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The Advocates for National Development and Democracy (ANDD) says the injection of US$50 million into the country’s economy aimed at stabilising the local currency is unsustainable and cosmetic.
Executive Director of the organization, Samuel Banda, said the current appreciation of the Kwacha following the Central Bank’s interventions was cosmetic.
Banda in a statement issued in Lusaka on Tuesday, stated that the gains were not sustainable because it was not supported by production and forex generation through trade and commerce.
He said it was an open secret that economic fundamentals that can trigger a bullish Kwacha performance against the United States (US) dollar and other currencies were not in place.
“For example, Zambia being a mining-dependent country, will require a robust and viable mining sector that can help increase copper production to warrant a stable Gross Domestic Product (GDP) and a more predictable exchange rate,” Banda noted.
He added that since mining remains the country’s key economic driver and pillar of economic national development, government should ensure the strategic mining giant Konkola Copper Mine (KCM), starts operating optimally.
Banda said this was in order to increase copper production output and increase export volumes to generate huge forex to effectively stabilise the exchange rate sustainably.
He advised government to take advantage of Vedanta’s Resources investment commitment of over $1 billion for mining recapitalization and development.
“Government should expedite the KCM Vedanta legal transition process so that Konkola Copper Mine begin to operate optimally,” Banda reiterated.
He said Mopani Mines whose equity partner had already been engaged with International Resources should also operate at full capacity for the economy to respond positively.
Banda said the volatility in the exchange rate impacts the economy negatively, making it difficult for business entities to plan as it raises the cost of doing business, and also shrinks the domestic economy and business environment.
“We therefore appeal to the government to start implementing sound, sustainable and predictable economic policies that will stabilize the exchange rate and reduce the cost of doing business, to promote commerce, trade and socio-economic growth,” he stated.
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