Kwacha running on the back foot of US Dollar, as the market continues to face serious supply imbalances!

Kwacha running on the back foot of US Dollar, as the market continues to face serious supply imbalances!

By Kelvin Chisanga, Zambian Social Economist +260 97 9305194

Following the recent trading patterns that we are witnessing in the Kwacha especially this particular period of demand-supply towards end of year, the local currency (Kwacha) is likely to land its performance levels into psychological barrier of trading at K18.00 to a unit of US Dollar as anticipated by the end of this calendar year (2022).
The drivers of the rally are the low supply of US dollars on the local market contrasting with a heavy pick-up of US dollars’ demands driving strongly on importation for festivities and also with a factor of end of the financial season of year 2022.
Zambia being a mono economy fully dependent on copper export, it’s now about time we needed more aggressive efforts and trigger some deliberate bold actionable steps to have everyone engaged in making sure that sectors such as the Agriculture, tourism, transport etc., begins to give Zambian business class the much needed participations so that the impact on the forex market demands are adequately met without any difficulties through opening up of an expanded export bill to widen the forex base, and as talks get deeper sense of adding value on all non-traditional products flocking into the regional markets such as Angola, DR Congo, Tanzania, Kenya, Uganda etc. We really need to plan it pretty well especially that we have a strong Zambian advantages in so many things.
So, we are basically now in need of a vigorous policy stance from the Government so that we begin to increase levels of production and productivity required to chase up with this country’s economic aspirations as envisioned in 8th national development plan as well as vision 2023, and particularly the Agriculture sector stands potentially very strong base, as the sure way and as a powerful weapon for use in reviving of Zambia’s economic vibrancy.
However, this strongly in mind then we can breakthrough if only we expanded export bill as a firm ground solution to the current economic quagmire and we also need to strongly keep promoting some local productions in consumptions, so that we reduce the needs for import process to favour local economic participations.
Lastly, it is observable that we are slowly changing the trading narratives, quite recently we used to import high consumptive items and these were considered key essential goods but today we have a huge importation of intermediary goods for finishing up the manufacturing process in our local industries though not much is being done in comparison to the projected industrial growth.
Finally, it is well cognizant to state that the Agriculture sector should be emphasized to argument this perennial effect on the local forex market since it’s a main base in the manufacturing and industrial processing.