“Zambia seems to be experiencing some turbulent times with its currency depreciating significantly over the last period of time,” Isaac Ngoma, president of the Economics Association of Zambia told CNBC Africa.
“The key reason for this is because the country has insufficient reserves to cushion the currency as it imports dependent.”
“Government has to ensure fiscal discipline and going by what has been seen so far this needs to be managed properly,” Ngoma added.
The copper rich country has also faced challenges from investors due to some policy changes, however, the major challenge has been weak domestic market.
Ngoma noted that the country need to escalate domestic activity as to help inflows into the treasury.
“The ability for government to mobilise sufficient revenue in the domestic economy is constrained as there has not been escalation of inflows into the treasury.”
“We seem to be generating very little of foreign exchange as we are importing far too much while realising very little from our export earnings with this mismatch creating the existing status.”
The Zambian kwacha has failed to hold to the level appreciable in the market to major currencies especially the US dollar, and this depreciation has had a compounding effect on the economy.
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Ngoma added that, inflation has gone up as the country’s manufacturing base has been very weak.
The government has also been accused of fiscal ill-discipline with Ngoma noting that, banks see it more opportune to lend to government through securities and treasury bills which has its own disadvantages.
“We are working towards growing the private sector, creating jobs but government is negating that.”
The Zambian government has been rolling out huge infrastructural projects increasing public service wage bill through increment of salaries of public service workers.
The Economics Association of Zambia says, the country’s creation of new districts was also an unnecessary added expense in a struggling economy as this calls for huge finances.
BY TRUST MATSILELE