Kelvin Chisanga's Podcast: Recent Episodes
Kelvin Chisanga
The Central Bank of Zambia's monetary policy committee (MPC) has maintained its accommodative policy stance at 9.0% to help the economy fully recover from the pits of the pandemic, keeping the key lending base rate at record lows. The performance of interbank encircled to the policy rate with this positive change coupled with inflation movements which have both edged to this directional route.
Zambia should aspire to formulate an export-led facility growth policy to help on the balance of trade especially targeting strongly on commodities outside copper, if we are to drive a sound diversification in policies, we should firmly centre our focus on promoting non-traditional export especially if we are to put all our arsenals on agricultural products, we can drastically increase the export base to facilitate conducive macroeconomic conditions for this country.
We are coming from industrial rest where the economic wheels were slow responding to the market, so what we are seeing is the situation where we have high demands for supply for essential goods and services as we start this financial year, then we have some goods that were not fully cleared from third and four quarter of 2021 purchases. So there is a tight supply of US Dollars on the local market as the import is still and strongly driving the local fundamentals for supply and demands.
What we are seeing is that this effect is showing in the loss of Kwacha by small margins almost everyday but our consolation is that we can see it being offset by both government securities thus bonds and treasury which are basically coming in this first quarter to help salvo inflationary effects that could be firmly generating from the exchange rate.
Also seasonal demands for goods, works and services may take this downward route for Kwacha though we will keep monitoring inflation until next month to see what lies ahead with the next set of monetary policy direction.
Its indeed regrettably to note that Zambia has changed mining tax regime for about 15 times, which has been very unhealthy for the economy, despite receiving a bad shape in 2016. It is however commonly to state that Zambia’s economy at some points came under a serious stress between the financial period of 2015 and 2016 as external headwinds coupled with domestic pressure played a severe card on our economy. As we saw on how Copper prices were drastically plunged by a margin of more than 20 percent during the same financial period, and this was mainly attributed to a reduced global demand scale that had characterised with our solid commodity partner China.
The expectations of having over three (3) million metric tonnes projections for copper’s output capacity or production in the next 10 years is such a welcome idea, given the circumstances that we have reduced some of the risk factors that the mining regime had quite experienced in the last 10 to 15 years where there were some seemingly aggressive policy inconsistencies since 2008, which may have been blamed on market fundamentals as well as policymakers. The red metal (copper) commodity has shown some relatively good performances, as it jumped to 3.3% to settle at $9,507.50 a metric ton on the LME, and this is seen to show a biggest gain recorded so far in just two solid months, hopefully this will be trend to continue seeing going forward, we anticipate that the red metal’s stable prices can support Zambia’s economic fundamentals during the new government’s budget transition period, as it takes down to start stabilising within the course of first quarter of 2022.
Its indeed regrettably to note that Zambia has changed mining tax regime for about 15 times, which has been very unhealthy for the economy, despite receiving a bad shape in 2016. It is however commonly to state that Zambia’s economy at some points came under a serious stress between the financial period of 2015 and 2016 as external headwinds coupled with domestic pressure played a severe card on our economy.
The marginal increment poised on fuel or petroleum subsector will automatically result in the sharp changes, especially on the cost scales of production and on the delivery processes of goods, works and services, and this will also suddenly trigger an upward adjustment measure across all meaningful economic activities, sad reality is that principally during this season the production of both goods and services turn to slow down, coupled with expectations of fourth wave of COVID-19.
Zambia IMF talks over pre-conditions which weighs on Fuel, Electricity Subsidies as I was engaged on Power FM Breakfast on Monday
The Kwacha in this week has been seen trading very fairly with the US Dollar, the local currency is showing some strong signs of low enthusiasm to drive forward with required strength as we are about to sum up this particular year. However, it is gratifying to state that the Zambian Kwacha has been seen trading on a firm footing amidst talks of IMF support, mainly due to the increase in supply for hard currency following a number of cases at hand
The IMF shows unwavering support to the Zambian Government with a USD 1.4 Billion to cover about three years and the financial markets have started showing positive sentiments.
Africa's tourism sector saw some relatively huge financial and asset related losses in both 2020 and part of 2021 all because of the ongoing global pandemic which has aggressively shut down most of creative aspects within the tourism sector.
A return to normal is still seemingly setting on some way off the tag of balance, but plans still remain quite optimistic on the policymaker's tables and with the industry players, however most African countries are starting to address the situation as they present of their plans for sector recovery models with aims to revitalizing of the economic processes for the overall hospitality industry.
This morning, I was engaged to talk about the adjustments of Monetary Policy Rate by Zambia's Apex Bank the Bank of Zambia.
Though, the monetary policy rate has remained substantially at this particular current level in this year for some time now since 19th February, it is highly imperative that the Bank of Zambia should again maintain the policy rate at 8.50%, following the factors seen from monetary transmission mechanisms that are being positively recorded in the third quarter of 2021 particularly having witnessed the reductions in inflationary pressure, which started giving much hope to the economic recovery process models, on an account of reduced political risk, sustained food supply coupled with some relatively steady movements observed in the foreign exchange market fundamentals though not very encouraging remarks to strongly to take heed with but we are seeing some better results, as also the COVID-19 pandemic has made some progressive outcomes within the third quarter of 2021.
Kwacha now stands at the mercy of the treasury bill performance in this week following a mammoth run where we have been losing a unit factor each single day that comes, as the domestic currency faces serious supply woes since mid September when import demand picked its influence.