Former Finance Minister Ng’andu Magande has observed that the continued weakening of the Zambian Kwacha against global cumulative currencies requires government to revisit the Bank of Zambia (BoZ) Statutory Instrument (SI) No. 55 of 2013.The PF Government issued Statutory Instrument 55 of the Bank of Zambia (Monitoring of Balance of Payments) Regulations in July 2013. This revoked and replaced Statutory Instrument 32 of the Bank of Zambia (Monitoring of Balance of Payments) Regulations, 2013.
The Kwacha has dropped to a record low in 20-years as much K5.78 per US dollar.
Mr Magande also observed that the weakening of the country’s currency is an indication that very little foreign exchange is coming into the country’s economy.
He said government should establish whether investors are now withholding their export earnings as a possible protest against Statutory Instrument no. 55.
Mr Magande who is National Movement for Progress president and an Agriculture Economist by profession told Qfm News in an interview that the Kwacha’s volatility requires government to revisits SI 55 and possibly reverse it.
He further advised government to ensure that all export proceeds are coming back into the country’s economy to cushion the economy, as opposed to being channeled to foreign reserves.
The Bank of Zambia recently called an emergency meeting with lenders to probe a drop in the nation’s currency to a record against the dollar.A falling currency increases the risk of higher inflation in Zambia, which imports items from oil to breakfast cereal. It also makes repayments on external borrowings more expensive.
Go away Mr Magande you irrelevant me thinks lol
Thanks
Mr Magande I agree with you.
You were the best minister ever
Just shame about you being Tonga . Come join us in MMD you are my inspiration. I will rule zambia and would like to see you as minister of finance
There goes Mushota the attention seeker.Get a life you little dullard.
Is Mushota suffering from syphilis? It’s the only disease that I can diagnose remotely. One day she is ok and the next the illness takes hold.
I do not know who and where Mushota is but seems a bit mad.
@ Elaborate why you think Magande is irrelevant. Magande has valid points and government needs to listen and not trivialise national issues by issuing arrogant, rude and vulgar responses as State House has been doing whenever HH write to the President. ZAMBIA is BIGGER THAN pf & Sata.
@ Mushota, Elaborate why you think Magande is irrelevant. Magande has valid points and government needs to listen and not trivialise national issues by issuing arrogant, rude and vulgar responses as State House has been doing whenever HH writes to the President. ZAMBIA is BIGGER THAN pf & Sata.
Rebase to US Dollar 🙂
Mushota kapuba.This man(Mushota)is not consistent one day he is Pf,another day UPND and another UNIP.Grow up swaini iwe.
I think a lot of people miss the humor and sarcasm in Mushota’s comments…or i just have a wierd sense of humor
So polite, no matter how ridiculous the post it always end with thank you. lol
What happened to the real Mushota? The one with proper gramma.
The sick people are you chaps that keep replying to what this lunatic called Mushota says
Mushota may the Devil curse you more as you are so retrogressive. PF need to be Voted-OUT asap to re-organize and re-unite Zambia.
@Saulosi…why is it a shame that Magande is Tonga?
What’s your point? How can u see the irrelevance of Magande’s comments when u can’t express yourself in proper English ? Next time don’t expose yo stupidity..
Mayo ba Mushota, it seems your finance minister has finally swallowed his pride and done what magande suggested a long time ago, Insoni
Spot on bosses ! I just like this man because he rarely shoots down government policies without offering suggestions.He is unlike some politicians we know who just open their mouths widely without offering solutions or suggestion.No wonder they are called under 5, it is for a reason.
Ignore this fake Saulosi with a teddy bear childishly thank you
The only problem is Saulosi (Alf) you may praise him giving suggestions but you and I both know that your government would rather eat glass than take ANY advise from anyone not in PF.
@Dudelove…we just look like that on the surface, but we are a listening government.I have a feeling that my party will seriously consider his proposal.
@Saulosi (Alf) pull your head out of your ____. sorry if you take offence to my statement.
This is crazy, it’s just too much and at this rate we will even touch K7/$. All the theories by the so-called learned technocrats are just driving us into a disaster. Magande start charging them consultation fees, at least with you at MoF, the Kwacha reached record levels of K3.1, and people’s pay was making sense then. Ba shikulu ba Chikwanda is at sea, given the current crucial situation.
During magande the kwacha was seemingly doing well because of debt forgiveness spearheaded by the Catholics. The strength of the Kwacha was virtual and was going to burst at some point as long as we keep importing toothpicks from china.
it’s not only the zambian kwacha but also nigerian naira ,ghana cedi,the gambian and several developing country currencies.the actual cause is certainly more than this statutory instrument
This character is just job hunting. Approach Sata and others in Governmemnt and join them. There’s no need to mourn outside the perimeters of power, just join in and fight from within PF after all, it for the good of the country Zambia, simple…
Zanaco changed their banking platform.The system is not yet stable because of symetricals with the VISA system . It seems they didnt not plan well ahead before the cheque truncation switch was activated . But you will surely get your money back. Dont listen to alarmists about government this and that..
I want to bring to the attention of the nation at large of want is happening with our accounts domiciled at ZANACO. Yesterday in i withdrew K2000 and got a slip showing my balance. Today the balance has changed showing a different balance much much less than what i left. I went to ZANACO UNZA Branch and found alot of clients with similar problem and we were told we have been debited twice and we have been given forms and a promise that the issue will be settled within 45 days. The system or whoever is in charge of reconciliation of accounts should not hold us as if its our problem. We need our money to pay school fees for our children the rot should be stopped in the bud before we suffer with the already biting economic situation. Please ZANACO dont play with people’s lives we have so…
@Moses Tembo, I think it is not a coincidence that you are losing your money from your (government) Bank account ! The government could be “borrowing” your money without your consent, only to be repaid in 45 days time!! What a government !!! Borrowing without asking is tantamount to stealing !!!!
Mr Magande, I have always respected your views, yet still only at time, you need to stop being academic sir. The call for revision of SI no. 55 based on whether investors are ‘now withholding their export earnings as a possible protest against Statutory Instrument no. 55.’ should not be a basis for such a call. When investor begin abrogating laws of a nation, it is not the national laws that should change. I very much hoped that you would pin-point flaws in the SI no 55 against the falling down of the Kwacha. By the way, try to link what is happening globally, especially with China, as one major investor in Zambia past decade, against its stillness now. While you are looking at that, try to analyse the advantage forthcoming from it, against zed food gradient with neighbors.
@Kaingo: I dont think you even understand what Magande is saying in Real Economic terms! Magande is telling Chikwanda and Government to remove the barriers to the flow of money (Foreign Transactions) to help stabilise the Kwacha and bring down the cost of doing business.
Yes SI55 may have benefits as you may argue BUT the cost of those restrictions far outweigh any LITTLE benefit SI55 may have! He has pointed out an example of no “New Money” flowing in compared to the last 3 years and this means scarcity of FOREX and this will push up commodity prices in shops because Zambia imports everything and produces nothing!!
If SI55 stays, you should expect the cost of Maize meal for a bag of 25kg to be K150 by this time next year!!
Depreciation of a currency is not bad for development, especially when a country is surrounded by free cross boarder trade, and itself, as a country, has insufficient. Stop politics and be human like John the Baptist
But Waliba Dull Kapoli iwe, depreciation of the currency works well in an export oriented economy waunfwa. The biggest problem is the BOZ Governor (Not qualified) and at the moment there is no confidence in the economy coz of incoherent statements coming from government officials nefyakulwa amongst the same pipo.
simple matters are easily resolved with less digress, and btvh. look up the matter, read, understand, hope God willing you may have a say sir. hope you fix ur set up prop. with love sir
atually iwe kapoli so long you keep your head down there without reading nor understanding, you will smell nice cologne kanshi uli neule
@Kaingo:
You must be the most fo.ol.ish person living in Zambia at the moment. Contratry to your argument, the depreciation of the Kwacha is very bad thing to happen! It would have been good for Zambia if our country was a net producer because we could sell our products cheaply.
But Zambia is a net consumber that produces nothing and this means paying more with a deprecated Kwacha for imported essential goods like Fuel, Tyres, Vehicle spare parts, Fertilizer, Wheat, Rice, Clothes, Shoes, etc!!
Where did a fo.o.l like you do your Economics? You are not only a nuisense but such a disgrace to humanity!!
Actaully mr magande you need to start calling me sir from today whenever we meet
Goog advice sir, unfortunatly its fallin on rocks..thy dn’t care whethr hw mch it’l b sellin coz thy wn’t live long enough to see how thr recklessness will cost us as a country. K100-U$1 fili ukotuleya.
Magande is right. You get hassled to receive your own hard earned forex with beaureaucratic red tape. No one even informs you there is forex pending clearance in your a/c. After 10 working days uncleared forex goes back to remitter. Why suffer when you can open an offshore a/c where forex is received without hassles? This what has happened.Better to restrict outflow NOT inflow.
Please Mr Mangande don’t waste your breath, even though you mean well for mother Zambia !!! These Pa Fibuba (PF) niba Munshebwa, baile namafi kubuko !!!! Cumbu munshololwa !!!!
Mr Magande is the best finance minister that Zambia has ever had,Don’t forget that Mr Chikwanda was once a finance Minister in UNIP’s Regime,so what do you expect? UNIP Minded.
No. The best was Musokotwane because he kept the economy growing despite the financial crisis. Musokotwane managed the economy like there was no crisis!
The dollar is still going up against the Rand, Kwacha etc. Its time the government allowed dollar as a medium of exchange parallel with the Kwacha.
Magande; these people are willing to sacrifice anything for their TRIBE.
That’s what happens when you have no policies to bring investors and lack of political stability and it’s not only kwacha all emerging countries are crying because of uncle Ben QE and now tapering, in Japan Abe economics is working then you have Mario Draghi driving the euro high. The kwacha will continue to fall until there is risk on in USA, Euro zone, China and Japan.
something must be done surely or else all commodities will not be affordable
I do agree that SI55 was rushed without much thought on negative effects it would impose on the economy. Over 90% of the Zambian economy is controlled by foreigners and loss of weight on Kwacha is as a result of foreigners keeping their proceeds overseas due to restrictions on forex movements imposed by SI55. Coupled with the fact that the Govt does not seem to offer much needed economic confidence, the Kwacha has to bear all the consequences. Next to shoot up will certainly be fuel prices and at that stage the price spiral will begin. This is when real hardship may begin and unfortunately it is not too far in the distant.
Zambia needs to stick with SI 55. If it gets to the worst government should impose brutal measures to force mining companies end stock piling. Have read the amended SI55 it looks good. Atleast count of 120 days starts from day of export than receipt of export.
The Kwacha was not any better at all even when Magande was finance minister.
LIAR
The Government of the Republic of Zambia introduced Statutory Instrument No. 55 (SI 55), which empowers the Bank of Zambia to monitor inflows, outflows and international transactions.
The Bank of Zambia (BOZ) will work with financial service providers, the Zambia Development Agency and the Zambia Revenue Authority who will be required to collect specified documents from importers and exporters above a specified threshold, persons making certain remittances and those contracting external loans. Periodic monthly returns will therefore need to be submitted by financial services providers to BOZ.
I dont know if Mr. Magande has read this SI in full coz what he is advocating for has been covered by this same SI. The biggest problem is ”Uncertainty in the economy” coz of too much yapping
From the Archive.
The enactment of Statutory Instrument (SI) number 55 has resulted in increased foreign exchange market liquidity which saw close to US$1 billion worth of Forward Exchange Contracts (FEC) being traded.
Bond and Derivatives Exchange Zambia Plc (BaDEx), deputy chief executive officer Peter Sitamulaho said the volume of forward purchase transactions amounted to $550 million in 2012, compared to the $250 million in 2011, while forward sale transactions increased from $257 million to $491 million.
Mr Sitamulaho said foreign exchange market liquidity tremendously increased in part due to the enactment of legislation SI Number. 55 of 2012, which barred the settlement of domestic transactions in foreign currency.
Mr Sitamulaho said; “in particular, commercial banks’…
Reading Mr Magande’s views and some sensible comments, it seems the problem is not the instrument, but investors who are manipulating and keeping away the Forex. Therefore SI 55 is okay. Let us deal with the culprits that hide the Forex overseas. We have adequate laws to deal with them. Time to act is now!
Good afternoon
As someone has pointed out, a weakening currency is not always a signal for an economic crisis. The biggest impediment we have is lack of industries (valued products), no job skills, no proper infrastructure and a missing broad middle class. These are the driving forces for a strong economy and the things that Zambian economics should be looking at before complaining about a weak currency.
The Germans gave up the Deutschmark which was much stronger and adopted a weak Euro but still managed to maintain their status as Europe’s industrial powerhouse and the world’s second largest exporter – a country whose economy has single-handedly stopped the eurozone falling back into recession and the only nation rich enough to save the Euro.
How? We have lessons to learn..
The kolwestans have lamentably failed. I saw this coming our way. Putting under qualified and inexperienced cadres in sensitive offices. This is the result
This forum is full of big brains Mushota inclusive. Mushota chill on d weed bra!
Magande is right just give him support or let president give him employment he has suffered lot just drinking a k 2 juice. loo
These guys are hell bent on doing things their own way despite all the economic indicators showing that things are not going in the right direction. On top of this, we have a Finance Minister who does not seem to have a clue on what to do and does not inspire confidence in the electorates. Some of the simplest economic indicators include the price of essential commodities, transport, building materials, exchange rates e.t.c. That is what you get for putting “fossils” in critical positions.
We are a consumer-based nation that outprices its few products comparative to its neighbors. Is that surprising that we cannot even take advantage of the dips in the Kwacha while looking for ‘solutions’? Whenever I sit to pick my holiday destinations I pick Zambia and RSA. My costs literally fall to the floor when I switch to my SA section of the holiday each time. We can only sustain dips and crests if we can encourage a well supplied middle class, a functioning production sector, and a well deserved small business arena. At the moment it is always touch and go – you can see the overwhelming outcry from the consumers because the crisis of packaged goods is never too far away relative to currency shocks.
Mr Magande Sir.. the SI was just amended last week. Go and get a copy at government printers its out this week. It only cost K1
A lot is wrong, we are a Consumer country for real and our Copper contributes peanuts to our National budget as a Nation and then we put a huge budget on RDA which eventually gives 90% of contracts to Chinese companies. What do you expect i dont need to be an economist to analyse this. Force chinese companies into Partnerships at 50% with Zambian companies and the scenario will change, Zambians most likely will keep their Money in Zambia. China is indeed laughing, what a Friendship.
That is why we need to plan longterm our economy and the effects on the currency especially were we have an inverse floater Relying only on FDI is not a solution as FDI in capital flows can either be a blessing or a curse a good thing if the FDI enables the economy to grow as value addition is encouraged bridging the Gap between domestic investments and savings a curse if a boom like conditions emerge artificially with asset price bubbles resulting in the currency overshooting into a n overvalued territory if inflows or FDI reverse and outflows outweigh then you have a major depreciation of the currency and such is the the Kwacha Lets have fundaments correct on our economy supporting FDI to grow us
SI are not the only solution as fire fighting with such is artifial and will create another externality common and known by every careful observer let work long-term and plan the Kwacha It can work short term but long-term we will have the opposite
US dollar has just appreciated against every currency coz its the safe haven for investors considering the poor performance for the global economy.
What are Mr. Chikwanda’s credentials? Could he be just another KKK (ku klux klan or just ‘the klan’) breed?
You watch and plan for your currency as a mark of your economy not always watching over the neighbours fence but rather making your house in order in your economics applying interventions properly knowing the state of your economy and effects wether using unsterilized or sterilized intervention methods knowing the effects proper helping to tar the Itezhi Tezhi road as a result
Although, to a certain extent, Mr. Magande is right about policy, I sincerely doubt the cause of the slid in the value of the Kwacha against the dollar is the SI 55 only. If Mr. Magande had been following world events, he would have realized that it is NOT only Zambia that is going through currency devaluation, but even much larger economies like India, Argentina, Brazil, South Africa, Nigeria, etc., are experiencing the same depreciative phenomena in their currencies.
Most of what is going with the Kwacha, and many other currencies around the world, is simply beyond the control of indigenous Govts’ monetary policies. It is more dependent on what is going on in Washington and the Federal Reserve Bank.
cont….
The entire world depends on the dollar, so whatever goes on at Fed Reserve in the USA will reverberate around the world.
One would wish people like Mr. Magande, as a former Finance Minister, should be able to give us a deeper analysis and understanding of these matters than simply blaming the slump in the value of the Kwacha on an SI alone. This is simplistic and not worth his caliber, to say the least. Those who are interested in putting this issue in the rightful perspective should check out Bloomberg News Editorial Opinion; under the title: WHAT’S BEHIND THE EMERGING-MARKET MELTDOWN published Jan 24, 2014. Below are some excerpts from that article:
“…Emerging-market economies had a brutal week. For years, during the crash and its aftermath, they did well as the advanced economies slumped. Recently, not so much. Many developing countries are seeing their currencies drop and their bonds and equities hammered. Just as the global recovery appeared to be strengthening, a fresh source of instability has presented itself…
… In a way, this was not an unexpected development: The recession in the advanced economies caused central banks to push short-term interest rates to zero and buy assets to drive long-term rates down as well. Capital flowed to the developing world in search of better returns. As investors prepare for a resumption of normal monetary policy, demand for emerging-market assets is bound to fall…”
“…The question has always been whether this adjustment would be smooth or abrupt… The problem is that two things are amplifying the adjustment of capital flows: first, the dependence of global capital markets on the dollar, and hence on the policies of the U.S. Federal Reserve… In the short term, there’s little to be done about the dollar’s destabilizing pre-eminence… Paradoxically, the U.S. market crash of 2007 and 2008 entrenched the dollar’s global dominance. Investors sought safety, and U.S. government debt remains the world’s safest asset. Despite tremendous federal borrowing, U.S. debt was soon in short supply…”
“…The Fed’s quantitative easing took trillions out of the market, and emerging-market governments bought dollars as a cushion against bad news and to hold their currencies (and export prices) down…
As a result, the emerging markets are unduly sensitive to fluctuations — real or imagined — in U.S. monetary policy. The Fed has recently begun to pivot away from quantitative easing; signaling that the era of extraordinarily loose U.S. monetary policy will come to an end. This is making investors think twice about putting their money in developing countries…”
“… There’s news to concern investors in other and more important emerging markets, too. Growth in China has been expected to slow for years: It now appears to be happening, and the government’s ability to manage the necessary economic restructuring is in doubt. The world’s second-worst-performing currency lately is the Turkish lira: Political protests, corruption scandals and flailing leadership are calling the country’s economic prospects, and its place in Europe, into question. Russia is stumbling. So is Brazil…”
So there you have it! The explanation of what is going on with the Kwacha is NOT as simple as Mr. Magande want us to believe. We need to sober up when analyzing important National issues than giving simplistic solutions to complex problems!
>>>>>>>>>>>> Ng’andu MAGANDE>>>>>>>>>>
Memberships and honours
Fellow of the Economic Development Institute (FEDI) of the World Bank.
Member and past Chairman (1995–1996) of the Economics Association of Zambia (EAZ).
Vice-Chairman of the Board of the European Centre for Development Policy Management (ECDPM), 1996-2000.Member of the American Management Institute International 1996-2000.Member of the Governance Panel of Consultants of the Department for International Development (DFID) of the United Kingdom Government.
Commander of the Order of the Republic of Benin (COB) in recognition of service to the ACP-EU international community and to the negotiations for the 20-year Cotonou Agreement, March 21, 2009. SAY NO MORE. Please be realistic not just copy and paste. Nice doc
@yambayamba your comment made interesting reading as most above,I agree with , but still believe our fall is a little too much and could be managed better despite the global trend.Thanks for the efforts mr Magande you are a true citizen.
Great topic to overhaul many fundamental corners of the economy and indirectly address the path longterm for the Kwacha in the international theories of parity and monetary policy
I like YY comments but proper intervention unique to each economic scenario learning from the Peso currency crisis
Last time it was also good to follow the for a at economic association at pamodzi on intervention but we are yet to do more????