• There is high demand for imports especially in the manufacturing sector.
• The high cost of production is making it difficult for manufacturers to produce competitively.
• Most of them resort to import goods for resale.

An Economist says the high demand for imports especially in the manufacturing sector is putting pressure on the Kwacha.
Speaking when she featured on Money FM’s Policy, Power and Money program, Dr. Esther Banda noted that the high cost of production is making it difficult for manufacturers to produce competitively, therefore most of them resort to import goods for resale.
Dr. Banda also observes that the protracted debt restructuring process is making it challenging for foreign investors to bring in their investment, thereby limiting capital inflow which has contributed to the poor performance of the currency.
“The country is still in debt distress and it becomes difficult for investors from the international community to bring in their investment. This means that if we do not have new investors coming into the country, we have zero inflow of capital and so those are some of the reasons why the Kwacha has been performing badly.”
“We have also seen that there is a huge demand for imported goods because of the high cost of production which is making it very difficult for manufacturing companies to produce competitively, so it’s easier for them to just import goods and resale, so the fact that there is so much demand for importation of goods keeps weakening the Kwacha every single day,” Dr. Banda stated.
She stressed the need for the country to reduce on its imports and increase exports to help strengthen the exchange rate.
“It is for the first time in the history of Zambia for the Kwacha to go as high as K27 per US dollar and that is a huge shock. So for any country’s currency to be strengthened, one key fundamental aspect is reduce on your imports and increase your exports. What is it that we are doing wrongly as a country when we have been exporting copper?” she wondered.
The Zambian Kwacha has experienced persistent reductions in its value against major convertible currencies such as the United States dollar.
The local unit has today Tuesday 13th February, 2024, opened the market trading at K26.63 and K27.16 on the bid and offer respectively.
Government is optimistic that the currency will stabilize once Mopani and Konkola Copper Mine (KCM) as well as other mining investments start coming in.