Saturday, June 15, 2024

Mining Production Decline Contributes to Weakening Kwacha, Says Copperbelt Economist

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Copperbelt based economist Manase Siwila believes declining production in the mining sector is contributing to the weakening of the local currency Kwacha.

The Kwacha on Thursday morning breached the K23 barrier when trading between K23.00 and K22.57 against one dollar.

Major mining firms Konkola Copper Mines, Mopani Copper Mines and Chambishi Metals have not operated at full capacity for over three years.

Mr. Siwila has bemoaned the weakening of the Kwacha against major currencies such as the US Dollar.

Siwila notes that the weak Kwacha shows that the local economy was struggling.

He proposed that increasing exports and reducing externalization of funds by foreign investors can help to stabilise the Kwacha.

“Check the productivity levels, they are so low. The production in the mining sector that we all know helps have foreign exchange into our country seems not to be on the right track in terms of production,” Mr. Siwila noted.

He continued:”Remember we are an importing country, for that matter we seem to have too many imports as compared to exports this in itself has weakened the Kwacha. The weakening of the Kwacha is not good for the economy. This is why the cost of living is on the higher side because we have a lot of money that is being externalized.

Mr. Siwila concluded:”We need to increase production in order to arrest the weakening of the Kwacha. We need to attract more foreign currencies.”

10 COMMENTS

  1. The depreciation of the Zambian kwacha against the US dollar can be attributed to a combination of economic, political, and external factors. Inflationary pressures, balance of payments deficits, political instability, ineffective government policies, and global economic conditions all contribute to the weakening of the Zambian kwacha. Addressing these factors through sound economic policies, promoting political stability, and attracting foreign investment can help mitigate the depreciation and stabilize the currency in the long run.

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    • If anyone from BOZ is reading this I have been singing the same song, to cut on externalization the govt must pass a Statutory instrument that requires all investors to deposit investment funds above say $5 million into the Central Bank. This will make the much needed USD more available. Allowing the commercial banks to hold that money has proven problematic as they have no interest in seeing the exchange rate remain stable. For them the more the kwacha losses the happier they become. The answer lies with BOZ, this action is similar to the statutory reserve Instrument but this one is in USD and must be held at BOZ not commercial banks.

  2. Swear me in as republican president, 10:00 hours, come 1400 pm, the dollar will be selling less than K14. Sorry, the horizon for Zambia is still far. The magic wand hasn’t worked.
    This year alone, the kwacha has dwindled by over 20 percent. When the democratic space dwindles, our currency suffocates. It can’t breathe.
    Zambia ku chalo
    Zambia forward.

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    • Still better than your one suffering from severe inferiority complex If you the fountain of knowledge as you say Talk about Sampa and promises coupled with money for him to back track

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  3. An increased SRR reduces liquidity in circulation. Banks are left with limited lendable funds. Doesn’t less disposable money increase interest rates? This method works best when you want to mop out money. But which excess money have Zambians been accessing? None.
    There is another theory that counterfeit bills are in the system with the help of commercial banks. Really. How factual without catching one or two? Others are saying some people have buried money in Ukwa bags, an obvious sentiment that Obvious also has a story to tell about. An economist has failed to address our diseased Zambian economy. Meanwhile, we still have monthly fuel reviews and no one says this is the biggest cause of the malaise.
    Bar-Lee will fix it.
    Zambia Forward.

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  4. The man speaks the truth
    Mining is the biggest contributor to forex (80+%?) in Zambia
    Meanwhile, those Shopping Malls the Bank of Zambia Governor and I like patronising, are forex addicts
    The Bank of Zambia are using wrong tools by restricting money supply which will drive drive interests and push inflation higher than the currently massaged (read manipulated) official interest rates.
    GRZ should, with immediate effect, bite the bullet and starve all non-productive forex addicts for two years say, and not the general public, while the mines are being brought to normal production capacities.

  5. I have done a few economics courses. Frankly, the UPND has done well to maintain the kwacha below 50kwacha or even 100 kwacha to the USD. I say this because just before elections we were heading towards 30kwacha to a dollar. Add to that defaults and failure to secure debt restructuring. When PF was closing KCM with gun totting policemen and Mopani walking the same people complaining now we’re cheering then. For once let us stop politicking and get to work.

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