Stronger Kwacha offers relief, but costs depend on more than currency fundamentals
Kelvin Chisanga
By Kelvin Chisanga
The recent appreciation of the Kwacha is considered as a positive fundamental development for Zambia’s economic health, particularly for importers and investors but it has to lead a balanced scale even for local manufacturing sector and exporters.
However, it is also important to note that currency strength alone cannot automatically drive down the cost of key goods and services.
Prices are usually influenced by a compendium of factors including energy and fuel costs, interest rates, taxes, logistics and supply chain structures.
Businesses often face fixed domestic costs and inventory purchased at higher exchange rates, which delays the pass-through of exchange rate gains to consumers.
Sustainable reductions in prices will require coordinated improvements across multiple areas: efficient supply chains, stable energy pricing, competitive markets and supportive monetary and fiscal policies.
While the stronger Kwacha provides relief potential, it must be complemented by consistent broader structural framework and policy measures to meaningfully ease the cost of living for Zambians. – Zambian Developmental Media Alliance (ZADEMA)
About The Author
