Shoring up the kwacha.

Author:Kunda, Anthony
Position:Zambian monetary unit - Brief Article
 
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When Zambia's major copper mines were privatised in March last year, President Frederick Chiluba was full of praise for the new mine owners, saying it was the dawn of a new era of prosperity for the country's Copperbelt province. But now, hardly a year since, President Chiluba seems far from pleased about what has been happening in the wake of the sale, especially with the fall of the Zambian kwacha against the US dollar.

President Chiluba has said he was deeply disappointed with the new mine owners for not ploughing back the bulk of the foreign exchange earnings into the Zambian economy. He claimed the new mine owners, and other foreign investors, are siphoning foreign exchange out of the country causing the Zambian kwacha value to fall sharply, and that it was disheartening that, since the sale of the mines, the amount of foreign exchange entering the Zambian economy had declined.

He said that at its height in 1994, the mining parasratal Zambia Consolidated Copper Mines (ZCCM) "provided up to 4,412m kwacha annually to the central Bank of Zambia. This is in critical contrast to the $18m the central bank received from the mining sector last year.

As a consequence of this, President Chiluba added: "All the buying power of the kwacha is gone! We cannot allow this to continue." He also claimed that some investors are "hiding behind the name of a free market. A free market is not a passport to do whatever you want."

Forex controls

In a typical commandist economy style, reminiscent of the former President Kenneth Kaunda's era, the Zambian government has directed that all exports should be receipted locally and at least 75% of the proceeds should be deposited with local banks immediately upon receipt but in any case not exceeding 180 days from the date of exporting.

Finance Minister Dr Katele Kalumba explained that, to this end, "declaration of the commercial bank processing the exports on the existing customs and excise declaration form is mandatory." Remittances, other than dividends, by all business entities will in future have to be made against invoices consistent with bills of entry collected by the Zambia Revenue Authority.

Dr Kalumba said: "Business entities and members of the public wishing to make external payments in excess of $5,000 will be required to channel such payments through banks." Personal cash carried by citizens travelling outside Zambia have been also been limited to $5,000. Any extra monies will have to be in travellers...

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