THE Kwacha is Zambia’s legal currency which has been depreciating against the major convertible currencies such as the United States Dollar for instance. The Bank of Zambia (BOZ) exchange rate of the kwacha against the United States Dollar was K20.13 as at Monday October 12, 2020.
The Kwacha at various Bureau De Change in Lusaka is trading slightly above K21.00. The recent depreciation of the kwacha relative to the foreign currencies has led to the skyrocketing in the price of goods and services.
The prices of goods and services have generally more than doubled in the recent past, thereby making it difficult for the majority of the people to afford them. The above named category of people don’t have the purchasing power. Hence, wallowing in abject poverty.
However, the outbreak of the corona-virus in China last December which has devastated the entire world has been cited as one of the factors leading to the depreciation of the kwacha. The corona virus has affected the employees’ financial status in that some of them have been dismissed by their employers while others have been put on forced leave owing to low business activities.
The small scale entrepreneurs have not been spared either by the Covid 19 pandemic. The most affected business sectors are the hospitality and the manufacturing, among others. The low level of economic activities in our country entails that most goods and services have to be imported. When the country imports more goods than it exports, the country has to pay for the imported goods in foreign currencies notably the US Dollar. Ultimately, there will be more demand for the dollar.
It is a well known fact that the majority of Zambians are wallowing in abject poverty owing to the fact that only few people are in formal employment. Even those in formal employment, their disposable income is low, making it difficult to buy most necessities. On the other hand, some entrepreneurs don’t make enough money through sales by virtue of not selling much of their merchandise. The dire consequence of this is that there will be less sales which translates into less revenue.
The economic challenges are in our midst quite alright. To mitigate the adverse impact of the depreciation of the Kwacha owing to many factors of which the corona virus takes the centre stage, there is need for the Government and other stakeholders to find amicable solutions.
ELEMIYA PHIRI Lusaka.