By Agness Changala
New Heritage Party president Chishala Kateka says the government is not compelling mines to bring back the money into the country so that it can help to stabilize the kwacha.
The depreciation of the Kwacha has mainly been attributed to low foreign exchange supply, especially from the mining sector amidst high demand in the market for imports of fuel, medicine and agriculture inputs.
The development has forced the Bank of Zambia to raise the statutory reserve ratio by 3 percent from 11.5 percent to 14.5 percent on both local and foreign deposits, including government deposits and Vostro account deposits, as way to stabilize the Kwacha.
Asked to give her position on assertions that the country is not getting a lot from the mining sector, Kateka said her party has consistently talked about why the country is not getting enough foreign exchange.
She said the major problem contributing to this problem is the model, where mines sell their minerals abroad and receive dollars in foreign banks.
“As New Heritage Party for the last two years, we have consistently been talking about how or why we do not get enough foreign exchange from the mines,” Kateka said. “And of course, there are a number of reasons. But one of the major problems that we have is the model that we have of our mining. When these mining houses sell their minerals, they sell them abroad on London Metal Exchange, they sell emeralds wherever they sell them. What happens is that these people receive their Dollars or Euros or foreign exchange in banks abroad and those companies don’t bring that money back to Zambia. So, although we are earning enough foreign exchange, it is not brought back to Zambia.”
Kateka observed that because this money is kept out there, it’s not being accounted for here in the banks.
“To us here it seems like we are not earning foreign exchange when we are. And the thing is very simple. The government is not compelling these people to bring back the money so that it can help with our foreign exchange situation here in Zambia,” she said.
She said the day the government will compel the mines to bring back their Dollars in the country, the Kwacha will also stabilize.
“This issue that I am talking about is the lowest hanging fruit that we have. The day that we will compel these people to bring back their dollars to sit here in the accounts, we are not saying that we shall take that money, but the dollars should sit in the accounts here in Zambia, you are going to see the exchange rate normalizing very, very quickly,” Kateka explained.
Asked if it won’t be viewed as exchange controls if mines are asked to keep their monies in the country, Kateka responded in the negative.
“No! No! That’s not exchange control. That’s not exchange control at all. Exchange control is when they have your dollars here, then we tell them, you can’t take out so much. This one is about accountability of money that you have raised in Zambia being banked here,” she said. “You need to bank that money here, what does that do? Firstly you will have a lot of dollars in the economy, secondly even our banks will begin to make more money because when these companies want to buy their caterpillar machinery, they will make the booking from here, not from another bank outside of the country. This will help this economy greatly.”
