MINISTER of Finance and National Planning Situmbeko Musokotwane has attributed the cumulative depreciation of the Kwacha by 73 per cent since June last year to short-term and fundamental factors like political uncertainty and re-emergence of pricing of local goods and services in dollars.
The local currency has depreciated by about 17.1 per cent since January this year.
Dr Musokotwane told Parliament in a ministerial statement yesterday that the depreciation of the local currency did not mean that it had performed poorly as it competed favourably with other currencies like the British pound and the South African rand.
“Against the sterling pound for example, the Kwacha had depreciated by only 11 per cent since the end of June 2008. Against the South African rand, the Kwacha depreciation was only 26 per cent,” he said.
The minister said the two international currencies could have been about the same price they fetched against the Kwacha if measured by February last year.
He said Zambian importers often needed other foreign currencies apart of the United States dollar.
Dr Musokotwane said a lot had to do with the foreign currency individual traders wanted to deal with.
Commodity imports and exports that are invoiced in the dollar, like petroleum, attracted higher amounts of Kwacha equivalents which may not be the same for goods purchased in pounds and rand.
“In other words, when we consider the depreciation of the Kwacha against a hypothetical average exchange rate that reflects all our relevant trading currencies, it becomes clear that the Kwacha has not done so badly,” he said.
Dr Muskotwane said other than the re-emergence of dollarisation, fundamental factors like the change in investors’ sentiments resulting from the global financial crisis also contributed to the local currency’s depreciation.
He said the growth and terms of trade that led to reduced foreign exchange earnings equally affected the strength of Kwacha.
Other factors that have contributed to the Kwacha depreciation are the increased and bunched demand for foreign exchange rising from oil, maize and fertiliser import requirements, including some element of panic and speculation in the market linked to uncertainties about the supply of foreign exchange.
And Deputy Minister of Agriculture and Cooperatives Daniel Kalenga told the House that the Food Reserve Agency paid K305,500,080,000 for 402,786 metric tonnes of farm produce bought from farmers countrywide during the 2006/2007 farming season.
Deputy Minister of Energy and Water Development Lameck Chibombamilimo said mining companies, hotels, agriculture and banking sectors lost US$39,550,717 as a result of power outages last year.
Government did not however compensate such strategic industries for the loss.
Meanwhile, Deputy Speaker of the National Assembly Mutale Nalumango reserved a ruling on a point of order raised by Nkana member of Parliament Mwenya Musenge (PF) over the matter in which MMD deputy national secretary Jeff Kaande requested Government to pay party members for goods and services they supplied to Government institutions.
Mrs Nalumango said she, too, had read such reports in the press but needed time to study the matter before she could make a ruling.
[Zambia Daily Mail]
I hope it is a good explanation. Let me read first.
Hope is a place in Hell in our situation
Mmmmmmm!!
I dont understand why Musokotwane is trying to console the nation over the depreciation of the kwacha. What is required is positive action towards addressing the problem.
This Minister is a liar, they have failed to stem the free fall of the Kwacha due to myopic leadership. Not these reasons he is giving us. When he says Political uncertainity who has created it??? MMD.
They had channeled the money in campaigns and other unproductive NyamaSoya trips to Nap in Mfuwe and other neibouring countries. magande is around, why cant they consult him what they did to ensure the Kwacha was stable??? As usual Musokotwana wont because of pride & NyamaSoya clueless. Circus continues..
Good point, but dont you think the global economic crunch has affected every country. for the first time rand is trading at R10 to $1 .I think we have been hit badly simply because of poor planning. We never have plan b so when the investors F#$% us up , everything goes down together with them…kaili big cheese priority is to tour Africa instead of making a serious consortium to discuss the way forward.
Musokofimofimo ine i cant heed yo explanation lest it was Magande,hes a real economist. Not imwe awee tata
Hi Zoe, i thought you said wafileka ifya blogging coz its become complicated?…kidding..how u mummy?
i hope bwana minister, you know where u r taking us.
OK, good explanation Mr. Musokotwane. In other words you would have simply said our major dependency on copper export revenues is what keeps our currency weak. Now what’s the way forward?
Ee ba minister of Finance aba? The man is lost. He does not understand his role and looks like Jeff Kaande the MMD party cadre
This man is A JOKER & too theoretical. We want solutions not explanations.
WE ARE IN BIG TROUBLE COUNTRY MEN AND WOMEN.
Have we ever been out of trouble? The real big trouble begun when the imperialists started their scramble for Africa. After the so-called “independence”, they merely left us with the choice between being fryed in the pan or being grilled directly by the fire.
Nine Chale, are you sure its right for us to still blame white chaps for our misery? we had it all but we lost it, after independence, we had so much infrastrature, industries, we failed to keep these things running and profitable after crying for it. Lunshya is the best example, imwe, when we were grouping up the place used to be cute…nomba, kwashalafye rubbing shoulders ne ngombe mu town..
ba nine chale, i find it rather primitive when people talk about imperialism in this age and era. dont be like silly old bob mugabe
Nine Chale u are the biggest joker of them all… the so called imperialist left us with much hope than we have now. in 1980 the kwacha was equal to a british pound and two USD. then came KK with his communist nationalisation program, after him came big Fred with his back pocket privatisation program. LPM tried his best we will never fully know what his legacy would have been. ALAS the biggest and most ignorant leaders of them all Nyama Soya…… we all know his is a ship with no rudder or compass. Like blogger #2 said our hope is a place in hell.
Can the minister please tell us what he is doing about this ZMK depression. Giving us reasons is not enough. He should demonstrate that he is in control and on top of the situation. Otherwise he’s not fit to be the leader in this situation. Is he really capable. We need capable men and women, solvers, not just observers. What is he doing about traders pricing in dollars? What plans have they put in place for next year so that the cause due to maize and fertilizer imports can be reduced or eradicated? What is he doing about the aspect of forex speculation? How is he addressing investor confidence? How about political factors? These are some of the things causing depreciation. Shallow minds!
You on the point my dear. we need a strategy for all these things and they dont seem to be looking at it in that way..Like my boss says, if u cant offer a solution before you even explain the problem then you are useless. They should employ me , i become RB’s strategic adviser coz i think he aint got any brains around him.
Useless bullsheet from Situmbeko, free and ever gravity obeying kwacha has been due to fiscal indiscipline and failure to regulate dollarisation coupled by the loss of metal prices on the international market. What is Nyamasoyo and his clique doing about it?
Hey, you guys related to Margaret Mwanakatwe, shes my role model!!
cheers!
Miss Daisy, these may be imposters! I don’t think people use their real names here, except me, ofcourse.
Is it, so your name is Chale?
Prepare for hard times ahead.
I think what the Minister is talking about is very true. It was on the news that the illness and subsequent death of LPM triggered the much uncertainty in the business environment…… The adoption of Nyama Soya helped to scale up the uncertainty. The election of Nyama Soya worsened the situation as people inclusive of those in MMD have had no confidence in Nyama Soya. He doesn’t even have confidence in himself. The budget that was presented never brought any new thing and never a ray of hope in it. So it explains the whole uncertainty scenario. My flag is always flying at half must.
This short man called musokotwane, l really cant understand him. Why ? kwena can a minister of finance come out like that ,just to console the nation how badly the kwacha is fairng and not telling nation the actions that the Government is undertaking to strength or protect our currency from further volatibility . What kind of a finance minister is that one ? His president being an economist from zimbabwe is also lost and cant tell us anything. What is the difference between us and Americans kanshi ? Look at Obama ! he has never been globaltrotting because of the economic he found after GB. But insteady the man spends sleepless nites trying to act and find a solution for his citizens. RB ??
This is the difference between Developed and underdeveloped countries – it is in the people in leadership. Obama is as African as you and me. He was elected at same time with RB. But look at how differently they handle things!!! RB is typical African leader – globe trot, spend all the little national resources on such things, take weeks off to Kasaba Bay, blame the world for everything and offer no progressive leadership. I tell you Obama will achive more by 2011 than RB. Very sad. I just wonder how we will ever come out of this. The calibre of our leaders is really crap! The electorate also should be blamed for voting in such people.
infact the entire zambian population should be blamed for accepting such animal poop of leaders to be imposed on them..@#$% and no one does anythng about it. ine chilankalipa mwe
To start with lets swallow our pride and dollarise the economy, simply put let us adopt the dollar as our official currency for goodness sake the US is the only country that specifically prints money for export, they would more than welcome that policy. in so doing we will get ride of the persistent devaluation of our currency and much loss will be averted in import and export currency translations (gains and losses) lets face it it will cost you more to buy a USD than to Sell it. Secondly Nyama Soya and his cronies should come up with solid economic plans on how to get the country back on it’s feet, instead of constantly crying and blaming the global recession,
let depreciate more till i come to zambia. im sure i will be a billionare
Banda has now grown into a brontosaurus. His fangs have sunk on Chibombamilimo and Shakafuswa’s bodies because they sympathise with that rude lady Maureen Kakubo Mwanawasa. Such info is priviledged for our kind of work only.
Bushe this explanation mwebantu!! Will it help?
Iwe mulenga, nauchinja ishina?
hehe, How you mummy?
Baby C, uli shani? I haven’t seen much of you today. Mulenga is a man of many moods, isn’t he?
RB should even address the nation on the state of job affairs in the country. Mopani copper mines is conteplating on cutting some more jobs (close to 1000) ,am sure he knows that by now. Gov is still sleeping about job security of its people with the mines . Insteady they are busy shielding Dora leaving out major problems people are going thru. Can the opposition parties show us that they are united and put pressure on this useless gov please ! Ask the Labour offices on data regarding how many zambians have lost their jobs. Even the best newspaper in the world ( PostZambia) can provide such for you guys.
We need to reach a stage where national leaders are judged by how many jobs they have created or destroyed. This is how the UK, USA and Europe operate. If you have a Govt or president that will never create jobs, he is not worth his salt. I do not think our president and Govt will willing fish out data on jobs and track them. They know they are failures. As for the Post and other media – Newspapers, TVs, Radio etc, they are too politically polarised that they only report sensational issues. They are capable of tracking data on jobs and judge incumbert and prospective leaders on that. But they dont. Why? They are only interested in making money for themselves – selling whatever sells fast.
To start with Nyama Soya was the wrong presidential candidate… no caliber you expect him to keep track of how many people he has indirectly fired.. come on!!!! what are the opposition doing in parliament are they still in the minority don’t they have the muscle to dictate policy on development or are they just busy enjoying those travel and lodging allowances…and how is their performance measured, the so called MP’s what developmental projects have they implemented in their constituencies..??? Damn selfish failures. PERIOD
The £, the $ etc have sufferred and continue to suffer not because of players in the market place panic-buying foreign exchange but because the whole business world is upside down. In the Zambian context we have , to say the least, two trained illiterates manning two of the most important and strategic offices in the land. The Finance portifolio and the Presidency both need persons with balls and the gall to deal with the economic problems we are facing instead of passing the buck to some faceless individuals.If we are broke, the minister should say so. If our economy is viable, in what areas is it viable and what needs to be done? The Party and it’s government of old knew what was going…
When you look at Obama, you get inspired and have hope that the man is taking you somewhere. Unfortunately, our Zed leaders dont offer that inspiration. I just can’t see it in RB or Musokotwane himself. None seem to be bold enough to step out and say guys, this is the way we should go. A leader leads, or at least must have leadership qualities and is visionary and strategic. RB and his ministers seem to be far from this. Is this really the best Zambia can come up with!! Is this how crap our political system is, to produce such inept national leaders to man very important offices. Where are they taking Zambia?
Well said my Bro, we all know that Obama is a highly educated man, i wonder about Nyama Soya, what’s his academic background and what previous projects has he done to back his credentials, has he built anything, (apart from his shack of course), what policy or law has he personally initiated can he say with a raised head that he has done and achieved such and such….
Mu Government mwaliba aba kote mwe..let me read first, how you imwe bantu?
If there is no food at home you can’t at your neighbors to if the do not have food who are we to have food. Has much as we might understand or not understand what has caused the Kwacha to depreciate we should not have more explanations but solutions on how the Kwacha will be brought to manageable levels. Our major foreign exchange earners for our country are the mines. The mines are not operating at full capacity or they are not operating at all. This has made you guys who are Lusaka who spend our hard earned $’s there not to have what to spend. Mines will declare loses and will not give the government the taxes.
A finance minister should be seen to be solving problems, not mourning. We pay him a lot of money to make our lives better, not to mourn or complain with us. In the business world, if a CEO is not solving problems, he is fired. Problems are there to be solved. The minister should bring out all the tools – his academica, experience, form consultative groups, engage other people, use experts etc till they have strategies to sort out whatever is in our power to sort out.
I thought abamapalashoot bamano sana.Anyway before i comment further let me reed again
President Rupiah Banda has with immediate effect fired Science and Technology Deputy Minister, Jonas Shakafuswa and Energy Deputy Minister, Lameck Chibombamilimo.
Mr. Banda announced the dismissal of the two when he addressed thousands of MMD cadres who matched to State House on Thursday to show solidarity with his leadership.
The President also said he would also dismiss MMD MPs who are not loyal to the party and face them in their constituencies during by-elections.
Mr. Banda warned that he will take action against all government and MMD leaders speaking ill of his administration.
He said he is aware that there are some bad eggs within government and the MMD whom he will be…
He’s beginning to sound like Pol Pot in the 1970’s true paranoia, the man is likely suspicious of his own shadow. the sooner we get rid of him the better.
What is the point Dr Situmbeko? We all know of the theories you are trying to impartb but the thing is, it seems you did not know this was going to happen. Worse still, you look like someone who does not know what to do after this has happened. Presido, has already indicated that he himself cant do anything and that China is working round the clock to solve this problem. No sense, if you dont know how to solve this then go to the farm???
Bushe ama investors can they trust people Like BANDA na Dora Siliya? Mubepela fye! even if its a global economic crisis, Zambia will still not recover mulandu waba Kabwalala. Napapatata MPS can you IMPEACH BANDA? IMPEACH IMPEACH BANDA
I recall Hon Magende when he was Minister of Fiance saying the Global Financial Crisis was not going to affect the Zambian economy. What has changed now because that assurance appeared both in public and private media. Talking of political uncertainity, well the MMD Govt whether LPM was still alive, we were still going to face the same problem. This is something which started with the biggest economy in the world for Zambia we are just catching the melt down fallout. Let the Govt come up with a THINK TANK that will chart the way forward. Some one out there can provide solutions to our problems. Time for blaming this and that one is not there, let us put politics behind and find a solution.
In a nutshell Dr Musokotwane is saying its due to high demand of the dollar and short term political uncertainty – he does have a way of saying it in a very complicated way. I feel the global reccession is a key factor and i think he is down playing it because of the implications on the Zambian economy. The implications are dire in the short term (2-3yrs).
It doesn’t take an economist to understand that reduced inflows due to reduced global demand (china/india) means less dollar to meet our demand.
Having said this, i take nothing away from Dr Musokotwane and hold him in the highest regard. professionally.
In a nutshell Dr Musokotwane is saying its due to high demand of the dollar and short term political uncertainty – he does have a way of saying it in a very complicated way. I feel the global reccession is a key factor and i think he is down playing it because of the implications on the Zambian economy. The implications are dire in the short term (2-3yrs).
It doesn’t take an economist to understand that reduced inflows due to reduced global demand (china/india) means less dollar to meet our demand.
Having said this, i take nothing away from Dr Musokotwane and hold him in the highest regard. professionally.
Dr Musokotwane knows what the problem is, but his statements have caused more uncertainty his statement is as good as remaining mute on the matter, how can a finance minister say that the currency has devalued because of A, B & C and leave it at that, to quell the uncertainty let him tell us the citizens, the corporates and investment houses what he is going to do about it. we do not need elaborate speeches to please grade 12 parliamenterians we need solid fiscal and economic policies to guide our nation. PERIOD. and you still hold the man in high regard???
Ati magande was to write off inkongole yaba ZA. Nyama so ya has documents
kepusha takolelwe bowa,bwana minister ask ngafyamiso banya,no one will laugh at you.
Hi Guys, I’m writing fron Guanzhou. By now you have herd that Chinese investars have bought the mine. We will bring 90 trained Chinese miners to teache Zambians how to mine copper profittably. We hope that we can work harminously for the successful of this mine. I will be rooking ahead to coming to Zambia once my visa is issyued by the govarnment. Rooking foreward to being in nice Zambia. ME AND MY FRIENDSE WILL MAKE YOUR KWACHA STRONGE BY WORKING HARDE. Yours in friendshipe, Weng