Do not shun Kwacha!
Published On September 16, 2015 » 1638 Views» By Administrator Times » Opinion
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ALL citizens and stakeholders have a role to play in ensuring economic success of this great country.
The citizens’ and stakeholders’ role becomes even more magnified whenever there are major challenges to the national economy.
Currently, there are two such major challenges – the current power deficit which has resulted into long hours of load-shedding and the fall in the prices of the local currency, the Kwacha, which has resulted in the increased cost of importation of goods and services.
For the power deficit, all the citizens and stakeholders have seemingly been playing their part in trying to ameliorate the situation, since Zesco made the call for understanding.
It is on the drop of the value of the Kwacha that some stakeholders, in the name of traders, have tried to be “smarter” than others by pulling a fast on the consumers.
This has been done by pricing and quoting prices of some goods and services in the United States dollar contrary to the current regulation where the Kwacha is the country’s sole legal tender.
We agree with the Bank of Zambia (BoZ) which says that this is uncalled-for.
We further commend the Central Bank for timely providing strong counsel to the business houses which had deliberately chosen to disregard a well-known fact.
Like the BoZ said, while dollarisation, or indeed the over-use of foreign currency, has been known to reduce the losses for business people due to sudden changes on the currency market, it is not entirely
good for the country.
This is because quoting prices in dollars or any other foreign currencies has the capacity to depreciate the Zambian Kwacha even further and render it worthless.
If left unabated, the dollarisation could lead to a total collapse of the Kwacha, and examples abound from other countries where the trend was, for some reasons, allowed to prevail.
Indeed full dollarisation will result in the loss of an important emblem of national identity and pride, which is the national currency.
If the Zambian citizens are allowed to engage in substituting the Kwacha, they may lose all the confidence in their local currency and completely stop using it, hence rendering it completely useless.
Because of this, the Kwacha will go into extinction and the country will be known not to have any currency of its own, hence losing that national identity and pride.
Zambia does not want to go that route by losing the grip on this important identity and asset, the Kwacha, and then remain without any national currency.
Given this as it may be, the BoZ’s warning against the few business houses which are pricing locally-traded goods and services in foreign currencies, especially the US dollar, is very much justifiable.
Truly, this practice undermines the macro-economic stabilisation efforts that are being undertaken and it should be underscored that the trend could counter the current progress on inflation which has
remained stable and has been declining during the year.
The current macro-economic conditions do not warrant pricing in foreign currency for domestic transactions.
The panacea to the current Kwacha malaise is well-known and has been well-articulated by the relevant wings of Government and some independent experts.
There is need to increase export of – especially – non-traditional export (NTE) goods and services so that the country could earn more foreign exchange (Forex).
On the other hand, there is need to reduce on imports, which are taking away even the little forex there is in the country.
With more dollars and other major convertible currencies coming into the country through export and less of it leaving the country through importation of goods and services, the local foreign exchange market will stabilise.
The continued prevalence of the hard currencies against the Kwacha, in terms of amounts, will raise the demand for the local currency and strengthen its exchange position against international currencies,
including the US dollar.
This is how the value of the Kwacha can be salvaged, not by shunning pricing and quoting prices in it! OPINION

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