COMMERCE, Trade and Industry Minister Chipoka Mulenga says the appreciation of the Kwacha against major convertible currencies might not lead to an immediate decline in the prices of goods.
And Mulenga says government will set up a fertiliser plant which will produce 10 times more than Nitrogen Chemicals of Zambia.
Speaking in Parliament, Tuesday, Mulenga said it may take a little while for prices to decline on the domestic market even when the Kwacha had appreciated.
He said the country was expected to see price stability domestically as import commodity prices reduced in the long run.
“The appreciation of the Zambian Kwacha against other major convertible currencies may not lead to an immediate decline in the price of goods domestically due to several factors. As you may be aware, a significant amount of inputs that go into our domestic manufacturing sector are imported and ultimately affects the prices of the final product on the domestic market. Therefore, some business enterprises still have old stock which was procured at high exchange rates and are still trading at very high prices to recover costs. In this regard it may take a little while for prices to decline on the domestic market even when the Kwacha has appreciated against major currencies,” Mulenga said.
“Secondly, you may also be aware that the Bank of Zambia does not target the exchange rate but instead allows the exchange rate to be determined by market conditions. The exchange rate policy in Zambia is aimed at achieving a stable and competitive exchange rate consistent with the macroeconomics conditions. Therefore, domestic prices may not immediately adjust with the appreciation of the Kwacha due to the flexibility of such an exchange rate in the short run. In spite of the above, the overall appreciation of the Kwacha is expected to reduce the cost of imported intermediate goods and ultimately reduce price levels. It is expected that the country will see price stability domestically as import commodity prices reduce in the long run.”
Mulenga said government was trying to ensure that the appreciation of the local currency extended into the next farming season in order to produce food at a lower cost.
“We appreciate the appreciation of the Kwacha. All we are asking the Zambian people is allow us to reconstruct the economy of this country, restock our coffers, restock our bans of food and in due time as we are working, prices of food will reduce. Within the next farming season, if we continue putting everything in place, you will enjoy the lower cost of commodities. The government is committed to ensuring that strong monetary policies are maintained in order to cautiously caution the currency from the internal and external shocks resulting from the COVID-19 pandemic and general inflation,” he said.
“Leadership is a continuous process. As the new dawn government, we have inherited all that we have found. I am trying at all costs to avoid blaming anyone for what we have inherited. But the truth be told, all the stock we have inherited is the stock under the old currency which we are trying to reconstruct. As a responsible government, we will ensure that it gains the currency it needs and go into the next farming season to produce food at a lower cost which will trickle down to the buyers.”
Meanwhile, Mulenga said government would set up a fertiliser plant which would produce 10 times more than the Nitrogen Chemicals of Zambia.
“We are coming from an era where taxing was a mode of gaining revenue for the government which we have not seen translate into good living standards of the Zambian people. Taxation also crippled business houses in this country. We are working to see how best we can reduce taxes on many other things. The Minister during the budget presentation will highlight how taxation can enhance the cost of doing business in this country and improve the living standards of the Zambian people. The price of mealie meal is expected and because of the cartels that were in place, the cost of fertiliser was abnormal. The cost of fertiliser was almost a thousand Kwacha,” said Mulenga.
“The new dawn government is not rhetoric. We are a government committed to serving the interest of the people in a sound manner. We are going to reduce the cost of fertiliser. It is not just about eliminating the middle men in the supply chain, we need to set up industries that will produce. We need to recapitalise Nitrogen Chemicals of Zambia in the best interest of the Zambian people. My Ministry alongside other Ministries is working so hard to see that we set up a fertiliser plant right here in Zambia that will produce more than 10 times of the Nitrogen Chemicals of Zambia. In due time, the cost of fertiliser will drop by a certain margin. The moment fertiliser reduces, the bags of mealie meal will reduce and livelihoods will reduce.”