By Isaac Zulu
Private Sector Development (PSD) association chairperson Yusuf Dodia has observed that multinational companies are withdrawing foreign currency in reaction to government’s policy on tracking proceeds, which he said is leading to the depreciation of the Kwacha.
In an interview with Daily Revelation, Dodia said that normally the Zambian Kwacha tends to appreciate towards the end of the year, but it is surprising that this time around it is depreciating.
He attributed the current trend to the recently announced Export Proceeds Tracking Framework, saying this has necessitated the withdrawing of foreign currency from the Zambian economy.
“In normal circumstances, the Zambian Kwacha tends to appreciate during this time of the year because multinational companies get to pay end of the year taxes and pay Christmas bonuses and all that. But it is surprising that this is not what is happening this time around. I would like to think that, following the announcement of the introduction of the Export Proceeds Tracking Framework by the Bank of Zambia, most of these multinational companies are withdrawing foreign currency from the economy,” Dodia explained. “This in turn is making our economy weaker. Hence the continued depreciation of the Zambian Kwacha against major convertible currencies.”
He observed that that following the announcement of the introduction of the Export Proceeds Tracking Framework, which will take effect in January 2024, most multinational companies are not being open about the profits they are making, saying they are not able to react to government directly but by withdrawing foreign currency from the Zambian economy.
“This is reaction by multinational companies and mining companies to the Export Proceeds Tracking Framework. They do not want to react directly to government, but instead decided to take some decision that has made our currency getting weaker,” Dodia said.
He said that this is also an indication that the Zambian economy is still at the mercy of foreign entities.
“This only goes to show that the Zambian economy is at the mercy of foreign entities. And mechanisms that government is putting in place such as the Export Proceeds Tracking Framework, ought to be supported because that will help in stabilising the Kwacha and, ultimately, contribute to the improvement of the country’s economy,” said Dodia.
