Economic Expert Urges Zambia to Diversify Exports Amidst Growing Trade Imbalance
Economic expert Mr. Kelvin Chisanga highlights the urgent need for Zambia to broaden its export basket as it grapples with a persistent trade imbalance.
Mr. Chisanga, addressing concerns raised by various media outlets, emphasizes that the current market interventions by the Bank of Zambia may not offer sustainable solutions in the long run.
Mr. Chisanga points out a serious and continuous trade imbalance between exports and imports, attributing it to flaws in the local economic plan’s approach to industrial activities.
He notes that the structural domestic economic architecture favors imports over exports, contributing to a trade balance deficit consistently hovering above 45 percent, as reported by the Zambia Statistics Agency Monthly Bulletin.
According to Mr. Chisanga, the imbalances, with a significant increase in imports and a decrease in exports, are putting immense pressure on the local currency and impacting the balance of payments.
The exchange market, he observes, displays clear signs of strain due to trade imbalances, with the Kwacha experiencing marginal losses and rapid reactions.
Identifying festivities and industrial breaks as key contributing factors, Mr. Chisanga emphasizes their adverse effects on production scales.
He explains that a trade deficit of above 15% in exports and a simultaneous 25% increase in imports indicate a lack of local production, affecting the balance of payments and potentially depleting Forex reserves.
Mr. Chisanga concludes by underlining the importance of addressing the root cause of the trade deficit. He advocates for a shift towards expanding the export bill, relying on the natural law of supply and demand for foreign exchange.
Rather than relying solely on market interventions by the Bank of Zambia, Mr. Chisanga suggests that sustainable solutions lie in boosting local production and diversifying the country’s export base.
As Zambia navigates its economic challenges, experts like Mr. Kelvin Chisanga stress the significance of strategic measures to enhance exports, thus creating a more resilient and balanced economic foundation.
