In the wake of Zambia’s economic challenges and the unsettling depreciation of the local currency, Kwacha, prominent economic analyst Kelvin Chisanga has put forth a series of short-term solutions to mitigate the negative effects on the nation’s economy.
Economist Chisanga acknowledges that various factors, including prolonged debt restructuring deals, political upheavals affecting essential goods, and global events impacting regional markets, contribute to the decline in the value of the Kwacha.
Despite these challenges, Mr. Chisanga advocates for immediate actions to address the situation.
One key recommendation put forth by Chisanga is a critical review of the payment structure for foreign trade, particularly in vital sectors such as mining.
He suggests discontinuing offshore auctions taking place outside the country, emphasizing that these auctions create a significant disparity in Kwacha trade values, with offshore rates slightly higher than the domestic market.
Another crucial aspect of Mr. Chisanga’s proposal involves a comprehensive reevaluation and restructuring of the local economy.
He emphasizes the urgency of expanding the export basket through policy enhancements and stimulating growth in local production, particularly in the agricultural sector.
Mr. Chisanga also calls for higher trade limits on US Dollars, provided the transactions adhere to ethical business practices.
To address the scarcity of US Dollars in the local market, Economist Chisanga proposes a temporary rule limiting the outflow of US Dollars unless for critical purchases.
He suggests monitoring foreign banks harvesting US Dollars for their respective markets and implementing measures to ensure dollars leave Zambia only for essential goods and services.
Mr. Chisanga highlights agriculture as both a short and long-term solution to mitigate the impact of Kwacha depreciation. He points out Zambia’s abundant natural resources and the potential of the agricultural sector to meet regional demands for the country’s produce.
In a bid to encourage retention of US Dollars within Zambia, He recommends offering interest rates on customer foreign accounts (CFC or CFY accounts).
Additionally, he suggests an amnesty order for individuals holding money outside the country, aiming to incentivize repatriation without punitive measures.
As Zambia grapples with economic uncertainties, Mr. Chisanga’s proposals offer a strategic roadmap to address the immediate challenges and pave the way for sustainable economic recovery.
The Ministry of Finance is now considering these recommendations as part of their ongoing efforts to stabilize the economy and strengthen the local currency.