There are no fundamental challenges in Zambia’s economy, says President Edgar Lungu’s spokesperson Amos Chanda, arguing that the Kwacha is not necessary depreciating but the dollar is appreciating against all other major currencies.
And Chanda says government will follow the law to the latter in the disengagement process with Konkola Copper Mines.
Meanwhile, Chanda says President Lungu had a constructive meeting with Mopani Copper Mines in which the mining giant promised to sort out some issues of concern.
Speaking to journalists in Ndola, Saturday, Chanda said it would not be accurate to blame the Kwacha depreciation on President Lungu’s pronouncements on the mines.
He said there were no fundamental structural problems in Zambia’s economy and it was the dollar that was just appreciating.
“Exchange rate is a function of two things, external and internal factors. We’ve seen, the government is still examining the internal factors that are causing that but it is clear and common knowledge that the US dollar is appreciating against different currencies, we’re watching that and we are not exclusively resigned to the fact that these external factors are a major problem. We are looking at the internal factors that could affect that but what we can isolate with certainty is that the Rand is taking a hit, the Pula, the Japanese currencies are depreciating against an appreciating dollar. So going into the details is dangerous for us now because we want to watch and see clearly exactly what the causes are. When the President is making decisions, he makes decisions based on a composite of factors and his decision making will not be constrained by one sector, he looks at the country from a bird’s eye view. So yes, there could be problems associated with sentiments and anxieties that may arise but the President makes decisions from a broad perspective, a consideration of broad factors,” Chanda said.
“The Deputy Secretary to the Cabinet Mr Christopher Mvunga yesterday gave a statement where he clearly stated that there are no structural problems, major structural problems in the economic fundamentals and therefore, he gave wise counsel that speculative actions in the market are not advised because he is confident that the market dynamics will resolve themselves because he understands, he is speaking to Cabinet, he is speaking to the Bank of Zambia, he is speaking to the Treasury and he understands that there are no fundamental structural problems in the economy.”
And when asked what the timeline for government’s disengagement with KCM was, Chanda said there was no timeline at the moment, but emphasised that all processes would follow the law.
“There’s no timeline now, the President has given the broad themes that where things are going wrong and a particular mining company cannot stay or cannot fulfil their terms of reference or conditions, or legal requirements, a lawful process within the due process of the law shall be undertaken and when that is arrived at, the nation will be informed,” he said.
Meanwhile, Chanda said Mopani Copper Mines has promised President Lungu that it will sort out some issues of concern.
“The management and board of Mopani have assured the President that they were very committed to sound investment policies and management practices, corporate social responsibility and all forms of engagement and the President has thanked them for that commitment. The President has made clear his displeasure on certain items, the relationships of the company and the supply chain, for instance, local contractors, social services such as education and Health. They have assured him that they will continue to engage with the Minister of Mines the technical aspects of that. Otherwise, the summary of it is that it was a constructive engagement between Mopani and His Excellency the President,” he said.
“Whatever interventions that the President is making to rectify some of the inherent problems in the mining sector will be done lawfully and the due process of the law will be followed at whatever stage. Whatever intervention that is being made is nothing outside the law. There is no hostile take over of anything, there is a constructive engagement under his direction to different relevant ministers. So there is a due process whenever a certain decision is arrived at. The due process will be followed, respect for private property.”
Chanda also said the President wanted Copperbelt Energy Corporation (CEC) and Zesco to have a smooth transition into a new agreement after the bulk supply agreement currently in play expires next year.
“He has had a very open and frank conversation with CEC, which is the major supplier of power to all Copperbelt companies. One of the contentious matters regarding that has been the bulk supply agreement between ZESCO and CEC and this agreement comes to an end next year. The President wants a smooth transition into any other agreement between ZESCO and CEC going into the future because he does not want disruption of operations, disruption of supply to the mines so Minister Nkuwa will be taking steps to ensure that that process is driven. The President expects that the two parties at CEC and Zesco will engage in constructive dialogue to ensure that the relationship which is tripartite; the mines, Zesco and CEC, transitions smoothly,” said Chanda.