Zambia's Kwacha slips to record lows as China fears linger.
Sep 15, 2015 Zambia’s kwacha currency has recently dropped to a record low, following a power crisis and a fall in the export price of copper. A slide in global copper prices has further depressed the kwacha, after the currency fell by 55 percent against the dollar early this year.
This current trend has forced the Zambian government to slash its economic growth forecast for this year from an initial 7 percent to 5 percent.
Financial analysts have advised commodity-driven countries in Africa like Zambia on the need to diversify and push for more inter-regional trade.
Commenting on the country’s economic woes, financial analyst, Maambo Hamaundu said:
“The inflow from that direction has not been particularly good owing to the fact that there is a problem in terms of electricity, there is a lot of load shedding, mines had to drop down in production and this has not really saved the cause and of course the prices on the international market of copper have dropped and this is also not a motivating factor in terms of inflow of forex into the country, so all these things put together has resulted in what the kwacha has been experiencing now.”
Copper production accounts for 11 percent of Zambia’s gross domestic product and its export has been on the downward spiral since the beginning of the year.
Zambia’s power generation capacity stands at 2,200 megawatts (MW), with most of the electricity produced from hydropower. Zesco Ltd, the state own power utility company has reveal an imminent power cut following the draught that has lowered water levels at its largest hydropower station
Hakainde Hichilema, Leader of the opposition United Party for National Development has attributed the country’s economic crisis to government mismanagement.
“The depreciation we see today, the free-fall of the kwacha we see today is a culmination; is as a result of those negative measures, inconsistencies in the policies, inconsistencies in the tax regime, the mining tax regime,” he said
However, the Chinese government has assured the southern African country of their continued investment. According to Yang Youming, Chinese Ambassador to Zambia, the Asian giant is committed to increasing its investments in Zambia.
“We already have an investment of some three billion U.S. dollars in Zambia and I see that as we go along, as we discover new opportunities of co-operation in various fields, I am sure that there will be an increasing of Chinese investment in all areas of development in Zambia,”