By Antonio Mwanza
SYNOPSIS
1. President Edgar Lungu through His Economic Recovery Plan (2020 -2023) negotiated with the mines to be paying their taxes directly to the Bank of Zambia in DOLLARS as opposed to paying in KWACHA thus increasing the Dollars in the economy.
In the last 2 months the mines have injected in excess of 400 MILLION Dollars in taxes into the ZRA Account at Central Bank. All this money is now circulating locally.
2. Zambia’s agriculture has BOOMED under President Lungu. The bumper harvest of maize and other cash crops has led to massive exports hence more foreign exchange is coming into Zambia. This has led to a significant increase in the trade balance from 576 Million between January and May, 2020 to a hefty 1.9 BILLION Dollars this year over the same period.
3. The decision by President Lungu to make Gold a Strategic Mineral is finally paying off. The Central Bank is now keeping Gold as a foreign reserve asset. In the last one month alone BoZ has recorded 22 MILLION Dollars in Gold deposits.
4. Increased electricity generation has increased productivity in all sectors. We no longer have load shedding and people are able to produce more at a reduced cost. Further, since the PF government has increased the generation capacity of electricity from 1600MW in 2011 to 3250 MW in 2021. Zambia is no longer spending millions upon millions of dollars importing electricity.
5. The confidence that investors and market players have in the leadership of President Edgar Chagwa Lungu whose Government policies are consistent and predictable, plus the fact that there is no wind of change so investors are comfortable with pumping their money in our economy because they know that there will be no Government disruption but continuity.
5. CONCLUSION
With the fundamentals holding, the KWACHA will continue to appreciate against major convertible currencies.
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