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Alba Iulia
Monday, April 6, 2020

It’s Too Soon To Celebrate The Kwacha Appreciation-UPND

Economy It's Too Soon To Celebrate The Kwacha Appreciation-UPND

Charles Kakoma
Charles Kakoma

We have been asked to give a candid response about the sudden appreciation of the kwacha. Ours is a measured response devoid of politics but full of intellectual reasoning.

When the kwacha was depreciating, we were told that the situation was global. Now that it has appreciated, the PF is claiming that it is a result of measures taken by the Government.

How did we get to the levels of one dollar trading at 14 kwacha? It was lack of investment, inconsistent policies (u-turns), load shedding, and fiscal indiscipline. All these things are still happening as we speak. There is no logic in this appreciation except to say that it is largely driven by two things. The first is that the Bank of Zambia has tightened monetary policy. This is a temporary intervention (firefighting if you like) which gives us temporary relief. By his own admission the Minister of Finance Hon.

Alexander Chikwanda issued a statement to that effect. Monetary policy has never been a long term strategy. Those that care to follow economics will recall that when Europe was slowing down, the European Central Bank (ECB) had to even make interest rates negative to stimulate the economy as a temporary measure to kickstart the European economy.

Whereas ECB was pumping money into the economy, BOZ is doing the reverse, syphoning off cash from the economy using Treasury Bills and raising the policy rate, which now stands at 15.5%. As the kwacha is syphoned off, money becomes a problem especially for small-scale traders. What will happen next is that few traders will be able to afford to restock their shops and this will drive inflation upwards due to demand for goods which will be in short supply.

The second dimension is that most international organisations whose financial year ended on 31st March are buying kwacha to pay their financial obligations in the local currency. This, coupled with the lack of money in circulation, has caused the kwacha to appreciate. How long will these measures hold? We wait and see.

What does the future look like? The government owes contractors money. These contractors are foreign and will immediately, they are paid, externalize the money. They will need to buy dollars and we will see the kwacha start sliding back to its normal probably at more than 12 kwacha to a dollar. Secondly, the Eurobond payments will need to be made, this will also have an effect on the exchange rate.

Thirdly, economic activity will continue being minimal, Spar Chilenje closed, that is a sign of things to come. Just take a walk to Soweto and ask how much a box of tomatoes is costing. At this time of the year tomatoes should be cheap because coming out of the rainy season, even those farmers that have no irrigation systems will plant tomatoes, thereby flooding the market with the product, but they did not grow it.

What we need in this country is a stable currency, not a currency that fluctuates like a see-saw. This makes planning very difficult for the private sector. Those that want to invest in this economy would rather hold on until some form of stability is achieved. Until Zambia starts exporting or stops importing everyday consumables, we should forget about a strong economy and a strong kwacha.

Charles Kakoma
UPND Spokesperson

[Read 35 times, 1 reads today]

19 COMMENTS

  1. We are not surprised that you Under-5s are negative about everything. Too negative, always Nega Nega. Useless analysis Kakoma. Where you drunk on chibwantu?

    • I THINK UPND IS A GROUP OF SO USELESS CHAPS WHO WANTS THE KWACHA TO CONTINUE GOING DOWN, HOW DO YOU COME UP WITH THIS USELESS STATEMENT SAYING IT IS TO EARLY TO REJOICE IN THE APPRECIATION OF THE KWACHA. COME AUGUST WE SHALL TEACH A LESSON NEVER TO FORGET

  2. Mr Kakoma so want the Government to watch and do nothing.Zambians open your eyes UPND do not mean well do not vote for them.They have no heart to serve the Zambian people.
    We Zambians have cried to the Lord and the Lord has answered.You cant see that the flood gate of heaven have been opened.We have good rains and Copper price going up this is not the work of man but God Almighty.Wait you will be surprised the Kwacha will appreciate further.God is Almighty.

  3. Mr Kakoma so you want the Government to watch and do nothing.Zambians open your eyes UPND do not mean well do not vote for them.They have no heart to serve the Zambian people.
    We Zambians have cried to the Lord and the Lord has answered.You can’t see that the flood gates of heaven have been opened.We have good rains and the Copper of price is going up, this is not the work of man, but God Almighty.Wait you will be surprised how the Kwacha will appreciate even further.God is Almighty.

  4. BAD NEWS FOR ZAMBIA IS GOOD NEW FOR UPND AND HOT CAMPAIGN MATERIAL. THAT’S HOW THEY SEE BAD AND GOOD NEWS. THESE CROOKS ARE DRIVEN BY URGE TO ENTER INTO PLOT 1 AND GOVERNMENT AND NOT BY THE NEED TO DO A SERVICE TO PEOPLE. THAT’S WHY ZAMBIANS DON’T TRUST THESE CROOKS. EVERYWHERE ON EARTH CURRENCIES ARE AND ECONOMIES ARE FLUCTUATING BY THE SAME REASONS ZAMBIA’S CURRENCY AND ECONOMY ARE RESPONDING TO. TO UPND IF IT IS HAPPENING IN OTHER COUNTRIES IT IS GENUINE. BUT IF IT IS IN ZAMBIA IT IS FAKE. ILL-INTENTION CROOKS.

  5. Meal meal price will soon go down, load shedding will soon reduce, commodities prices will soon reduce, new roads, new hospitals and schools, Universities will be opened in chinsali, trade schools mwebantu. Why should we vote PF out?

  6. So when you score a goal,you have to wait till the end of the game to celebrate,is this what upnd want to do? Ati opposition,labishi.

  7. The decision by spar is not well thought after as a business decision Rather than saving to grow the brand to save the growing market of Lusaka in that catchment of chalala and chilenje they made a costly mistake to reduce their visibility and presence to ShopRite and Pick and pay That was a perfect place to build on presence and create a bigger store Its entirely them and no marginal contribution has been added from that disinvestments

    As for kwacha short to long term performance Mr kakoma has missed the corner stones and failed to see the interventions that bank of Zambia seems to be exercising in its monetary policy in its MTC to achieve broader…

  8. macro prudential performance of the Zambia economy Its interesting that he has failed to see that monetary economics is like a peg to flex the course of velocity of money to achieve the growth desired in the short term for the long-term

    The kwacha will not revert to trade in the 12 Kwacha given the interventions and focus being made looking at the global to emerging markets currency trends

    The kwacha is simply retracing its gains and if given the confidence it deserves may trade again below 7 kwacha Be positive and give the correct sentiments

  9. The thinking of UPND leadership on economics makes me want to cry in shame. I assume that this statement was written by HH since he is the only who is permitted to think economics in UPND. So let me address their daft economic guru through you mr Kakoma. First, this Kakoma admits that monetary interventions by governments and central banks are necessary to address specific objectives in an economy. He gives the example of the ECB in Europe stimulating their economies by reducing interest rates. But surely Kakoma, you can’t be that daft if you intend to rule Zambia. What was ECB addressing? An economy in depression and deflation, that is, very low inflation which is not desirable. The cure that they chose is loosening their monetary politicies. And what are we addressing in Zambia? The…

  10. But surely Kakoma, or HH, you can’t be that daft if you intend to rule Zambia. What was ECB addressing? An economy in depression and deflation, that is, very low inflation which is not desirable. The cure that they chose is loosening their monetary politicies. And what are we addressing in Zambia? The exact opposite, I.e. High inflation. The cure chosen here is tight monetary policies. The cures in both situations are acceptable elements of economics, there is no one solution in economics. However, in these cases both solutions were the best for the situations.
    Look here Mr Kakoma or is it mr HH, suffice to educate you that in economics it’s not a question of one size fits all. Please HH be educated that you have misunderstood what the ECB were doing relative to Zambia situation. In…

  11. Look here Mr Kakoma or is it mr HH, suffice to educate you that in economics it’s not a question of one size fits all. Please HH be educated that you have misunderstood what the ECB were doing relative to Zambia situation. In short your economics is upside down. Quite a shame really, for someone who stakes his claim to State House on being “the” economic manager. Since you passed your economics degree we can only assume that you have shamefully failed to put into sensible practice what your lecturers taught you. Or maybe you were taught by lecturers similar to that Dr Habanjoka, sorry Dr Habazoka I think it is.

  12. Its lack of understanding of the nature of economics affecting Zambia by Mr Kakoma is also failing to see the performance of global economics affecting the kwacha Markets have performed I stocks and other assets China has stabilised the EU also has moved from the worst since the turmoil 2016 raising the investor confidence
    You may may see also the ZAF Chopper money as result on the global front affecting further the kwacha Simply look at the investors reactions to activity in china there today you have a barrel of oil at 40 USD Look at the US employees activity
    And ECB Mario Draghi announced fresh stimulus for ECB addressing what BOZ on the…

  13. opposite is addressing There is something god to understand have a stance in global economics You need to be active in addressing your positions not passive like the Chinese Minister who has seen “bias” against the country in ratings by the POORS AND MOODYS when they lowered the sovereign outlook for china recently There analysis did not move with his understanding and he somehow right

    Its not also that what comes is taken as confirmation like the Chinese minister questioning the reasoning behind forecast by He observed that IMF only sees measures china was implementing to address economic concerns on the demand side forgetting the supply side In the same…

  14. cheap analysis, Spur chilenje closed due to poor management! Period! More mals are still opening meaning confidence to the economy.

  15. Kakoma is such a dull man. He doesnt realize that the Kwacha is appreciating because there has been increased supply of the US dollar on the market due to corporations converting their US dollars to get kwacha so that they meet their quarterly tax obligations. Besides, there has been reduced demand for the US dollar on the market because the of the tight monetary policy being pursued by BOZ. Instead of him politicizing the issue, he should be happy for Zambians that they will now be able to import goods and services cheaply

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