Zambian Newspaper Headlines 23.04.2014

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Why is the Zambian Kwacha Depreciating?

New Kwacha Notes2 2013

For the past two months the Zambian Kwacha has received serious blows pushing it down in depreciation against the major currencies. The situation has caused panic among the citizens and the Government.

H.E. MC Sata assured Zambian people that the Government was closely monitoring the developments in the foreign exchange market. The President said the recent depreciation of the Kwacha is due to a combination of domestic and international market developments.

The Finance minister blamed it on the curtail which is manipulating financial markets to the benefit of some scrupulous people.

The opposition on the other hand, has attributed the situation to lack of investor confidence.

However, given the obvious confusion it is appropriate to assess the facts from an independent point of view. It is therefore important to ask the right questions for the right answers. The question would be, what causes any currency to depreciate?

Inflationary Pressure

Inflation is one of the biggest factors in currency depreciation. When inflation occurs, the general prices of goods and services are on an upward trend. When inflation rises too rapidly, currency then depreciates. This occurs because consumers have to spend increased amounts of money on goods and services during inflationary periods than they do during non-inflationary periods.

Bank of Zambia observed, through their policy rate report, that inflationary pressures continued to increase. In January 2014 inflation was at 7.3% but now it stands at 7.7% . Could this be a reason for our Kwacha tumbling?

On this issue the President said that his administration had tightened monetary policy consistent with the attainment of the inflation target of 6.5 per cent for 2014.

It must however be noted that, generally, a steady rate of inflation is a positive event because it indicates economic growth. Could this be our position that our economy is growing?

National Trade Balance

The other thing that causes the currency to depreciate is balance of trade. When the total dollar value of a country’s imports exceeds the total dollar value of its exports, the county has a trade deficit. This means the country is exporting fewer goods than it is importing. However, if the export value is more than the import value, it means we have a trade surplus.

Zambian’s current account trade balance, at the beginning of the year, was at US$433.5 million, which is a 17% Which is up 17% from US$368.5million in 2012. Meaning we have a trade surplus that has improved and cannot attribute to the Kwacha depreciation.

However, the central bank moved in to explain this issue further. The Bank of Zambia (BoZ) said that there is an increase in demand for imports of capital goods which has contributed to the loss of value of the Kwacha against major currencies.

Simple economics states that, when demand is high for any product, the price also goes up. The more foreign currency is demanded the more Kwacha is needed to exchange (or buy) with foreign currency. In other words the Kwacha depreciates.

This is as a result of consistent economic growth the country has recorded over the years which has led to a steady increase of imports particularly capital goods critical for sustaining such growth.

“Although exports have continued to show impressive growth, demand for imports has been relatively stronger, thereby contributing to the exchange rate depreciation,” said the central bank in a statement.

Economic Money Supply

This is where the Government through the Bank of Zambia intervenes on the financial market in an attempt to find equilibrium between the supply and demand for Kwacha and foreign currencies. Two common ways of intervention is by increasing the economic money supply by printing new money or selling government-owned securities. When either of these two events occurs, the currency depreciates because the supply of money is higher than its demand.

On this aspect, BoZ came in to explain that apart from the demand for imports, the central bank noted that Zambia’s increased integration with the world economy has had an impact on the performance of the local currency.

“It is important to note that the US Federal Reserve Board’s decision to reduce the amount of US dollar liquidity supplied through its quantitative easing programme has broadly affected several emerging markets including Zambia,” the statement added.

The Federal Reserve’s course of action has led to fears of slower growth of major economies particularly China.

This has resulted into the price of copper, Zambia’s major export earner, to be subdued thereby undermining investor optimism. The Bank stated that the impact had also resulted into a slowdown in portfolio investment inflows, which have hitherto played an important role in financing the country’s current account deficits.

Degree of political stability

A country’s political unrest is characterised by loss of control of a country’s territory, inability to provide public service and erosion of legitimate authority. The gap between the rich and the poor can also bring political instability.

All these are in one way or the other related to the economic status of the country.

Zambia has a majority of her people falling below the monthly food basket. A larger percentage of the citizens are unemployed and those that are employed are mostly facing very bad conditions of service. Anger and frustrations of the people towards the government is slowly increasing, after a high expectation after the change of Government. People don’t seem to have the patience and opposition parties are taking advantage of the situation.

This has been going on for decades although the effects are more pronounced now due to global economic advancements. This has put unforeseen pressure on the government of the day and unfortunately all the anger which has been building up in the people for decades is suddenly being directed towards the PF government.

However, the situation is not as bad as the opposition political parties are trying to portray for their political expediency.

Investor confidence is still solid judging from a number of bilateral and multilateral financial agreements the Zambian Government is signing.
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In the early morning of today 22.04.2014, unknown people broke into our offices and got away with some office equipment.
The incidence has been reported to the police and a guard has been detained to help with investigation.
It is interesting to note that this is the first burglary on our premises which houses a number of organisations mostly law firms. It is the same place where our current speaker had his offices.
Yesterday we gave a comment against the crime alert message issued by the American Embassy. Zambian Voice did not agree with this statement by the US Embassy. In spite of this incidence we still believe crime and violence is being exaggerated.
However, we would not want to speculate on this matter because we have confidence in the police investigations.
We will be updating you on how things unfold.

Zambian Newspaper Headlines 21.04.2014




Happy Easter to you all, from The Zambian Voice Team!!!!

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I was Heart Broken but I Forgave on Easter

I must confess that I have not been so prayerful during this Easter period such that I was almost passed through festive like a traveler sleeping on the bus missing on all the beautiful sceneries. I prayed for my daughter but it was more about her, after all she is grown up knowing what is going on. I mostly left her in the hands of her capable spiritual god-mother.
However, soon after the Easter Mass in which my daughter was baptized, God intervened in my indifferent or casual attitude towards the festive of Jesus’ apex of love by his suffering and dying for me in spite of my sins.
I came outside the church to take pictures with members of my big family from which my daughter stems. I met one person that I have not met (or avoided) in a very long time. This person greeted me “Happy Easter Chilu”, extending his hand to me. I answered but could not extend my hand to him. I just answered sharply and avoided eye contact at all cost.
After the photo shooting, I quickly stormed out of the place going to the car.
I slowed down to wait for my eldest daughter (who is my friend, my sister and my mother) and my biological sister. My daughter looked at me steadily with her big eyes and I knew I had done something wrong.
Like a porcupine I lifted my sharp spines, or quills, in defense. Porcupine 
King CobraLike a female brown cobra, she spat at me “Why didn’t you greet a person that had graciously extended his hand to you”.  
I didn’t expect this from her considering she was also caught up in the crossfire which lead to this bitterness. I thought she would be on my side.
Extolling my ego, I retorted in a sharp voice to scare her. She was not easily intimidated as she continued marbling some words which I hardily heard because my stubbornness and pride had already taken me over. I grabbed the keys from her and walked fast to the car almost wishing she would not come in the same car.
I drove the car faster than a sportsman fighting for a finishing line in the World race. No one uttered a word till we reached home. I could not get into the house because I was fuming. Instead I drove to my hiding place where I always find comfort.
My office is not just a place of work, I stay there. I recreate, socialize (on social media), reflect, plan and do just about everything including prayers. I like my lonesomeness in my office, especially when no one is there.
As I sat in my chair, I went through the whole episode and felt the words of my daughter penetrating my heart like Jesus rebuking me. The words changed to “I died for you a sinner, but you can’t forgive”. Slowly like dawn, my mind and heart lighted up. I felt it is time to forgive. It’s time to let go of this bitterness and move on. Yes this person trespassed on my most valued thing in my life, but I have no reason to hold on to this anger. My situation has been turned around but God knows better, so why go on hating my brother.
To defuse the fume in me I decided to write to this brother expressing myself on how I feel he hurt me. I tried to write the email in a manner that I don’t judge him but simply putting down the hard truths. I sent the email to him and felt okay.
I have since taken forgiveness as theme for this Easter. Many times we think we are good Christians, like me, by following or doing so many Christian rituals, like going to Mass daily or every Sunday, offering prayers here and there. However, when we are comforted by real life situations, where we have to show our love or sacrifice, we want to hide in the weakness of our human nature. Christianity is about sacrifice, void of this, we need to pray for deliverous.
Happy Easter!!!

It’s Not Fuel, It’s Hon. Chikwanda and Dr. Gondwe to Blame

Chikwanda and Gondwe

In bemba they say “Imu Mbulu bakonka uulile ingulube” (You follow the wild-dog that has eaten the pig). This simply means that when something is wrong, you have to identify who is responsible.

Fuel has been increased and obviously many other commodities will be adjusted upwards. But who is to blame for this increment? Fuel has been increased due to depreciation of the Kwacha. We don’t produce fuel locally so it is imported meaning we have to use Dollars to purchase it.  So we are now using more Kwacha to buy Dollars to get our fuel hence it is logical to increase fuel locally.

The issues of Kwacha depreciation are under the guard of Ministry of Finance and the Bank of Zambia as the institution in-charge. It is therefore logical and factual to state that finance Minister Alexander Chikwanda and Bank of Zambia (BOZ) governor Michael Gondwe are responsible for the increase in the fuel price.

The two gentlemen are at the helm of the Ministry and BOZ respectively. These two people with their team must show that they are capable of controlling the situation before it gets worse and ensure that the prices of basic commodities are reduced. The depreciation of the Kwacha we believe can be controlled due to positive economic indicators.

Zambians are already living in poverty and should not be thrown into more poverty by people’s inefficiencies. The excuse by Minister that there is a curtail taking manipulating the exchange rate is a self-confession that someone is being smarter than these people entrusted to run the affairs of our economy in the Ministry and at BOZ.

This is a failure and let down on the Zambian people by Hon. Chikwanda and the BOZ boss. The positive economic indicators must be taken advantage of in all possible ways not just in borrowing. If these people don’t know how, they should be replaced or consult other people so that they can save the Zambian people from more misery. This situation could have been avoided and we believe it can be reversed.


sata with RB and KK
The issue of violence seems to have been exaggerated to unacceptable levels by political players, media houses and social media. The perception created is like Zambia is on fire or turmoil.
While we acknowledge and condemn the sporadic episodes of targeted political violence, it is not correct to paint Zambia red, as a sign of danger of violence.
Zambia is a peaceful Country and we are still enjoying that peace with people going about praying and celebrating Easter.
There is no one living in fear including those political leaders perpetrating or claiming to be victims of violence.
Showering Zambia with messages of violence will only disadvantage the citizens in getting the benefits that come with the goodwill of foreigners and investments to a peaceful loving Nation like ours.
We wish to appeal to all peace loving Zambians, especially the media to avoid sending wrong messages to satisfy political expediencies.
Happy Easter to you all.

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