Thursday, March 28, 2024

There is no magic in Kwacha appreciation-Noel Nkhoma

Share

kwacha
Lusaka Economist Noel Nkhoma says there has not been any significant improvement in the productive sectors of the economy to justify the recent sharp appreciation of the Kwacha.

Since January 2016, the Kwacha has gained by as much as 20 percent against the US dollar after slumping 42 percent in 2015.

But Mr Nkhoma said it is incorrect to attribute the Kwacha appreciation to Government’s austerity measures.
He said the truth is that Government is still spending on all areas adding that the only marked slowdown has been on infrastructure development programmes.

Mr Nkhoma explained that the slowdown in infrastructure spending is mainly due to the fact that the treasury has run out of funds.

He was speaking when he phoned in to the Red Hot Breakfast Show on Hot FM.

“It is not true to say there has been any serious austerity measures that have been implemented since January. If they insist that austerity is there then we have not seen that because they have not announced any,” Mr Nkhoma said.

He added, “What is happening in the infrastructure development side is that the treasury is depleted and so they don’t have a choice but to slow down their spending. A number of foreign and local contractors have not been paid.”
Mr Nkhoma who is also former Economics Association of Zambia President said the other ley factor behind the Kwacha appreciation is the Bank of Zambia’s decision to deploy monetary tools through the Open Market Operations.

“What is happening is that the Central Bank is mopping out all excess liquidity and this is simply making it difficult for SMEs to access capital for their business and this has led to many SMEs closing down,” Mr Nkhoma said.

He observed that as much as the Bank of Zambia open market operations are necessary, the manner in which the operations are conducted is suffocating the economy.

“You need a balance. There appears to be a focus by the Government through the Bank of Zambia to chase a stronger Kwacha by they are forgetting that by doing so by the inducing inflationary pressure that makes it even more difficult for the SME to service.”

He added, “The truth is that the productive side of our economy is still very weak. There is nothing that can point to the fact that we have exported more since January.”

Mr Nkhoma who is now Chief Executive Officer of BetterNow Finance, an SME focused lender said there is no magic that has happened to justify the Kwacha appreciation.

“Although minimal, we cannot ignore that the US dollar has also weakened and most of other currencies in the region have also appreciated, take for example the Rand. It has also marginally gained against the US dollar. I think people are being economical with the truth by saying Government’s austerity is responsible for the Kwacha gains,” he said.

He added, “Unless Government is able to measure this same austerity, then we can be convinced, but for now there is nothing we could point out to.”

Meanwhile, Bloomberg reports that the Kwacha has gone from the world’s third-worst performance in 2015 to the best this year, outshining gold, silver and 150 other currencies and precious metals tracked by Bloomberg.
Further gains are in store as copper prices recover, according to ETM Analytics.

It says the Kwacha has benefited from an increase in metal prices, news of increased mining investment and proposed changes to mineral royalties seen to be more investor friendly.

“We continue to see the kwacha relocating with the copper price,” Gareth Brickman, an Africa analyst at ETM Analytics, said in a report on April 12. “There is still room for several percent’s worth of gains.”

Since reaching a seven-year low in mid-January, copper prices are up 11 percent and expectations are rising that Zambia will reach an aid deal with the International Monetary Fund after general elections scheduled for August.

Some Zambian companies have been converting dollars into kwacha fearing they could lose out on the rally, and tight monetary policy from the Bank of Zambia has also supported the currency by driving yields higher, Irmgard Erasmus, an analyst at NKC African Economics, said.

The kwacha gained 1.4 percent to 9.175 per dollar by 8:51 on Friday morning bringing its advance this week to 6.7 percent.

“In the short term, we see the currency strengthening, but the economic fundamentals of electricity shortages and drought still pose notable threats,” said Neville Mandimika, Africa strategist at Rand Merchant Bank in Johannesburg.

56 COMMENTS

  1. Great Fiscal policies, downturn in the dollar, and a little help from above has done this. Now President Lungu should put a vice grip on the ministry of finance and their ravenous borrowing appetite. Austerity measures need to hit all MPs and ministers.

    • Kwacha I am using Pounds.It is backwards and silly to be dealing with Kwacha when one can deal with PoundsI am on over 50,000 Pounds a year which is among the highest by any zambian abroad, but you will never hear me show off.

      And pounds are not dollars or kwacha

      Thanks
      BB2014

    • For how long shall Zambian leaders be playing such games of massaging the economy for short term political purposes? If only these leaders knew how much damage they`re doing to the country for future generations? Its really sad. Zambia needs smart and serious leaders who understand the crisis that the country is in, and are able to implement real solutions aimed at building economic development fundamentals that are almost non-existence in Zambia. Right now, with the level of damage done to the country over years, Zambia needs, at least 30 years to put the country on the right path. For instance, we don’t have any serious research institute that you can point at. Our universities can`t make in the 50 best colleges in Africa. That`s a disaster!

    • – Erectile dysfunction?
      – Low S*X drive?
      – Need more power?

      Try PYTHO ANDRO from Christine’s Health Shop.

      Deliveries throughout Zambia.

      Thank you for the overwhelming support!

      Visit www(dot)christineshealthshop(dot)com

    • Kikikikiki, yaba! Wasn’t it in the same Bloomberg were we were mocked for praying for the strengthening of the Kwacha?

    • What about the EL Nino issue………haven’t our neighboring countries been pounded left right and center and will face serious droughts thís year?………..imwe, God answers prayer! It’s amazing to see how parts of Zambia have not received favourable rains for not heeding to the call for prayers by the president because that region supports a particular political party. I feel like am living in the “Bible days”.

    • Why is it that its only politicians celebrating the gain? People trained to understand these things are all sceptical. Is it that all economists, finance managers, business people, bankers have become opposition?
      FTJ tried to artificially influence the money markets sometime around ’94,’95. The result was a crash of unprecedented proportions.
      You don’t muck around with money.

  2. Mushota, what are you talking about not showing off? It is exactly what you are boasting about you brainless twit. What a plonker you are. LOL

  3. Honestly speaking, we the Zambian people are not benifiting anything in the rise of the kwacha against the dollar; if anything food and all things have gone up.

  4. Those depending on the fall and crashing of the Kwacha to get into gov’t should learn a lesson here. Pessimism is a wrong mindset and playing on people’s mind is no way to gain power. Honesty is real power. His a Excellency President Lungu has fought well and is deserving.

    • Well said once again ba Patriot, anyone who wishes to ascend to power on the misery and suffering of others does not deserve power in that case and God will always deny them that power..

      Ba UPND please take to heart these wise sayings from Albert Einstein..”Madness is doing the same thing over and over again and expecting a different result” ..2006,2008,2011, 2015 and now 2016..there must be a serious problem somewhere with UPND..

      2016 ECL nafuti

  5. Noel Nkhoma is speaking like a upnd cadre. Plse give credit where credit is due. I thought Noel was a distinguished economist who would analyse econ6mic issues professionally but it is obvious he is an opposition. If the kwacha continued to depreciateam sure he would be there condemning pf. He is unhappy that an international wek respectf organisation has rated the kwacha the world s best performing currency. Shame on him!

    • He says he has not seen any measures from government again in the same article he says they are mopping liquidity from the market. To me he doesn’t seem to understand economics even though he is an economist. These are the economists we have in Zambia that’s why our economy is what it is today.

    • @6 Noel Nkhoma has said “the productive sector has not improved”. If you disagree with him, point out those sectors that have improved! Let’s deal in facts! As far as the common man is concerned , mealie meal is still too high and unavailable! What deliberate policies has govt undertaken to address the economy?
      Noel is right!

    • Economist my foot, when the Kwacha plummeted into low we saw other regional currencies in the same tracking and the same so called economists condemned govt. The reason for the gain is that the USD is slowly weakening and all share indexes and commodity prices are in positive territory currencies have begun to appreciate. Noel Nkhoma should do refresher courses to enhance his knowledge and not speaking like a political cadre. I watch closely the JSE. If you ask the same Nkhoma why the Rand plummeted into its low when Jacob Zuma fired the Nhlanhla Nene guess what would be his answer? Wake up! currencies also depend on the reaction of the Markets.

    • ALL THESE USELESS ZAMBIAN ECONOMISTS WE HAVE RUSHED TO INVEST IN OFF SHORE ACCOUNTS BUT REALITY HAS CRIPPLED IN AND THEY ARE LOSING THEIR INVESTMENTS PLUS KALOBA THEY GOT HOLPING TO MAKE EXCHANGE GAINS AS THE KWACHA DEPRECIATED AGAINST DOLLAR. SO DON’T EXPECT ANY GOOD SENTIMENTS FROM THOSE CHAPS-NOEL, MILES AND UPND CHAPS COZ THEY THRIVE ON ZAMBIANS STRUGGLES.

  6. “Mr Nkhoma who is now Chief Executive Officer of BetterNow Finance, an SME focused lender” He wants a higher dollar rate, so as his firm can suffocate and charge SMEs higher interests. That is evil to the core.

  7. Noel Nkhoma is speaking like a upnd cadre. Plse give credit where credit is due. I thought Noel was a distinguished economist who would analyse economic issues professionally but it is obvious he is an opposition cadre. If the kwacha continued to depreciate am sure he would be there condemning pf. He is unhappy that an international well respected organisation has rated the kwacha the world s best performing currency. Shame on him!

  8. Even our learned economists have issues. Seriously, these are the guys that should be advising government and our grandmas selling tomatoes how to save and invest.

  9. Well said Nzelu, PF govt has more work ahead ..we need to maintain the gain, cut down on expenditure especially at the top, MPs, Ministers and Deputies alongside Perm Secretaries, in general all top govt officials must be subject to wage and allowance cuts. This is what we want as die hard PF supporters a top down approach! However well done ba govt for fighting to make the Kwacha gain! Next assignment is mealie meal which I know will also be reduced..our predictions are always accurate unlike these ZWd/ UPND de.vil worshippers!

    2016 ECL nafuti

  10. Elo this Nkoma chap is just a paid UPND cadre and a speculator wishing and praying that the Kwacha will continue to drop because he has many dollars ..these are the capitalists that worship HH, a capitalist known to thrive on the suffering and misery of others.mGod forbid such evil minded people to come even an inch close to rulling Zambia..God forbid!!!

    Kudos to the govt so far..keep up the good work to the economists at BOZ, to the planners at Min of Finance well done and God bless you all, God bless mother Zambia my one and only home!

    2016 ECL nafuti

  11. It’s easy to have an opinion when one’s mind is not preoccupied with how to feed, provide health care and educate your kids. The weight of our fifty year old mess can be shared amongst all those who have had the privilege to be in the position to change lives for ALL. The cocky arrogance of many who have been in that position matters more than the cocky arrogance of those who are vying for the position. What we need is all hands on deck to improve lives but this political playground is more self serving than deserving. Let’s hope the rocky year has been a lesson to all as opposed to the rise of new braggards. Think of how to develop a productive and resourceful nation not tribes, disses and covering up mismanagement with faux promises of a better day.

  12. Just to give you some guidance or reminder you have deliberately ignored Mr Economist Nkhoma. You have rightly said theres no change in production to justify the appreciation of the kwacha. Even the depreciation of the kwacha from K5/US$ to K15/US$ was not caused by any production reduction. Don’t rush to copper because even there don’t forget that the copper you are selling now was transacted for a long time ago. Sir with all due respect you know that the depreciation of the kwacha was majorly caused by some selfish individuals who went out to borrow kwacha and mop the dollars out of the market. To educate you sir, the bank of Zambia increased interest rates such that the monies you people borrowed to wipe out dollar from the market, you will pay it back through your nose. That’s why…

  13. That’s why they have started taking back the dollar on the market. Hence the availability of dollars on the market. The kwacha they borrowed cheaply is now expensive. With the dollar losing, they are hit on both ends.These are some of the austerity measures government has put in place.I hope you understand Mr Khoma. The pit they dug for kwacha, they will instead for into it because God can not be mocked, whatever you sow, you reap. To other bloggers banks are literally calling companies to buy dollars from them. Yes the Kwacha could have depreciated but not to the levels it did, the normal depreciation should have been around K7.

  14. Noel is an Economist. What he is saying is purely his theoretical view of Macro economics. There is also a behavioral view on a micro or domestic level. Why is it that the Kwacha has suddenly captured confidence of the international investors!Economics is a difficult field and no one economist has definite answers to economic problems. Economists have failed to predict a lot of economic disasters starting from the best IMF and world Bank economists to the self declared economic messiahs. My point is that lets give credit to what has happened to the Kwacha and later on answers will come as to what factors are at play now. Yes BOZ has played a critical, Glencore’s investment, export of maize,HE E Lungu’s persistent hard work and humility, improved outlook(drought seems to have been…

  15. The dollar just lost some value against the yen and other currencies now and for the most part of last week so let’s not get too excited. It is also projected to gain soon , I think it is too premature to get excited especially with market forces. I don’t know if it is going to hold till election time or otherwise it is going to create issue for the party in power if the kwacha start to lose value during that time.

  16. There’s no magic in kwacha appreciation? Well, there’s no pride in being a commodity economy for over 50 years either .

    • Spot on man. No country in the world has ever achieved meaningful economic development on commodities. Even oil giants like Kuwait, UAE and Saudi Arabia realized that a carbon economy cannot sustain a country in a long term and developed national innovation strategies which they`ve been implementing.

  17. Nkhoma is being myopic. He must be one of poor economists pretending to know everything. The best Nkhoma can do i to go and ask
    Chikwanda and learn the t

  18. Noél is martani’s boy like sampa. Last time we met at lusaka club he was with chad muleza and his comment was that PF was a failed project so i am not surprised that he has said this. This was even before sata died. Sometimes we need to be honest and come out and say that you are UPND

  19. Govt has been announcing austerity measures for some time now. Let current economic association issue authority statements and not non functionals.

  20. Nkoma is a failed banker and an economist wanna be. He is just trying to line himself with a job should the opposition win.

  21. Ala ba Noel you can not comprehend things of God with your limited knowledge you have as an economist. While you use your brains to understand why the Kwacha has appreciated as believers are praying for the nation & the leaders. I know you may not understand what im saying because things of the spirit can not be understood with your interlect. If you tune to radio Christian voice at mid night you will understand what saying. Believers are praying for our leaders not condemning and when The Almighty God answers you are busy condeming! Wait and see what is about to happen by August you will be a strong believer of God Almighty.

  22. Surprised even nowa nkoma can analyse national economic matters and LT accepts the trash. We wer in same class he reaaly used to write rubbish guesswork

  23. Yaba! Zed economists! They think with their greed political exploited egos-honestly speaking Noel’s opinion against Bloomberg? Talk of a sardine vs a shark?tired of these up n down demagogues- always sees negativity everywhere- fokofu!!!

  24. Search no further there is a simple explanation. The major reason why the kwacha depreciated last year was speculation and not real economic fundamentals, even though copper prices went down. What is happening now is that the kwacha is simply trying to find it’s real value without speculators interfering.

  25. Noel is NOT an economist . He is a grade 12 drop out who Rajan assisted to get a job with FBZ on account of a favour from Julius his father. He then did a few courses in banking largely in India and much much later a General MBA from London. He intended to float himself for chipata central on upnd but he has been chewing money as an sme onlender. Morally he is bankrupt and we can publish all the women of his taste married or single.

  26. We took it to God Almighty in prayers, and He has answered. Period! Lets just give glory to God for the answered prayers.

Comments are closed.

Read more

Local News

Discover more from Lusaka Times-Zambia's Leading Online News Site - LusakaTimes.com

Subscribe now to keep reading and get access to the full archive.

Continue reading