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By: Kelvin Chisanga
The Zambian Kwacha for sometimes now, has been gripping with sagging supplies of US Dollars on the local market leading to a continuous acts of depreciations which has given about 25% culminative loss since the beginning of this calendar year in January.
However, there are measure that we need to look up to in order to control the run-away which is being currently experienced with the Kwacha’s performances, and as a beginning point I think the Bank of Zambia (BOZ) seriously needs to uplift trading limits on Dollars so that we can harvest from that end especially in areas that we see with high dollar transactions like targeting the Kasumbalesa border post which has high volume of Dollarized transactions, as DR Congo has for a longest period of time been exposed as an economy with strong liquidity flowing in Dollars right within the wider market, and this border post has highly been observed to have very sound and health Dollar transactions.
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Secondly, we need to start putting up some interest rates on CFC accounts so that we can make a good return on Dollar inflow and in saving investments, as most of the business players will be forced to keep Dollars in their accounts under this proposed policy. The CFC account is currently operating on interest free and it does not encourage health Dollar inflows but strongly working against with a huge part and portion of killing Dollar with firm outflow levers on the other side of demand channel of expenditures.
Thirdly, we seriously need to start monitoring our annual or perennial purchases that usually do happen both in the third and fourth quarter of each calendar year to avoid creating unwarranted pressure on the hard especially with the ones commanding high drive of agricultural input importations which seems to be the last minute resort sort of the model of national procurement cycle and we need to key-in with a better formula and a model for our fuel purchases to stabilize the Kwacha especially with a system of contractual agreement despite facing sharp changes in oil prices.
So, in essence Zambia as a country needs to be proactive with the outturns seen in currency performances which proves to get tough during the last few months of each running financial year particularly with the specific target around the last part of third quarter covering as well the entire fourth quarter, as it also builds up with a very heavy and aggressive demands for the hard currency, this period runs with an aspect of facing short supply coupled with high drive of Dollar harvesting situations where other key stakeholders within the market, keep forking out the green currency out of the local market.
The local forex market in Zambia has some relatively good support at times though standing not with a sustainable formula as this market is very sensitive to market dynamics and also lacks model to seeing a sustainable trading patterns owing to the serious imbalances due to insufficient supplies with export basket to match up with strong importation drive.
