ZAMBIA NEEDS SOLID POLICIES TO BOOST EXPORT EARNINGS, SAYS ECONOMIST

By BUUMBA CHIMBULU GOVERNMENT should formulate and implement long-term industrialisation as well as export policies that will earn the country the much-needed forex to strengthen the Kwacha. This can be done through the Ministry of Commerce, Trade and Industry, and Ministry of National Development Planning, says economist at Equilibria Consulting Limited, Caesar Cheelo. Mr Cheelo said said there was need for policies and planning for long-term public investment in sectors that would unlock production and export potential. Mr Cheelo said the Government should rebuild value that would help the Kwacha appreciate further.  He said this could be done through making public and private investment in direct production areas such as factories and farms and pushing out exports which will earn the country forex. “We need both the formulation and implementation of long-term industrialisation and export policies and plans in order to earn the forex needed to strengthen the Kwacha. “Typically, you can rebuild value by making public and private investment in direct production areas (e.g., factories, farms, etc.) and pushing out exports which earn you forex and the more forex you earn per Kwacha you invest, the stronger the Kwacha. These are conventional measures,” he said. Cheelo said at the moment, the Bank of Zambia (BoZ) should not get into trying to defend the Kwacha from depreciation or worse still trying to get the Kwacha to appreciate. “At this point, BoZ should not get into trying to defend the Kwacha from depreciation or worse still trying to get the Kwacha to appreciate. That is way outside the purview of monetary policy. “Monetary policy should remain limited to smoothing short-term fluctuations in the forex market for example, when there is an unexpected shortage of forex on the local financial markets, BoZ can then pump in forex to present adverse speculation,” Cheelo said. He said using methods such as ‘clawing back value’, which meant using unconventional measures such as suppressive monetary policy  that spoke to raising interest rates and causing the public to reduce demand for money is not good for the economy. Mr Cheelo said such measures would further depress the already depressed economy.  “Such measures would further depressed an already depressed economy, but policy makers, under pressure, might not care about the low demand; they will be insistent on clawing back some value, even at the expense of other macroeconomic factors like growth,” he explained.