Zambia’s central bank expects to complete research on forming a digital currency that could cut transaction costs and boost participation in the formal financial system by the fourth quarter.

“The results of the research will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia,” Nkatya Kabwe, acting assistant director of communications at the regulator, said in response to emailed questions.

CBDCs, or so-called GovCoins, are national currency because they are linked to fiat currency, unlike their crypto counterparts such as Bitcoin and Ethereum.

Cryptocurrencies are not legal tender in Zambia, the central bank said earlier this month and “people who want to deal in them should have a clear understanding of all the risks that come with such payment and investment instruments.”

The Bank of Zambia is researching GovCoins as they have the potential to expand financial inclusion, improve traceability, safety and efficiency of payment systems, Kabwe said.

Analysts at the Bank of America Corp. have warned that central banks that don’t introduce their own digital money risk losing monetary control and seeing the demand for their currencies drop as their citizens start using another country’s digital cash.

Zambia joins nations such as Israel, Ghana, the Bahamas, Nigeria, China and the U.S. that are toying with the idea or have issued a digital version of their currencies to keep up with technological advances that have spurred the rise of Bitcoin and other private initiatives.

Bloomberg

Social Economist and marketing expert Kelvin Chisanga says the Kwacha’s instability and continued depreciation against major world currencies such as the US Dollar can be restrained by increased exports.

According to Absa Bank daily indicative rates, the Kwacha was on Tuesday buying the US Dollar at 18.3087 and selling at 18.6598.

Almost around the same period last month, the Kwacha was buying the US Dollar at 16.9709 and selling at 17.2963

The local currency started going down with a significant margin around 14th January when trading between 16.9709 and 17.2963 against the US dollar

In a written statement, Mr. Chisanga said trade imbalance is one of the major reasons the Kwacha is losing value as Zambia continues to import more than it exports.

He said there is a need to come up with a deliberate policy aimed at boosting exports away from the traditional copper and its by-products.

“The Kwacha’s challenging performances can be moderated by a stronger export-driven policy. Zambia should aspire to formulate an export-led facility growth policy to help on the balance of trade especially targeting strongly on commodities outside copper, if we are to drive a sound diversification in policies, we should firmly centre our focus on promoting non-traditional export especially if we are to put all our arsenals on agricultural products, we can drastically increase the export base to facilitate conducive macroeconomic conditions for this country,” Mr. Chisanga said.

“The proposed policy formula can ultimately stimulate an increase in the domestic production sectors by widening local manufacturing activities with aims to improve on the export market, thereby creating an economic multiplier effect which will eventually push through some good employment numbers and can actually also increase values on the gross domestic product (GDP) though that cannot be taken as an immediate cause but with time it will look a positive undertaking,” he said.

“The main idea behind the IMF pushing most developing economies to embrace their prescription is that countries should aim to maintain a relatively stable or low exchange rate which helps such targets (countries) to build up on foreign reserves, and this can equally serve as a cushion against such futuristic financial shocks,” he said.

Mr. Chisanga observed that the depreciation of the Kwacha is further pushing the inflation rate up.

“Kwacha’s current challenges are mainly due to trade differences that are existing between import and export, at the moment the country is seen importing more volumes in terms of numbers of goods compared to the volumes of export moving out of our borders to regional markets. This is the bad case which will always promote inflation to shoot up from the target range especially if it is left unchecked by various stakeholders.”

“However, we can improve the economy by restoring balance of payment equilibrium especially through an increase in the value of our exports, import reduction by using the local industrialization policy to make certain controls, and impose a moderate custom duty for undesirable goods and services in the country through our revenue offices which may be a bit difficult to implement with a poor political will, looking at a slow-pace of some economic activities being experienced,” he said.

Mr. Chisanga said the rise in demand for foreign exchange always exceeds its supply thereby causing the Kwacha to depreciate.

“Unfortunately, we are importing mostly finished products with the scarce foreign exchange at slightly higher cost at present. This means that imports and exports are sinking the power of Kwacha, subjecting it to some ‘pressure’ since available foreign exchange is always less than what is required to make on our numerous consumable imports. The export base is so narrow that it can’t be equivalent to the import bill.”

He concluded: “Technically speaking, the rise in demand for foreign exchange always exceeds its supply, and by nature the law of demand and supply, the Kwacha must fall, a case at the moment which can be looked upon with a strong and deep sense of change in policy to steer economic growth and bring about sustainable means.”

Youth, Sport, and Arts Minister Elvis Nkandu has said that about K17 million has been recovered from the various youth empowerment programs since the new dawn administration came into office.

Mr. Nkandu said that the government is committed to recovering the loans to enable more youths to benefit from the empowerment programs.

The Minister also revealed that some artists that benefited from the K30 million youth empowerment scheme under arts have started paying back the loans.

Mr. Nkandu has since urged artists that may be having challenges to pay back the money to engage the Ministry.

Last year Mr Nkandu demanded that youths who got loans in form of buses, grinders and wood-mizers during the Patriotic Front Government payback.

Mr. Nkandu said loans are meant to be paid back unlike donations or handouts. The Kaputa Member of Parliament revealed that many youths who got loans in form of buses, grinders and wood-mizers during the PF government are yet to pay back the loans.

Mr. Nkandu warned that the government may be forced to repossess the buses, Grinders and wood-mizers if the affected youths do not show commitment toward paying back the loans.

He also questioned the criteria used to empower people with buses, grinders and woodmizers. Mr. Nkandu said he suspects that some people who got loans from the Minister of Youth are not even youths.

“Whoever gets money from Government should learn lessons from their colleagues that they should pay back. If they don’t pay back the law will take its course,” he said.

“I still have a feeling that there are some empowerment programmes that we have given but have not reached the youths. When I was interviewing some of the people who got loans I was told that we were just told to register in our names and they are not even our buses.

“So it is like there are other old people behind, who collected those buses on loan using the youths but you know if we are very serious on absorbing the unemployment levels then I would warn the youths not to be used,” Mr. Nkandu added.

“You know youths have been used in violence and now they have sacrificed again to be used as fronts that can collect something on behalf of the adults. I don’t think we are going anywhere so that trend must be stopped.”

The Government in March 2021 procured 50 fuel tankers and some buses as part of its programme to empower youths in the transport sector.

25 of the fuel tankers were distributed to youth cooperatives in some parts of the country such as Lusaka, Copperbelt and Eastern Provinces.

At that time, then President Edgar Lungu said he did not want youths who were empowered to fail to pay back the loans.

Mr. Lungu had said the culture of not paying back government loans among the people was growing, adding that the situation needed to be addressed if government is to empower more youths.

The Ministry of Youths and Sports had promised to arrange various capacity building programmes on how the youths can successfully run businesses and payback loans.

Economist Chibamba Kanyama said that he does not see any forgiveness for the Eurobond debt, stating that the only viable thing is to restructure the debt.

Mr. Kanyama added that the possible debt forgiveness Zambia can get is from lending institutions and not the private sector.

Mr. Kanyama said that a major component of the country’s debt is owed to private creditors, Eurobond holders, Chinese Creditors, Commercial Banks within the region, and individuals.

Mr. Kanyama further said that though it is possible for the Chinese government to consider payment of a portion of the debt owed to it, such a probability cannot come from commercial creditors.

Mr. Kanyama’s sentiments were echoed by Financial Analyst Trevor Hambayi who said that commercial debt is very difficult to cancel because of specific conditions that come with such debt.

Mr. Hambayi said that there is a need for Zambia to sort out governance structures that must be embedded in the Republican Constitution to ensure the country does not unnecessarily borrow.

Mr. Hambayi said that the dynamics are different from 2008 when Zambia got debt forgiveness, as, at that time, the debt forgiveness received was on account of it being Multilateral and Bilateral loans.

Adding his voice to the debate, Economist Lubinda Habazooka advised those advocating for the debt cancellation to call for the cancellation of debt that has been acquired outside the country.

Lately, the CSO debt alliance called for the cancellation of up to 60% of Zambia’s debt.

ZSIC Life PLC Managing Director Christabel Banda has left her post after serving the company since 2017.

During a farewell event held last Friday by the ZSIC Life Board and Management, ZSIC Life PLC Board Chairman Micheal Bwalya said Ms Banda had taken the company through some notable milestones such as the transformation of the company, having gone through a business process re-engineering which saw an improvement in operational efficiencies and reduction in the cost of service provision.

Mr. Bwalya said this culminated into the conversion of the company to a Public Limited Company and its shares registered with the Securities and Exchange Commission.

He said in 2018, ZSIC Life PLC recorded 50% premium growth, with a notable 13% premium growth in 2021.

“Under Ms Banda`s Leadership the company`s positive performance and consumer education drive was visible, with recognition awards such as the IDC Most Improved State owned enterprise and more than Seven consumer education awards in the past four years received,” Mr Bwalya said.

He further noted that through the company’s current digital agenda, it’s path of achieving enhancement of customer experience is taking shape with easy to access platforms and fully operational customer care center now in place.

And in her farewell message, Ms Banda expressed gratitude for the opportunity to serve at the helm of ZSIC Life PLC.

She added that she looked forward to seeing the company make strides in the highly competitive insurance environment.

She expressed confidence that the company would continue on this positive trajectory, as the staff had demonstrated resilience and commitment to the transformation of the company

She urged the Acting Managing Director Mr Kennedy Siamuwele and the management team to lead the company towards its target of being the most preferred insurance company in the country.

And Mr. Siamuwele thanked Ms Banda for having led the company through various phases and assured her that with the imparted knowledge under her leadership, the team will ensure that the key set objectives are achieved.

Ms Banda last week bid farewell to the company to pursue other personal interests.