior.

Mr Kanyama who is ZNBC Director General said the fall of the Kwacha at the moment is not so much about perceived weaknesses in economic fundamentals.

He wrote on his Facebook page that the depreciation of the Kwacha against the United States dollar is worrying primarily because the source of the slide is not fully ascertained.

Mr Kanyama added that the concern is worsened by the fact that the injection of US $178 million by the Bank of Zambia hardly defended the Kwacha.

“The fall is exacerbated by speculators who believe the Kwacha will continue to slide. Some currency speculators believe that Fitch may soon release a further downgrade of Zambia’s rating. Unfortunately, many will be caught napping at the slightest appreciation,” he said.

Mr Kanyama added, “many will panic, offload the dollars they are hoarding and I expect losers in the process.”

He said trading currencies on speculative grounds is dangerous to an economy just as much as it is highly risky to those involved in the activity, more so in a low income country with high liquidity challenges and uncertainties.

51 COMMENTS

  1. Hello Badaala. The main question we should pose to ourselves is why the speculation? Remember George Soros betting against a certain currency? People speculate when there are fundamental weaknesses in an economy.

    I still maintain that our Government should come out and demonstrate that all is well politically and economically. Currency is partly driven by sentiment. Negative sentiment weighs down on currency.

    Part of the solution is for our Government to address the stand off on political rumblings and inconsistent economic pronouncements.

    • kanyama say something about born and bred,, you will be truthful,,, you giving a true state of affairs as regards tthe current eonomic state, Sata wil fire you from ZNBC

    • @ Kalutu, You are correct. “People speculate when there are fundamental weaknesses in an economy.”
      And the fundamental weaknesses in Zambias economy are –
      1. An illiterate and uneducated President that has no understanding of economics at all.
      2. The appointment of a useless Minister of Finance based on nepotism, who has no idea of how markets operate and is just re-applying failed UNIP era policies.
      3. BoZ appointments that have no skills at the tasks they are assigned to, and are ignorant of the lessons George Soros taught the world.
      4. Extravagant borrowing with absolutely no plan on how to repay these loans.
      5. Unbudgeted and uncontrolled use of public funds such as unconstitutional payments to Satas wife, and unaccounted expenditure documented in the Auditor generals report.

    • Yesterday it was Caleb, today Chibamba, tomorrow?????. Can we have collaborated intput, concrete enough to gauge GRZ omissions. Counting on you all for your expert opinions in different sectors of economy to save the day.

    • When did Chibamba become an “economist”? He studied mass communication at UNZA for his BA and read financial management for his MA. Does that make him an “economist”? Please listen to Dr Caleb Fundanga’s views on the topic – he is a monetary economist with vast experience as a university professor, permanent secretary (finance), senior executive at the African Development Bank and central bank governor.

    • I do not always agree with his analysis of the economy but I do concur with his views as reported in this article. When a currency goes into free fall people will look for a hedging mechanism and as such speculative purchases of the stronger unit (the USD) is likely to occur. Good analysis by our IMF bound brother.

    • True just shut up and run the heavily politicked ZNBC.
      From a layman’s point of view; Zambia’s lower export materials are causing this, we import too much to an extent where the dollar is the only currency we mainly use for such transactions. The huge salary increments which was awarded to civil servants making most of them buying things from abroad using the dollar e.g. if the GRZ & lowly paid pipo bought everything they needed in Zambia, they had no need of the dollar but now that they can afford to buy cars using loans then they change their money into dollars to buy cars from China & Japan and this makes the dollar to on more demand than ever.
      The other reason is that since we depend too much on copper for forex, whenever copper prices go down then our economy suffers.

    • The solution is diversification our economy. Using Agriculture and Tourism for FOREX instead of copper.
      I 100% support the wage increases made to civil servants, but the GRZ should have put in measures to protect the economy from the pressures coming with such huge increments. Such increments may mean nothing in the long run if the cost of living continues to escalate. If one used to manage to earn a living on K1, 850.00 with the basic essential, then you pay them K3,300.00 and you raise the price of basic essentials to K4,250.00 then you would have done them a disservice, and this is what is happening in Zambia worse still those in private institutions who were not given as much suffer more.
      We need to export more than we import to save our economy; more industries needed. Shalom

  2. POOR DIPLOMATIC foolishness of PF…Political intorarance,CNP, no plan at all

    Zambia need HH, to have economic freedom not kaponya in state house./

    Kabamba kanyama you have been reduced to a puppet instead of giving right advise to your govnmt

  3. Thank you for your “copy and paste” analysis of the depreciation of the Kwacha. Sadly, you so called Economists always state the known and fail to come up with any substancial solutions to strengthen it. It was around K4800 not long ago before……

  4. I would like to believe what the former BoZ Dr.Fundanga said were the reasons for the kwacha downfall than this fake “renowned economist” now PF cadre Chibamba Kanyama

    • Both Caleb and Chibamba are right. The slide is being caused by a number of factors among them low export earnings, unclear economic policies and speculative purchases.

  5. Mr Chibamba is very much right. Thts one of the MANY FACTORS. Sata should comd out and address the Public and investors. Not the issue of LETTING PEOPLE SPECULATE ABOUT THE CURRENCIES and other economical issues u r not addressing. God save Zambia twapapata.

  6. This man called chibamba KANDIYO kowocha is not serious and him go back to school. Most of these so called economists have failed to be good leaders in the society and i do not know why. SHUT UP just go and read the news at ZNBC. You are a broadcaster not an economists.

  7. The Bank of Zambia needs a comprehensive bureu de change monitoring system. You cant have a currency that keeps dancing the way the Kwacha is dancing at the moment, today it 5.9 tomoro 6.1 the other day 5.02. any finance person can tell the involvement of speculators in the market. Someone needs to be fired at BOZ , becuaes this now is basoically lack of seriouness maybe the guys are even part of the speculators. In Zambia its very easy to go from one bureu de change to the other on the same day and not been caught because the system lacks intergration

    • @Matrix, thats what have also been saying. This is the only country where you can buy the Dollar over the counter in different bureaus without any detection. my colleagues from lesotho and botswana were so surprised on how easy it was to buy a dollar in zambia. What usually happens is that Tanzanians, Zimbabweans and South Africans board buses to come to Zambia just to come and buy dollar coz some bureau don’t even ask for ID. Just look at how easy it is for a foreign to own huge tracks of land. awe Zambia yena twalisebana sana coz of self inflicting problems. Ni sampeni

    • At least you agree that fyalionaika ifintu, but you continue praising Ur PF for not doing anything about it and you keep on blaming MMD who left the dollar at 4500?

    • What is right is right and what is wrong is wrong, it doesnt matter what party is in power or which party you belong to . no one takes a party to the grave, fyapachalofye ifi, dont bleed your heart over it.

  8. Kanyana you are right speculations and/or perception do affect the economy big time. The issue is what is causing that perception resulting into negativity in speculation? It can be civil unrest, major economies not seeing eye to eye (like is the case between Russia and the West at the moment) and the truth this does drive or kill economies. Now let us bring this home, why is the kwacha suffering from this phenomenon? The answer is simple, PF has no clear policy direction, which leaves everyone including you to be a speculator. Just in your statement above you have speculated losses in this game. Why? It is because PF has no clear road map to rescue the kwacha

    • @The Matrix, the road map is simple though painful for politicians. PF must drop the populist approach to economic matters but improve on their strategic planning and implementation i.e.
      1. Have a clear policy on taxation especially for the mines
      2. Control externalization of proceeds from businesses, by allowing them only to externalize dividends (this will assist ZRA as well)
      3. infrastructure development to be much with GDP, there is no way you can grow beyond your capacity to generate income
      4. Control the appetite for borrowing as this makes the country to be rated risky, hence increase interest rates and reduces chances of people wanting to lend
      5 Improve governance
      6. address food production, nation without food security is no state
      7. promote equal employment opportunity…

    • @Matrix ; Zedcrossroads.

      I like it when people are serious and blog on national interest.

      I add that:

      8. Government MUST reduce the wage bill; it is unsustainable. I read something on free alowances generated by civil servants, in the Post today, which in my view is a big scandal. Stop such schemes.
      9. Freeze creation of districts and universities until currrent ones are completed and functioning.
      10. The President and his ministers should take a salary reduction (hair cut) to show how serious they are.
      11. Government including the President must NEVER threaten any investor with nationalisation or withdrawal of licence. These pronouncements are dangerous to well being of economy.

    • Those are good suggections, but I have noticed that the electorate we have is inpatient and for a government to implement all that and survive the next election it needs a miracle. Why do I say so?
      1) most of these multinational companies are huge. the other factor that is contributing to the pressure on the kwacha is stock piling of mineral exports by the mines becuase of SI55.
      2)One of the biggest mistakes of PF has been to increase the wage bill which even the over extended cabinet contributes to. lsready you have ZCTU wanting a lift on wage freeze and others will join in to demand, thats what has become of electorates .
      3) adressing food security is equiavlent to diversification which in the short run will imply a coling down of economic growth projection , few electorate welcum…

  9. When did Chibamba become an Economist. I thought he studied Mass Communication at UNZA in the late 80s’? or did he do a double major?

    • Masscomunication major Economics minor at undergraduate, if you have been to a university you will understand what I mean. Then at graduate school economics majoring in fiscal policies.

  10. It is clear as I read the comments to this article, the anger, hurt and frustration of the people. Sadly I wish to add that while not an economist, and taking the time to evaluate Mr. Kanyama’s statement, it is clear and without a doubt spot on, taking his evaluation and Dr. Kaleb’s evaluation you cannot shrug the fact that economic policies are suspect and need to be puut under the microscope. Besides being director of the state owned broadcaster, I applaud him for being Zambian first and speaking his own mind based on his economic experience. As citizens we are to stop this ‘shut up’ culture and voice the concerns that have been shared via the comments in relation to this article and hopefully trigger dialogue and bring resolution to this matter at hand.

  11. I agree with Chibamba Kanyama. I think there some individuals, organisations etc who are holding on to the dollar based on the fact that the Kwacha will continue sliding against major currences. Ofcource such speculators help in establishing new methods of mitigating the depreciation but the move by BOZ to inject $178 million is not so sustainable in the sense that the fears of the kwacha to continue depreciating are high and $178 million will be consumed.
    I think its time for Government to start stimulating other will be resource avenues. There is alot of potential in the Agro,tourism and SME. GRZ should come up with escentive in these production sectors of the economy and make sure that the cadres and minsters are nowhere near these initiatives. GRZ should revisit the investment policy.

  12. What do expect from A TONGA ECONOMIST ? tongas are too mean even to themselves so this TONGA boy knows nothing about Economics i read his ka book hahahah..anyway its pure TONGA standard

  13. We already export this and that besides raw copper, but the issue is that the net value of our exports are very low compared to our imports. We also import things we ordinarily should not, like tooth picks, cereal, fruits and so on. The missing link is the Engineering connection. We should make use of our Engineers to produce most of what we need. This implies mobilising Engineers and challenging them to make stuff, provided all incentives and resources are made available by government or private people with money. If we can throw money at people who just seat and discuss like Technical committee drafting the constitution why not on Engineers who will produce something tangible ultimately. Chibamba is correct on speculation, and I include economic sabotage.

    • We should drop this nonsense about investor confidence. Israel is a tiny country without the resources we have and is surrounded by hostile nations and is constantly under the threat of war. South Korea is also constantly under the threat of war from north Korea. China’s human rights record is not that impressive but all these countries currencies are not shaken by mere rhetoric or the so called investor confidence because their economies are anchored on Engineering.

  14. Chibamba should be bold,there is capital flight and hedging because no one is sure about the future due to governance issues ie public order act,constitution,economic policy vis avis privatisation etc.

  15. With due respect to Chibamba, I do not think I fully agree with him here. In the first place, why speculate and who should speculate because the big companies like the mining are not exporting money (at least for the moment) but exporting e.g. copper that generates the dollar abroad and even if they were to bring the dollar earned in the country, I do not think that they would be lining up for the forex on the local market. In fact Chibamba himself appears not to be sure as to whether it is the problem of speculators or not when he writes, “source of slide is not fully ascertained”.Why not look at these sources of demand for the Dollar: 1) Zambians importing second-hand cars from abroad; 2) The massive road constructions going on where we even have to pay foreign companies in $s and…

  16. Reason is simple no road map to anything, we are CNP and the bible states our fate
    We will be tossed back and forth, there is no foundation , we are in a try and error mode
    Hoping alone won’t save us.

  17. Thats the worst analysis from a so called economist, An economist with sound experience will tell you that price is always driven by supply and demand. At the moment there is high demand for the dollar and less supply. Importers, investors and the people are willing to pay more for the dollar. What the Govn’t and the BOZ should be looking at is why there is less dollars in the market ?. Increasing exports thats the way forward for the kwacha. A the moment everything consumed in the country is imported and you don’t use the kwacha to pay for imports hence high demand for the kwacha as all importers try to get the last dollar in the market to keep up with business demands. Next watch inflation.

  18. With due respect,chibamba kanyama,Stop misleading people that u are an economist.Having studied just a component of economics doesn’t qualify you to be called Lusaka Economist.Leave people who have done economics itself to be called that.We all have browsed your profile and there is nowhere near that can convince someone that you are an economist.I will seriously take caleb fundanga’s advice than you night freight economist.

  19. We have already forgotten that we recently deported some big a guy from some big mining company and now the price of copper suddenly drops. We have a short memory.

  20. I honestly think Chibamba Kanyama should keep clear of things he hardly understands. All he has is a one year masters of economics degree and this is not enough to make him really understand and appreciate what is currently happening in the Zambian economy. He cannot in one breath blame the decline on speculation & in the very next breath admit he remains clueless about the source of the currency slide? This is tantamount to stinking intellectuial flip flopping!

    • Fo Kanyama’s own education, there are no perceived weaknesses in the economic fundamentals of the Zambian economy, there are real ones. Only a foolish govt would inject US$178 million into circulation to stabilize a currency whose slide reasons they are clueless about. There is no quantum withdrawal by the Federal Reserve Bank of the dollars circulating in the world & Chikwanda should stop lying about this as the reason for the decline. Even if this were the case, it alone would not stir up such a monumental slide in the kwacha, never!!!!

  21. let independent economists handle the shameful situation,Sata’s boot lickers wil try by all lost means to please him

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