FORMER Commerce Minister Robert Sichinga says Vice-President Inonge Wina’s argument that the free-fall of the Kwacha is due to the Covid-19 pandemic is merely an excuse which doesn’t make sense.
On Friday, Vice-President Wina told Parliament that the continued depreciation of the Kwacha against major currencies was as a result of the Covid-19 pandemic in response to a question from Mayinga UPND member of parliament Robert Lihefu during the Vice-President’s question time.
Vice-President Wina said the depreciation of the local currency was expected because Zambia’s economy was import driven.
“Mr Speaker, there are many local and international factors that influence the stability of the Kwacha, including this corona virus that is affecting the whole world. China is one of the very strong trading partners of this country and China imports a lot of copper from this country. So if the Chinese economy is not responding to our copper that is produced in this country, definitely there has to be an impact on the Kwacha. Only a few minutes ago, the leader of the opposition [Jack Mwiimbu] alluded to the impact of corona virus on the economy and social economy as well as the economy of the country not only in Zambia but globally. So Mr Speaker these are serious matters that honourable members should understand that in Zambia we do not operate isolation. We are connected to the global economy and this definitely has an impact on our local currency,” said Vice-President Wina.
“But coming back home, the Kwacha has been mainly affected because it is driven mainly by reduced supply of foreign currency from mining companies on one hand. On the other hand, there has been increased demand for importation of petroleum products, electricity… you know very well that in this house, we were informed about the need for Zambia to import electricity from Eskom in South Africa and from Mozambique. Mr Speaker, as well as the Agriculture inputs particularly the fertilizer that we do not produce in this country but we have got to get Kwachas and purchase these items.”
But in an interview, Sichinga said the Kwacha began depreciating way before the outbreak of coronavirus, insisting that government was just looking for excuses for its failures.
“They are offering excuses as though it is someone else’s responsibility to ensure that Zambia’s copper price remains the same. How about before coronavirus, was the exchange rate not dropping? How does she explain that one? How does the Vice-President explain the fact that the falling of the Kwacha value did not just start when coronavirus came on the scene? This has been happening all along, so how does she explain that the Kwacha has been dropping even before the coronavirus? How does the issue of exports come in? If she does not understand economics, she should leave it to people who are socio-economists to answer that. There is nothing wrong with the Vice-President saying ‘I am not able to respond to that, I will ask people that experts and come back here [to explain], and in this case she should be asking the Minister of Finance to answer or even the Minister of Commerce to answer it or even the Bank of Zambia. She shouldn’t try to figure things out if she doesn’t know because if she doesn’t understand something, she is allowed by the Speaker to go and consult outside the House. She shouldn’t start offering us excuses which don’t have any meaning,” Sichinga said.
“Is she saying to us that because of what has happened with the coronavirus, Zambia will continue to have its Kwacha disorienting? And if that is the case, how will she overcome this problem with her government? She is not offering us a solution. So like I have always to you, this government has failed! They do not know what to do. All they are doing is guessing. Instead of dealing with the problems, they are busy guessing issues. Okay, if the Vice-President really knows what she is talking about, can she tell us how much the export of copper has dropped? Can she explain to us why the Kwacha has deteriorated as well? Can she give us the statistics and figures?”
Sichinga urged Vice-President Wina to allow experts in government to explain the exchange rate.
“How does coronavirus affect the export of Copper? Tell me how it does. Can she (the Vice-President) explain to us how that happens? These explanations the Vice-President is giving, you know, if you don’t know something, it’s better not to say anything. How does coronavirus which is taking place in China affect Zambia? How does it do that? And most of these contracts for imports and exports are signed way beforehand. So she is just jumping from one to the other offering some explanations on things she hardly understands. These contracts, when were they signed for the export? China does not buy cash, they buy on contracts and yes, they may be one of the biggest buyers but they are already having challenges worldwide in terms of availability of Copper. So that should increase prices and not reduce them,” Sichinga argued.
“So this issue of offering excuses because you think that, that way, people can say ‘this is what’s affecting the exchange rate’ is ill-founded. How about the other countries where they are selling commodities? So the Vice-President should let people who know respond to such things, it’s not her issue to blab about things. So what she’s giving in Parliament were excuses not reasons. I cannot even see the direct connection between the virus that is taking place in China and the Kwacha, does Zambia’s copper carry coronavirus?”
Sichinga, however, said the country’s economy would be affected by the coronavirus especially in the hospitality sector.
“The first thing is that it will affect the hospitality sector. Those people who may have booked accommodation in Zambia may not come now because there are restrictions within their own countries but also because they are concerned that they could find viruses here. What is happening is that the worldwide net is capturing what each country is doing about this outbreak and Zambia is not clear what they want to do. They have issued statement but they are just at a lower level of a minister maybe. It’s not the same as President of Kenya which is major tourist centre stating what its country is doing. In other words, the Kenyan President is setting the tone of that the country is doing. But we haven’t got that here, it is left to the minister to issue statements and people take that as a weaker commitment to sorting out these problems,” said Sichinga.