Legislation must be introduced if the use of dollar in Zambia is to be stopped, says economist Professor Oliver Saasa.
Prof Saasa said that would be important because presently there were no exchange controls to take care of the situation.
In an interview Prof Saasa said that Zambia presently had a liberalised market which meant that it did not have a legislation that banned business operators from using dollars.
“If they want to introduce exchange controls that will ban the use of dollars then pieces of legislation have to be put in place,” he said.
But Finance Minister Alexander Chikwanda says he will soon issue a Statutory Instrument (SI) 33 of 2012 which recognises the Kwacha as legal tender in Zambia and prohibits dollarization, according to Ministry’s Head of Public Relations Chileshe Kandeta.
In an interview with the Daily Nation, Mr Kandeta said the process was in motion and had so far made great strides.
“The minister will guide the process which will come in form of an SI,” Mr Kandeta said.
On Thursday last week, President Edgar Lungu directed the Bank of Zambia (BOZ) to ensure enhanced monitoring of dollarization and take punitive measures against non-compliance He explained that businessmen were free to determine prices because there was no dollar equivalent system which prohibited them
“Let me say this first, fortunately or unfortunately, it is not illegal in Zambia to trade in dollars. The foreign exchange regulations presently does not ban the use of dollars,
“They are free to determine their price according to their determinations because there are no price controls but what it does is that if you do not put a dollar equivalent system then you will have to change the price tag every day,” he said. Prof Saasa said there was need to manage some of the macroeconomic fundamentals which would lower the price of commodities on the market
“We have to manage some of the macroeconomic fundamentals that will lower prices, you see telling business men not to operate in dollars is good because it is an appeal and we cannot do anything beyond that,” he said.
He however said the most important instrument to stabilise the economy was productivity, adding that the more productivity was enhanced, the faster the economy would find its bearing because prices were determined by laws of demand and supply.
Prof Saasa commended President Edgar Lungu for the recent policy statement he made on Thursday last week when he held a press conference.
He said the President announced good policies which if operationalized by both Government and the private sector would take Zambia to greater heights. He was however quick to mention that those policies needed to be translated into reality saying otherwise they would remain loft policy choices.
“This is not new, it was also said 30 years ago; the difference is that we need to translate policy pronouncement from Government into reality, that’s the level of implementation,
“Can we walk the talk and do we have the capacity to translate what the President has said, that’s where we should focus. Let us build the capacity to operationalize what he said by the private sector,’’ he said.
Prof Saasa said there was need to have transparent systems where operators in the private sector would predict the policy environment.
Good point. In fact there are contradictions to that liberalization. I went to an eating place where the bill came back in three currencies. My meal was worth 11 USD. When I handed in my payment in dollars the supervisor came up and said I needed to pay a little more in Kwacha because the dollar exchange for the 10 and 1 dollar bills was different and would result in the restaurant making a loss. Meantime there was no such regulation on the receipt or any notice. I simply walked off, knowing I had paid what they demanded and I have never gone back to that restaurant since…
here in South Africa it is not allowed to use dollars
And look, you also have load shedding. What exactly is your point?
@ Umwina Mafool…The point is that he does not struggle to have a meal in South Africa…
Saasa is completely misguided on this one. His flirting with PF dues not make sense. Was he not humiliated enough at Zambia Railways by Prof Chirwa? SI33 failed miserably and even if Chikwanda was to reintroduce it, expect the Kwacha to head towards K50 per USd1. The only cure for the weakening of the Kwacha is to curb budgetary deficits, export more and have policies that are fair to investors. With their emphasis on corruption, PF have failed in all these areas.
What are going to export?ingombe sha mu zambia shalilwala denkete ubuchi no value added copper exported as a raw material zamefa produce cables but you guys opt to go buy from namibia SA it is us zambians who are so extravagant we are already rich,you live in a house en paying rent you opt to go buy a car expecting the gvt to bring you fuel and spare parts.total nonsence
Zambia could become a REGIONAL Financial Hub and develop a huge industry serving our neighbors like Singapore or London. But the right enabling policies must be put in place and stability and consistency is an essential pre-requisite. This will include free trade in any global currency.
Professor Oliver Saasa is completely wrong on this, this is classic UNIP days thinking that will take us back into the STONE AGE!
We need to embrace Global trade and use, and develop our strategic location as Singapore has done. This will provide a multitude of high-paying, white collar jobs with huge spin-off effects. Singapore has one of the highest standards of living and incomes IN THE WORLD.
Saasas thinking will just leave the majority of Zambians as poor peasant farmers trapped in poverty…
the problem is not really dollarisation but the indexation of the kwacha to dollar. for example although DSTV charges us in Kwacha, theyve tied the rates to the dollar. this is what is bad. there is very little dollarisation in Zambia its indexation that is the main problem.
@ ine wine, you are right. In addition the pegging of prices in Zambia is just something out of this world. It is crazy. This is the main reason why a good number of Zambians prefer to buy things abroad.
Another SI33 OF 2012??? Chikwanda are you crazy or you just cannot learn? Wasn’t that the beginning of our current problems? Now I agree Chikwanda is a dinosaur in economics.
Neoliberal *****s. They have most people making $2 a day, and they think the key to the economy is ‘productivity’? The key to the economy is demand. People must have more money to spend, if the economy is going to take off. Then, this can only happen when domestic producers are stimulated and protected, or all the money is going to go Chinese imports or heavily US taxpayer subsidized American or Canadian imported goods.
And why, considering massive debt increase and the Kwacha collapse and the avoidance of taxing Zambia’s biggest resource, all for no good reason, hasn’t the Finance Minister resigned, or been fired? Let alone prosecuted?
ABC is misguided along with Saasa trying to solve the wrong problem instead of asking why has the kwacha depreciated? It’s not because of dollarisation. Let me give you some reasons to think about:
1. Budgets have expanded way above inflation in 2012-14. Excess money supply causes inflation and excess borrowing.
2. Externalisation of eurobonds and soft loans from China for construction coupled with lower income from mining have caused a shortage of dollars
3. Confidence in policy framework has waned due to lack of consultation and costly policy reversals. SI33 is one case in point as are u-turns in tax policy for the mines
4. Political uncertainty at the presidential by-election eroded investor appetite (except Chinese government back projects)
5. Points 1-4 are made in Zambia…
Professor in what? Street vending?