By Mubanga Mubanga
The Zambia Institute of Chartered Accountants (ZiCA) says the increased statutory reserve ratio has effectively squeezed money out of circulation, meaning that lending institutions will only lend money to mines and other big businesses.
And ZICA said the continued depreciation of the Kwacha poses a huge risk to the economy.
ZICA also urged the government to expedite the export diversification to other sectors such as agriculture, manufacturing and tourism, in order to arrest the depreciation of the kwacha.
Addressing the media during the ZICA fourth quarter media briefing, ZICA president Yande Siame Mwenye also called on the government to address Zambia’s deep- rooted structure disparity that has manifested itself in the mono-economy still reliant on copper mining.
“The government must expedite diversification of the country’s export base towards sectors such as agriculture, manufacturing and tourism as exposed in the 8 National Development Plan (8NDP) and other policy documents. This will ensure multiplicity of sources of foreign currency thereby arresting depreciation overtime,” Mwenye said.
She said the depreciation of the currency posed a risk to the economy of the country, and urged the UPND administration to find short term and long term measures to arrest the perpetual depreciation of the exchange rate.
“The exchange rate remains a significant variable in Zambia’s economy. Hence the depreciation of the kwacha continues to pose an economic challenge. Going forward, a combination of long term and short term measures must be used to arrest the perpetual depreciation of the kwacha. This way the kwacha can be redeemed,” Mwenye said.
On the move by (BOZ) to raise statutory ratios from 11.5 percent to 14.5 percent, Mwenye said the move will delay growth of entrepreneurs in the country and it will only support big business and mines.
She said the move simply put, has effectively squeezed money out of circulation which will force commercial banks to only deal or lend money to clients like the mines and big businesses.
She said this has a huge disadvantage for SME’s and delays in the growth of entrepreneurship adding that it will push the interest rates upwards.
On Constituency Development Fund (CDF), Mwenye said the government needs to be releasing the fund in its entirety, rather than the installment release that it’s currently doing.
“It defeats the whole purpose of increasing the CDF amount if only a fraction of it is released annually. We therefore call on the government to consider releasing the fund allocation in its entirety in the first half of the year and strengthen monitoring mechanisms on how CDF is being implemented and quality of projects that are being undertaken,” she said.
She furthermore said the government needed to employ registered and ZiCA trained accountants to provide oversight to CDF projects because at present, the Auditor General’s office does not have capacity to reach all constituencies in a timely manner.
“With the increased funding, there needs to be more oversight and the office of the Auditor General does not have capacity to reach all constituencies in a timely manner. Therefore, there is a need for the government to employ ZiCA registered and trained accountants because this ensures that we hold them accountable as our members.” Mwenye said.
On the debt restructuring process, Mwenye said the government needs to issue a comprehensive statement to dispel any speculation regarding the ongoing debt restructuring process.
“We encourage the Ministry of Finance and National Planning to issue a comprehensive statement on the current state of status of the debt restructuring to dispel any speculation that is currently being fuelled due to lack of information.” Mwenye said.
Mwenye also said ZiCA is concerned with slow progress of cases by its members at the Ministry of Finance and National Planning and Auditors General’s office.
“As ZICA, we have continued closely following our members at the Ministry of Finance and National Planning and office of Auditor General. As you may be aware, this is an active matter under enforcement agencies for which the institute awaits final verdict. We call on relevant authorities to expedite the process because the staff investigated have not substantively vacated the offices thereby, creating vacancies that cannot be filled but instead, have staff holding in an acting capacity and cannot make decisions which is affecting smooth operation of government,” she said.
Mwenye also said the prolonged investigation is posing a reputation risk to the country because senior government officials who manage the country’s finances are involved.
