BANK of Zambia governor Dr Denny Kalyalya says the Central Bank has signed a Memorandum of Understanding with the central banks of Malawi and Mozambique to try and use the local currency across the borders.
Speaking when a delegation from Bank of Zambia which was in Chipata for a board meeting met EPCCI at Protea Hotel on Wednesday, Dr Kalyalya said the Central Bank was also in the process of signing the same MoU with Angola.
“…There is a lot of activity going on between Zambia and Mozambique, Zambia and Malawi. In fact, we have signed a Memorandum of
Understanding between our two central banks, [Zambia and] Malawi to try and use the local currency across the border as well as Mozambique, we are in the process of doing the same with Angola but overall as SADC region, we have a platform now which we have established as central banks to use our national currencies to reduce the amount of pressure that we see of using the dollar, Euro and Pound,” Dr Kalyalya said.
He also said overall, the current size of the Zambian economy was about 24 billion dollars with 4.1 per cent.
“Now look at the economies of countries like the US, it’s 15 trillion dollars…the Chinese economy which is the second largest is about 9 trillion dollars. But we are concerned about our own,” said Dr Kalyalya.
Speaking earlier, Mtonga said the BoZ should look at ways of reducing lending rates.
Mtonga also said the foreign exchange rate which was around K10 per dollar was worrying, adding that “it will be better if it gets below K10”.
And speaking when the BoZ delegation paid a courtesy call on him at his office on Wednesday, Zulu said the banks could not conduct business the same way they were doing it in places like Lusaka.
“With your coming, we hope that the bank will come up with very good incentives to local banks that are operating in places that are considered rural because they cannot be doing business the same way they are doing business in Lusaka. This is a peak season for the banks here in the province because farmers are harvesting, so there will be
something to put in their accounts,” Zulu said.
“Our land here is largely customary and our farmers don’t have title to their pieces of land. We need to devise other mechanisms as to how we are going give loans to the farmers to be able to do business. We have the e-voucher system which sometimes delays but eventually comes but if the local banks can be incentivised to be able to give loans to farmers, knowing that government will soon put the monies in their accounts and they will be able to recover their monies, farmers may start getting the loans as early as August and we wouldn’t be having problems like delays in planting which affects the harvests.”
And Bank of Zambia deputy governor operations Dr Bwalya Ng’andu said it was important to go to various provinces to get a sense of the impacts of the various policy decisions they make.
He said Bank of Zambia had been working on expanding the space in the financial sector so that more people could participate in various financial services.
“One of the things that we think is key is the digital platform, the use of a mobile phone as a way of getting various actors to participate in form of financial system especially in the area of transmission of money from one person to the other, that’s one important things that we can push and we hope it can grow as it has been growing,” said Dr Ng’andu.
BOZ vice board chairperson Gilbert Temba said they were in Chipata for the bank’s board meeting.
Temba said the central bank realised that it needed to know the country from economic and social points of view so that as it sits to restructure the monetary policy that responds to the needs of the nation, they would have a grasp of things at various local levels.
This will be a border trader’s nightmare with the very wide spreads between the values of these currencies.
1US$ =10.35 Zambian kwacha.
1US$= 60 Mozambican Meticals.
1US$=723 Malawian kwacha.
@Enka, although this looks and sounds complicated, I believe it can work. The same way you change the local currency (Kwachas) to Dollars or Rands, why would it be difficulty to change Kwachas to Malawian or Mozambiquan currencies when crossing over to do business in those countries? The value should be based on the going rate for dollar for each currency.
Like you have stated:
1USD = ZMK10.35
ZMK1.00 = MWK69.89 (723 ÷ 10.35) ZMK1.00 = MZM5.80 (60 ÷ 10.35)
And these values would fracture accordingly, as each currency goes up and down in relation to the US dollar. But at least now you have eliminate the hussle people go through looking for hard currency in Dollars just to cross into Malawi or Mozambique to do business.
We struggle and go to all sorts of trouble finding and…
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and obtaining dollars (a currency belonging to a Country thousands of miles away) just so we can engage in business with our neighbors and we think that’s normal….it is NOT.
By the way, have you wonder why currencies like the Pound are stronger despite the lack of natural/raw materials in Britain? Well, because a multitude of Countries and people somehow think that the Pound is better….for reasons that only people such as yourself know and reenforce.
Asked yourself a question: Why is the Chinese currency not regularly used currency for international trade/exchange rate as the pound or Dollar? After all, China’s economy is the second largest in the world. Infact, even Germany’s economy is larger than that of Britain, but why is Germany’s currency not used…
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as one of the STANDARD currencies in international business and trade? These are the questions you need to research on your own if you want to understand why Countries like the USA are even willing to go to war to protect the Dollar and keep it on top.
Sadam Husen learned a hard way when he tried to stop trading Iraq Oil in Dollars. And where is he now? Dead! Don’t believe the nonsense about Weapons of Mass Destruction which Anerica used as a pretext to invade Iraq. America and Britain knew for a fact that Sadam had no such Weapons. After all U.N inspectors had already spent more than a decade in in that country blowing up and disabling the very weapons America claimed Iraq still had when they finally decided to get rid of Sadam. This should tell you the…
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issues/reasons were deeper.
Just watch how America will react once China decide to abandon the Dollar and adopt another currency as the standard. And the thought of such a scenario makes the U.S nervous and react the way they do towards China in terms of trade. But it is just a matter of time before China is both Militarily and Economically strong to take on America and start asserting itself on the world stage. Including setting international currency standards. Nonetheless, stay tuned for the NEGATIVE COMPAIGN and THREATS that will follow if and when China decides to do it anyway.
That’s the Geopolitics of the world currency for you!
Well said @Yambayamba. My sentiments exactly only very lucidly done! And now, in keeping with modern trends, we can have an app for that. A ‘AfroBorder’ app. At a glance, and click, you know how many Kwacha to give the Mozambican trader and so on and so forth…
@Yambayamba am impressed well articulated people should really know why some decisions are made give Gadaffi incident in Libya the USA saw its downfall if the man’s plan became successful. Am happy fyonse namulanda kale.
Who is Mtonga? Are you writing a thriller or a report to inform us of what is going on? Having said that, that is a positive move in the right direction and should have happened a long time ago at as many border areas as we have. It is frustrating to have to always have to resort to US Dollars when all currencies are readily available within the area. Well done, BoZ.
AWAY WITH FOREIGN CURRENCIES ESPECIALLY THE AMERICAN DOLLAR.
REMEMBER WHAT TRUMP CALLED AFRICAN COUNTRIES?
AND AMERICA ONLY GIVES COSMETIC AID: NOTHING SUBSTANTIAL
Really, What about the Millennium Challenge account???????????????????/ Drainage & water reticulation system in Lusaka. Thought its substantial. US360 million dollars free money. Sometimes tizitasha.
Very great idea and they should just unify the whole continent with only one currency but I see no progress unless we start using the cryptocurrency
Kobe we can never have 1 AU currency as each country has to have the same reserves this is the same problem that Europe has with the euro Greece has a lazy poor economy and other EU countries like Germany must prop it up. so in a Au currency SA would be propping up Zim and many others, that why each country has different exchange rates / interest rates now
Why do the world trade in pounds and euros?, because they are solid and backed by assets in other words in every euro is 93 cents of assets, the pound is 95 , the kwacha 6 and the USD is just living on goodwill of the past because its 2 cents yup its backed by 2 cents of assets but people crave USD. Not sure why BOZ up to now has made Kwacha a blocked currency, not trade-able outside of Zambia, in other words you can’t buy kwacha through banks outside of Zambia officially. they say by 2020 china will be the worlds biggest economy so expect to see international business done in RMB and the USD will crash and burn like Brazil currency. Stick with Pounds and Euro, Beware China RMB is pegged not floated and USD a ticking time bomb.
Its a good move but how its managed is important so that like The first comment the currencies are allowed to trade within acceptable spreads but of course that is a function o power purchase parity (implied demand and supply of goods) with the stronger implied currency getting the “Reserve currency” to be sought after and held in larger measure depicting the qualities of good currencies regional and global,the kwacha i those economies comes up but how the market infrastructure is set up to ensure its traded from “Banks or registered brokers” would be key Then there only a few currencies recognized i the bucket of SDRs and those currencies have…
have gained global recognition and backed by solid reserves So for the RMB to take on the Dollar it will be a battle of currencies and the kwacha would do better to check its true strength against those SDRs currencies to regionally trade like the rand or Namibian captain How the central banks will engage in repurchase and sell will determine also
An efficiently managed currency will always find its place amongst itself “SDR” pack and trade to improve its efficiency and convenience as a currency The kwacha has that efficiency and flexibility local and regional
They should find a way to do away with visas it doesn’t make sense that when you want to visit Mozambique you are harassed by police up to the point of being whipped because you don’t have a visa though they know you are just coming from across the border to visit a sick wife kid or relative. Please Mozambicans get civilized.
visas are only in place to make money for the govt its a cash cow
Too “Political risks ” Instability that side also can impact those decisions in addition to 1 above comment .In the expression of comment 1 above ,You may also think of it like the bucket of these currencies ” Zambia Kwacha,Mozambican Meticals or Malawian Kwacha individual exchange rates then convert them into individual USD rates equivalent to see what value this will add to the Kwacha and its quality looking at the broader economic prospects for Zambia discounting the geopolitical risks in Mozambique
You may express it as below
1US$ =10.35 Zambian kwacha.
1US$= 60 Mozambican Meticals.
1US$=723 Malawian kwacha.
Chief Editor, thanks! And thanks for sharing your great posts every week!