Bank of Zambia
Bank of Zambia

Bank of Zambia has said that unauthorised entities that may be engaged in some form of foreign currency trading must stop such practices as they are contravening the Banking and Financial Services Act (BFSA). In a statement released to the media today, the Central bank said that the Kwacha is the legal tender in Zambia and that all domestic transactions are required to be priced and settled in Kwacha.

Below id the full media statement

NOTICE TO MEMBERS OF THE PUBLIC ON QUOTING AND SETTLING OF DOMESTIC TRANSACTIONS IN FOREIGN CURRENCY

Over the past week, the Kwacha exchange rate has had some relative stability following measures taken by the Bank of Zambia and the Government. However, the Bank has observed with concern that a few business houses are pricing locally traded goods and services in foreign currencies, especially the US dollar.

This practice undermines the macroeconomic stabilisation efforts that are being undertaken. It should also be underscored that inflation in Zambia remains stable and has been declining during the year. Therefore, macroeconomic conditions do not warrant pricing in foreign currency for domestic transactions

The pricing in foreign currencies reduces the price incentive of a depreciation in encouraging businesses to engage in the export or production of goods that are currently imported. Such actions, therefore, work against the necessary adjustments which we all must make. It should be noted that it is not only the consumers that must adjust, but also producers and business houses if we are to successfully diversify our economy and achieve sustainable economic growth and development.

In addition, the pricing in foreign currency implies that businesses are adjusting their prices to reflect the extent of the movements in the exchange rate and yet most of their operating costs are not in foreign currency. The adverse effects of pricing and paying in foreign currencies are mainly felt by the general public rather than business houses as the former has no ready means of hedging against currency depreciation.

Incomes of the overwhelming majority of Zambians are not in foreign currencies. Therefore, these are bound to bear the full impact of quoting prices in foreign currencies more so if compelled to pay in foreign currency for domestically traded goods and services, such as, rentals and school fees.

Furthermore, quoting and demanding payment in a foreign currency amounts to dealing in foreign currencies, a practice that is for authorized foreign currency dealers only. It is also likely to lead to a multiplicity of exchange rates, which may differ significantly from competitive market rates and thereby destabilize the orderly functioning of the foreign exchange market.

If left unchecked, the practice has the potential to increase the demand for foreign exchange and intensify pressure on the exchange rate.

The Bank has guided before, and in line with the Bank of Zambia Act, that the Kwacha is the legal tender in Zambia. Therefore, all domestic transactions are required to be priced and settled in Kwacha. Unauthorised entities that may be engaged in some form of foreign currency trading must stop such practices as they are contravening the Banking and Financial Services Act (BFSA).

In this regard, the general public is hereby advised that regular surveys shall be conducted in order to assess the occurrence of such practices.

The Bank of Zambia commends members of the public who have spoken against this practice and urge the rest to assert their right and discourage the practice of quoting and settling domestic transactions in foreign currencies. Members of the public are also urged to bring to the attention of the Bank of Zambia any entity engaged in such practices.

The Bank of Zambia reiterates that the measures to stabilise the economy will only bear the expected results, if all players in the economy cooperate and work towards that goal.

Issued by

Head – Communications Division
Bank of Zambia
LUSAKA
Web: http://www.boz.zm
Email: [email protected]

September 15, 2015

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41 COMMENTS

  1. STOP ISSUING THREATS YOU PF ECONOMIC TERRORISTS !

    Will you stop issuing warnings and sort out the currency instability and unreliability so that people can have confidence in the kwacha again.

    Once the kwacha shows signs of stability and predictability the people will stop hoarding $ and stop selling in dollars. Simples!
    Issuing threats and warning are signs of uchimbwi no plan.

    To be honest PF are economic terrorists who have completely destroyed the Zambian economy.

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    • DEFENCE MINISTER SIAMUNENE IS DEAD!

      Defence minister Siamunene and some army senior staff were injured yesterday when their helicopter crashed near Siamunene’s home village. Siamunene and another army senior staff are believed dead.

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    • Can BOZ, in the same breath, tell businessmen and women how they will protect themselves from losing out due to exchange instability please? Otherwise I would quote in dollars before I loose out.

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  2. WARNING!!!!!!

    As a pastor, I feel obliged to warn true Christians that “Advanced Satanism” has entered WATS UP and FACE BOOK.

    In Kenya and Uganda, several people have died after receiving strange calls on the numbers starting with plus nine zre or zero nine zero one.

    Please ignore such numbers and anoint your computers phones with anointing water or anointing oil. Very soon this group of people with advanced will start calling ignorant people in Zambia and you can die within an hour. The world is on fire, only Jesus Christ the Son of the Living God will deliver us.

    And secondly, please STOP using SATANIC words like HUD, WUD, LOL, SWAG and WOW.
    LOL= means= Lucifer Our Lord
    WUD= means= Worship Upon Devil
    HUD=means=Heaven Under Devil
    SWAG=means= Satan Working Against God…

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    • This is nonsense, jesus will do what? You mean your white jesus who looks out for white folk!!!!! Get your damn nonsense the hell out of here. we are talking about the kwacha and not religious colonisation with the main captor jesus christ enslaving and killing our own traditional Gods. go to jerusalem, europeetc and worship your foreign gods there!!!!!

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    • Ba Pastor Michael,
      God of Abraham is not a superstitious God. If I pray to my God, the one who promised me that he will never leave me nor forsake me, why should a call kill me. In any case, why should we be scared of death when we are just passing through this Earth. You need to be reminded that certain innocent words in Bemba are actually insults in other languages. God looks at the motive with which you use that word. If I genuinely feel that LOL stands for Lough Out Loud, why should my God punish me? Let’s not cause alarm, Christianity is plain and we need to be guided by the Bible, not through unorthodox beliefs. Thanks

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    • LOL has several meaning including Lots of Love…it depends on what you mean…Who should we fear God or the Devil, who is greater God or the Devil…Exalt the name of Jesus and all His enemies will scatter. Jesus is Alive forever more and people whose motive is to instil fear are the tricky stars who turn around and offer fake solutions.

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    • Good April FOOLS JOKE!

      But the joke is on you as it is 15 September 2015!

      Here is another SATANIC word(s) for you to remember when you have a problem and Jesus cannot solve it for you. Write it down so you don’t forget it!

      ID ten T !!!!!

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    • The battlefield is in the mind according to the Bible, Romans 12:1 and Philippians 4: 8, Jesus has disarmed all principalities and all powers. It is finished and believers in Christ are seated with Christ in the heavenly realms far above all principalities and powers.The carnal mind is enmity towards God and it cannot please God, as a man thinketh in his heart so is he. It is not the things that come from outside that make a man unclean, but it is the things that come from within that make him unclean such as evil thoughts. To the pure all things are pure but to the corrupt all things are corrupt. We accept a mans testimony but the Testimony of God is greater. Let God be true and let every man be a liar. Heaven and earth will pass away but the word of God will never pass away. Every…

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    • Let God be true and let every man be a liar. Heaven and earth will pass away but the word of God will never pass away. Every promises of God are yes and amen in Christ. Remember the 12 spies in Numbers 13, 10 had an evil report but Joshua and Caleb had a good report. Take heed what you hear with the same measure it will be measured back to you.

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  3. These threats don’t solve the problem. Businesses are also just trying to stay afloat. the alternative is to switch off some services and cut some jobs. The correction is going to happen either way. Rather than making such pronouncements you should have engaged with Business and industry through ZACCI or such bodies. You are killing the economy. Expect Job cuts. You can’t force businesses to play where there is no profit to be made.

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    • These clowns at BOZ are really clueless!

      You PoorFools, ,look what your announcement has done! You have just made it worse!

      Kwacha at more than 10 to the Dollar today! If you had kept your stup!D mouths shut it could have stayed the same or improved!

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  4. It is only in Zambia where such nonsense subsists. Have you read any reports out of South Africa that businessmen are now charging for goods and services in dollars because the rand has hit over 13 Rand to the dollar?? Why are we so unkind to each other? Pathetic and disgusting.

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    • The reason business resort to quoting USD is most of goods in Zambia are imported…charging in the slippery ZMK is suicidal. Most of the goods sold and consumed in SA are manufactured there hence no need to panic even when the Rand falls..

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    • BOZ are not being sincere, they know that this is an import based economy. Squeeze business with over-regulation and you will remain with a nation full of tomato sellers. Lets be real. Allow the industry to self regulate and correct itself. Most businesses don’t want to do this but desperate times.

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  5. The bank of Zambia is right on this issue. Zambia is a sovereign nation which requires every to be done in our currency. As for the post they have been against Edgar Lungu since inception and as Zambians we are tied of their skirmishes

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  6. TWO WEEKS AGO WE WARNED THAT KWACHA WOULD BECOME OBSOLETE FOR CONVERSION WHICH WOULD HAVE SERIOUS MACRO ECONOMIC IMPLICATIONS.MOST FOREIGN INVESTORS DO THIS WITH INTENTIONS OF EXTRACTING THEIR GAINS AND PROFITS. UNFORTUNATELY IN A TRADER DIRECTED IMPORT BASED ECONOMY LIKE OURS WHAT IS GOING ON IS REALITY. THESE TRADERS ARE LEFT WITH THREE OPTIONS.
    1) WITHDRAWAL FROM THE MARKET
    2) CHANGE PRICES EACH TIME THE KWACHA LOSES VALUE
    3) CONDUCT BUSINESS IN DOLLAR TO PROTECT YOUR THEIR INVESTMENT.
    IF TRADER PURCHASED HIS INVENTORY AT A PARTICULAR DOLLAR AMOUNT HE HAS TO RECOUP AND MAKE PROFIT IN THE SAME DOLLAR AMOUNT TO BE IN BUSINESS. LOL KWACHA HAS BEEN STABLE FOR A WEEK? MARCH WE WARNED ON THIS BLOG THAT WE WILL BE AT $10 BY SEPTEMBER AND FOR SURE IT HAPPENED. WE WILL SINK TO ABOUT $13…

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  7. BOZ, this is political and not economic, our suppliers are quoting in dollars and you want us to be adjusting prices to our customers every hour? Be sensible, let people quote in Dollars but payment to be effected in Kwacha at the ruling rate of excahnge when it’s being done. Simple, everyone is protected and business goes on smoothly.

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    • And that is what businesses will do whether PF likes it or not. No business can lose just like that unless they do not know simple maths.

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  8. why should rentals for house and business premises be in dollars. These businesses sell their products in kwacha and these landlords charge us in dollars. We need to stop this at once as it has affected 90 percent of businesses who are been charged in dollar making all the goods to be expensive as there need to cover this extra kwacha cost in order to pay these rentals . Extra kwacha to find for the purchase of dollars.

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  9. Let’s all charge in dollar, get paid in dollar and the whole place will be awash with dollar! And voila, the FOREX prick will be history! Doesn’t govt do the same when BOZ occasionally offloads the dollar onto the market to arrest the perennial kwacha slide, except theirs is shot term unlike our smart move.

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  10. pf rule is based on appeasement no vision,brazil has decided to cut spending and increase tax bcz of the upcoming us $ interest rate to be introduced in october,all loans that pf have acquired the interest rate will be adjusted upwards by the lenders.the best the pf can do is reduce their bloated govt persons such as ministers,dc,close some missions ,suspend some projects and STOP the costly by elections.with the depreciation of the kwacha it will be an excuse not to enact the constitution.ba Lungu stop the colonial mentality of oppressing the citizens and try to come up with a vision not a dead man s vision.

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  11. Dear BOZ

    Our miners are breaking their backs and losing their jobs all in the hope of earning US$ for the rest of us.

    When these dollars reach you (if they ever do from the mines ) you give it out freely to every Tom, Dick and Harry who prefers to drink coke in a can instead of bottle, or prefers Amstel to Mosi, or wants to watch dstv, or wants potatoes in packets, or wants tomatoes in cans. Do these importers access our forex at the same rate as those wishing to import ARV’s, machinery, farming equipment etc ? Since you have allowed this and called them “investors” why are you crying now that the fire is getting too hot under your feet ?

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  12. In the same way gvt over borrowing undermines the entire national economy…so stop and be a responsible government for once

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  13. Your claim is that measures are working to stabilise the kwacha ? Mwana the rate is at 10. It was at 6 at the start of the year. The fact that it hasnt plunged further in the last few days doesnt mean you start bragging that you have stabilised it !!

    Go to Radian Stores and look with your eyes instead of issuing statements from behind your computer desk. All their prices are now in US$. Show us your muscle, that you bite instead of just barking.

    A landlord who gets his rent and then walks into a bureau and converts his rent into dollars is well within the law. How do you think you can stop this, just by telling him not to charge directly in US$ wont stop him from taking kwacha rent and thereafter converting into US$. Makes no difference whatsoever.

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  14. An import based economy is very vulnerable to foreign currency shocks. Worse still, the country employs countless expatriates, and reportedly pays them in dollars. Add to that, the tendency for those who should ensure that people conform to look away when paid a stipend. An uphill battle for BOZ, and the country of-course.

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  15. BOZ the best part is that our Govt allows any goods made in South Africa to be imported into this country COMPLETELY DUTY FREE. Yes you heard me right. Its DUTY FREE. That my friends is the law these champions have put in place. So instead of eating Chicco or Amazon or Musa biscuits, let me please enjoy my Bakers Biscuits like Eet Sum Mor from South Africa. If Govt doesnt give a damn about local industry why should I have to give up my imported biscuits to support Zambian jobs or keep our hard earned money circulating within our own hands ? Then as my imported biscuits suck out the forex in Zambia, the exchange rate will go up and hurt every child who needs school books from abroard, the farmer needing fertiliser, and the bus commuter who needs imported fuel. There is no…

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  16. When you go to any commercial bank like Standard Chartered you will find their quarterly balance sheet on display. When you read it, it shows the largest asset these banks have is called “BALANCES HELD WITH BRANCHES ABROAD”. So our banks take Zambian depositors money and pump it out at 6 to the dollar. When the local depositor wants to withdraw his money, the bank brings that much dollars back at 10 to one and gives the depositor back his Kwacha. And you as Boz allow this !! Commercial banks have pumped over $800m of depositors funds abroad, declared this on their accounts, and you allow this ?????

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  17. Commercial banks have to submit their sccounts each quarter to BOZ. These accounts are published in newspapers. Accounts are displayed at each banks branches.

    Instead of concentrating on what needs to be seen we are only concentrating on searching for fat mens dicks under their fat bellies. Kikikiki. Lets forget about not being able to see manhoods and rather lets look where looking is needed !!

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  18. Action needs to be taken. For those dealing in imported goods, its understood to hike prices to the Dollar exchange rate but for those dealing in local goods to increase prices of goods because of foreign exchange rate is theft to your fellow brothers and sisters. You buy bags of rice from Nakonde or Mongu, you start reselling at k7o per ati Dollar. The GRZ has not increased the fuel price and transport cost are the same. Are sure this is right? I feel this is an area where GRZ should urgently come we are being exploited.

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  19. Action needs to be taken. For those dealing in imported goods, its understood to hike prices to the Dollar exchange rate but for those dealing in local goods to increase prices of goods because of foreign exchange rate is theft to your fellow brothers and sisters. You buy bags of rice from Nakonde or Mongu, you start reselling at k7o per Tin ati Dollar. The GRZ has not increased the fuel price and transport cost are the same. Are sure this is right? I feel this is an area where GRZ should urgently come in we are being exploited.

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