By Chinoyi Chipulu
Economist Kevin Chisanga says de-dollarisation is not a standing solution to Zambia’s economic challenges as it may bleed other challenging problems.
And Chisanga has noted that restricting the use of the US Dollar in local transactions would be difficult, given the country’s industrial capacity.
Speaking in an interview with Daily Revelation yesterday, Chisanga said the country lacked a robust and vibrant industrialisation drive to support robust and industrialisation drive to support the implemention of de-dollarisation.
“First and foremost, I know that de-dollarisation has killed industries but with the current prevailing times, since we don’t seem to have a robust and vibrant industrialisation drive, it will be difficult to act on de-dollarisation process especially that our manufacturing industry has not taken off, to occupy a larger space on our local economy,” he said.
Chisanga said the proposed plan might bring in some distortions, as other sectors in this economy would struggle with most international transactions complicating the trade processes especially for those with high volume of forex interplay as there would be some delays in the process.
“Surprisingly, the Bank has been changing policy instruments for some time now even in this tough situations instead of advising the central government on stimulating economic growth through policy incentives and tax relief to the SME sector in order to build up capacity of enterprise development activities,” he said.
Chisanga said The Bank of Zambia (BoZ) would also face a tough and hard challenge with the instrumentation of the monetary policy transmission strategy, as the cost of doing business activities would keep on a focus with an upward movement in the cost of money and this would make monetary policy to become much weaker as compared to the current existing form of actions.
“Zambia’s economic challenges can only be sorted out if we build and scale up industries so that we can assume high production scales in response to the demanding power of the export market,” Chisanga said. “Technically if implemented, this act of policy, will lock up the economy and making it extremely difficult for key microeconomic environment to struggle as we have even some good examples of our next door neighbour Zimbabwe whose economic structure faced some insurmountable challenges way before reverting back to the dollarisation process after experiencing the highest level of inflationary spikes on most essential goods and services especially after the collapse of industries.”
Chisanga said what this economy required, were means of buffering strong manufacturing activities and base to ensure that the export basket became stronger and that way it would definitely support the forex market fundamentals.
“However, I conquer with the IMF citing that the best could be when the key macroeconomic fundamentals start showing some positive developments especially when we basically see some stability in key significant factors such as the inflation rate, interest rate, exchange rate, employment, production and consumption levels,” said Chisanga.
