By Isaac Zulu
Private Sector Development Association chairperson Yusuf Dodia has said that the appreciation of the Kwacha against major convertible currencies is temporal.
In an interview, Dodia attributed the appreciation of the Kwacha to the Central Bank’s decision to release forex from the foreign reserves into the economy in order to stabilise the local currency.
“If the Kwacha is appreciating because exporters are bringing in foreign earnings in the country and therefore our banks have more foreign currency. And because there’s more foreign currency there’s less demand for forex and the Kwacha has appreciated. Then we are doing the right thing,” Dodia explained. “But if the Kwacha is getting stronger because the Bank of Zambia has released forex from foreign reserves into the economy to help the Kwacha stabilise, then it is a temporal solution. It is like putting a bandage on the wound without treating the wound. You are just giving it a temporal relief and after one month or so, you get back to the same problem.”
And Dodia said that Zambia’s economic outlook is not positive.
He cited the high electricity tariffs, increased fuel pump prices and the decision by government to start importing mealie meal from neighbouring countries; as some of the contributing factors.
“We have allowed the importation of mealie meal from neighbouring countries; meaning that we are taking foreign currency out of the country. The electricity tariffs have been increased and ZESCO has proposed an increase in tariffs. That will impact negatively on the economy,” Dodia said. “Energy plays a critical role in any economy. The way water keeps a human body running is the way energy keeps the economy. Other than that, prices of fuel are high. We have shut Indeni, so we do not process fuel from there. This in turn means that we will continue importing finished products, which is very expensive. This has made the cost of doing business expensive because you need fuel to transport raw materials, to transport finished products and workers. Other than that, you need fuel to run machinery in factories. When the cost of production is high, the cost of goods and services become high. And ultimately ordinary citizens will continue struggling. I don’t think the country’s economic outlook is positive.”
He said that in order to improve the country’s economy, government should quickly resolve the debt crisis in which the country has found itself and take full control of the energy sector.
“Unless we do things differently, I am afraid the economy is likely to remain the same. We need to quickly resolve the debt crisis. There are lamentations over that because countries like Ghana is already ahead of us,” said Dodia. “It should also be noted that in countries likea China, Taiwan, Indonesia and Malaysia the government is in control of the energy sector just like we do with the Army and Zambia Police, because we consider those as sovereign tools. We have put the Zambia Army and the Zambia Police in government control because they are there for the prevention of citizens’ invasion. But we are overlooking economic invasion by commercialising and privatising the energy sector. Some economies in Europe and North America are collapsing because of the commercialising and privatisation of the energy sector. And I think there are so many examples that we can give out there to demonstrate that the commercialisation and privatisation of energy sector is a big mistake. And it is my considered view that we need to reflect on the decision we made some 10 or 15 years ago and see where it has brought us thus far. We need to reflect on that and see if we can make a turnaround and do the right thing.”
