• Zambia is supposed to be a producing country.
• Producing more for exports can enable the country have more foreign earnings to stabilize the Kwacha
• Bank of Zambia’s participation in the open market operations is just a short term measure.
An Economist has called for more agriculture production to increase the country’s foreign exchange earnings and help stabilize the Kwacha.
Speaking in an interview with Money FM News, Mambo Phiri noted that the currency has continued performing poorly against major convertible currencies such as the US dollar because Zambia is not producing enough to meet the demand for foreign earnings.
Mr. Phiri stated that Bank of Zambia’s participation in the open market operations, where it offloads United States dollars to stabilize the exchange rate is just a short term measure and is not sustainable in the long term.
“The performance of the Kwacha, ideally you find that as a country we are supposed to be a producing country, whereby the more we are producing in terms of the exports it means we can have more foreign earnings. The current situation is that we are not producing much so that we can meet the demand for the foreign earnings.”
“So as a result we just have to rely on the Bank of Zambia where the Central Bank will operate on the open market so that they can try to stabilize the exchange rate which is just a short term measure and is not sustainable in the long term. You will find that the Central Bank is offloading the foreign currency in terms of the US Dollar on the market so that they can try to stabilize the economy in terms of managing the exchange rate,” Mr. Phiri stated.
He added that the country needs to do more to support other sectors such as agriculture so as to increase the production of commodities which can be exported to neighboring countries like Democratic Republic of Congo.
“As a country we just need to do more so that other sectors such as agriculture can also be supported so that we can also increase the production of the commodities. We need to export more to countries such as Congo because there are a lot of people who like importing agro products,” he added.
