Africa-Press – Zambia. Bally is already Fixing It! 10-15% appreciation of the Kwacha in less than 2 weeks. Done! Free education from grade 1 to University. Next! COVID-19 Pandemic. Bring it on. Jobs for all graduates. Soon to follow. If only bitter PF cadres can step aside–our Bally will fix it.
We can’t change history, but we can avoid mistakes of the past. President HH and the UPND should not repeat the arrogance of the 1991 Chiluba victory over KK, and its ill-informed 1990s economic policies. The Chiluba administration was heralded by the World Bank and the IMF as a success story of a century–something I discuss in “Raised Hopes, Shattered Dreams: Democracy, the Oppressed, and the Church in Africa (The Case of Zambia).” But we, Zambians, were the biggest losers. I pray we won’t make the same mistakes again.
Bloomberg News August 19, 2021 article, “Zambia Election Euphoria Fuels Kwacha’s World-Beating Streak” noted that the “Kwacha extended its gains versus the dollar, making it the world’s best-performing currency” since May 2020, following HH’s victory. Specifically, the Kwacha appreciated by 7.8 % within a week against the US dollar. The appreciation has continued at a very fast rate. Yet the economic performances of the nation remain unchanged, while prices of commodities and salaries remain the same.
Bloomberg News assessment was based on the global platform for buying and selling of money. Yes. I mean selling and buying money as a product. The buyers are making dollars by betting on the Kwacha based on HH’s victory and his anticipated capitalist economic policies (even though he campaigned as a socialist) with the hope of reselling it in future.
These bets were driven by two factors–the “$1 billion Euro bonds due 2024” and $1.3 billion IMF relief package. This is where the deal is. These amounts were being negotiated by the Lungu administration. However, the Bretton Woods Institutions, and other funders were reluctant to release the funds due to the Lungu Administration’s lack of accountability. Now that they are certain the money is assured, why not get a share? Buy the Kwacha at its weakest.
Worse still, the Kwacha made some minimal appreciation based on high Copper prices on the international market. Since the transactions are all in dollars, it means that we need to exchange the dollar into Kwacha to pay workers and local contractors. Sadly the Mines are losing money by the same margins of the said appreciation to meet their payroll. The same with donor aid etc. If they used $100, today they will use $115 to meet the same payroll. If workers want a raise, this becomes impossible. The only solution is for prices of commodities to go down, which is not possible given the abrupt nature of the appreciation. In short, Zambians must be ready to tighten their belts.
Venture capitalists won’t hold unto the Kwacha forever–they will offload it at the time the Kwacha will be assumed strongest to the dollar. Those who bought it at K20 to $1, for example, would make a big profit by selling it at K12 to $1! As for those with excess Kwacha like President HH, it is now time to pile up US dollars–knowing too well that the dollar is the stable currency. They are winners either way.
I challenge President HH. If this appreciation is real, let him be patriotic enough and change his dollars into Kwacha. He won’t! Instead, he will be the first to buy dollars when the Kwacha is at its weakest–after all, he will be the first one to know. In the real world, this would be considered inside-dealing, illegal and unethical, but who cares in the nation where Presidents and politicians continue to run their own businesses while in power?
Moreover, not every Zambian small business owner has access to foreign currency accounts–most of us buy foreign currency from small businesses who are now afraid to part with their money. They don’t know when things would return to normal. But for team HH, the Bank of Zambia is open 24/7. We should expect artificial shortage of foreign currency in the nation since people will start withholding their Kwacha and dollars alike. This would lead to black market or parallel markets, which is not good for the economy.
Bretton Woods Institutions have never supported strong African currencies for a reason–they harm investors. In fact this is the reason for their original demand for devaluation of local currency as condition for Aid. The current Kwacha appreciation is solely based on financial speculation, betting and anticipated Western-interest driven capitalistic policies of the incoming HH administration. They know President HH, and where his heart is–making more and more money. But why subject the nation to Western vultures whose only interests is to rape our economy?Surely President HH knows that real appreciation of the local currency is highly dependent on many economic factors other than the president alone. The reason the venture capitalists are betting on Zambia is because they have seen a gold mine. They do not have any interest in Zambia at all, aside from profits and profits alone.
Until economic activities improve, confidence in the HH administration is established and accountability becomes a norm, any rapid appreciation controlled by Western capitalists will only harm our economy. There is a reason why governments protect their currencies from venture capitalists–the Chiluba-like economic policies will only make ordinary Zambians biggest losers. This is because the rich will continue to pile up dollars–knowing the appreciation is fake. The very people who raped us in the 1990s know HH is at the helm of power, so they are set to return and rape us again. Don’t be lied to–there is self-dealing at Wall Street–it is filthy. The Bretton Woods Institutions are not independent from the very people buying the Kwacha, but they are one and the same. Neither do they have Africa’s Interests at heart. They are buying the Kwacha because there is a catch for them.
We are not driving the appreciation of the Kwacha, but we are at the mercy of neocolonialist and capitalist imperialists whose only interest is to profit from Zambia. As Nobel winning Economist Amartya Kumar Sen has demonstrated, local people’s participation in the economy is key to economic development. Zambians must be empowered to participate in the economic activities that would lead to the true and sustainable appreciation of the Kwacha.
I want the Kwacha to appreciate–it is overdue. But real appreciation should follow real economic performances by all Zambians, and not speculation by Western criminals whose interest is to rob Africa of every cent possible. The Bank of Zambia must intervene to arrest this mess. America, Britain, and China are among the many countries that have protected their currencies from going rogue! They may call it currency manipulation, but the truth is the government must ensure that its currency is protected from foreign interests. It is a national security issue.
