Industrialisation key to stabilising Kwacha - Mvunga

VENTURING more into trade as opposed to manufacturing has added more pressure on the exchange rate, says Bank of Zambia (BoZ) Governor, Christopher Mvunga.

Mr Mvunga has therefore challenged the private sector to aggressively participate in the industrialisation of the country to assist in stabilising the exchange rate.

The Kwacha is currently in the range 21.32 and 21.39.

Mr Mvunga regretted that venturing more in the trading than manufacturing had put pressure on the exchange rate as businesses were more into importing than exporting.

“The more you go into trading, the more you have an impact on the exchange trade because you are just importing things from outside. You are just a middle man,” Mr Mvunga said yesterday when he appeared before the virtual Parliamentary Budget Committee.

Mr Mvunga emphasised that there was no trick of dealing with the exchange rate other than industrialising the economy.

He observed the need to take advantage of the trade agreements Zambia had signed with other countries to export more local products.

“The exchange rate is the function of the country’s productivity. It is a function of the demand and supply. We need to export more, so there is a structural issue here, there is no magic to change the exchange rate.

“If you are importing more than you are exporting. There is no trick that you can use to correct that. It is how much money is coming in and how much money is going out. The structural issue is the way our economy is structured,” Mr Mvunga said.

Mr Mvunga regretted that the private sector was not taking advantage of the incentives provided by Government to industrialise the economy and export more. He observed the need for the private sector to change their mindset for the private sector of moving away from trading and to start taking a long-term view.

“We need a mindset change in the private sector, we cannot be a country where everything Government has to take care, and we need private sector to be more aggressive in terms of participating in industry trade.

“The challenge we have business people who want instant satisfaction, I want to make massive profits in one year, in six months after I start. That needs to change,” Mr Mvunga said.