Zambian Kwacha Struggles Against US Dollar Amid Economic Challenges
Zambia is grappling with economic challenges as the local currency, the Kwacha, faces a decline against the US Dollar. Economic analyst Mr. Kelvin Chisanga sheds light on the current situation, attributing the Kwacha’s depreciation to various fundamental factors.
The Kwacha is currently under pressure due to serious supply imbalances in the market, coupled with robust demands for the US Dollar.
Mr. Chisanga notes that recent trading patterns indicate a concerning trend, with the Kwacha approaching the psychological barrier of trading at K25.00 to a US Dollar unit by the end of the calendar year 2023.
Key drivers of this currency imbalance include low US dollar supply locally, heightened demands driven by imports for festivities, and the conclusion of the financial season for the year 2023.
Other contributing factors include cost pressures on essential foodstuffs, potential political tensions locally and regionally, prolonged debt talks, reduced copper production, and imports of oil and medicine.
With Zambia heavily reliant on copper exports and facing challenges, Mr. Chisanga emphasizes the need for aggressive efforts and strategic actions. Sectors such as agriculture, tourism, and transport are highlighted as essential components for economic revitalization.
To address the economic challenges, Mr. Chisanga suggests a more inclusive approach involving the Zambian business class. He advocates for the expansion of the export bill to widen the forex base, adding value to non-traditional products in regional markets.
The importance of a vigorous policy stance from the government is underscored to boost production and productivity, particularly in the agriculture sector.
As Zambia undergoes a shift in trading narratives, moving from importing consumptive items to intermediary goods for local industries, the need for local production is emphasized.
Mr. Chisanga acknowledges external risks from South Africa’s power challenges and the upcoming political election in the Democratic Republic of Congo.
In conclusion, Mr. Chisanga emphasizes the pivotal role of the agriculture sector in mitigating the perennial effects on the local forex market. With strategic planning, expanded export bills, and a focus on local production, Zambia aims to navigate through economic uncertainties.
