Friday, February 23, 2024

Depreciation of the Kwacha against major currencies due to low foreign income from the mining sector

Share

Private Sector Development Association chairperson Yusuf Dodia has attributed the depreciation of the Kwacha against major convertible currencies to low foreign income from the mining sector arising from the current recession in Europe where most Zambia’s mining firms’ parent companies are headquartered.

And Dodia has said that the impending load shedding by ZESCO will impact negatively on small and medium enterprises and the country’s economy.

Speaking in an interview, Dodia explained that the mining sector is the major forex earner for Zambia and any external forces on in it has a direct bearing on performance of the local currency.

“The weakening of the Kwacha to the low foreign exchange coming from the mining industry. As you know our economy is largely dependent on the mining sector and the mining industry is the major forex earner for Zambia. We are heading towards the end of the year and most mining companies are making preparations to pay taxes, as a statutory obligation, as well as paying bonuses and allowances for workers,” Dodia explained. “But most importantly, there is a recession in Europe where most Zambia’s mining firms’ parent companies are headquartered. So these mining companies want to keep their parent companies afloat and that’s where they are channeling most of their revenue. And as such, the country is not getting enough forex to strengthen the Kwacha against major convertible currencies.”

And Dodia said the six-hour of load-shedding by the power utility company is too long and will adversely affect productivity among SMEs.

Dodia said that ZESCO should engage the Zambia Association of Manufacturers (ZAM) and other stakeholders in order schedule load-shedding during the time when there is less economic activities among small and medium enterprises.

“Load-shedding by ZESCO will affect all sectors of the economy in the country. But specifically talking about small and medium enterprises, six hours of no electricity means six hours of no productivity. And I hope that ZESCO is in dialogue with Zambia Association of Manufacturers and other key stakeholders so that load management is done during periods when there is less activity so that the SMEs and business, in general, will not suffer any inconvenience. In other words, they need to schedule it at night. Like I said, ZESCO has to dialogue with the Zambia Association of Manufacturers and small and medium enterprises and plan to ensure that load-shedding has minimal impact on the economy,” said Dodia.

7 COMMENTS

  1. Whilst this has always been true, the only challenge there now is that Zambians were told by HH that external factors will always be there and should not be blamed for economic challenges. It is poor leadership and lack of skills that causes currency depression. This is where the problem is.

  2. ABSOLUTE NONSENSE
    IMPORTS EVERY CHRISTMAS RISE SHARPLY DUE TO BUSINSSES WISHING TO CASH IN ON THE FEASTIVE SEASON
    THIS WILL BE SHORT LIVED AND WILL RETURN TO NORMASL IN JANUARY
    WE CAN ALSO EXPECT A RISE IN FUEL PRICES DUE TO CRUDE OIL GOING UP
    NOTHING TO DO WITH THE MINES

    2
    2
  3. That’s a good proposal. On the other hand crime will be taking place at night due to lack of security lightning. Iam learning.

    2
    1
  4. I thought when the Kwacha was gaining value last year, someone said it was due to ‘Investor Confidence’.
    Does it mean Investors are now losing confidence?

Comments are closed.

Read more

Local News