‘LET EXPORT EARNINGS BE CONVERTED, FOR PAYMENTS LOCALLY’
ALL earnings coming from the Export Proceeds Tracking Framework must be converted for payments within Zambia to put relief on the Kwacha, Standard Chartered Bank has suggested.
The Bank of Zambia (BoZ) is implementing this framework which came into effect on January 1, 2024 and has announced that over US$100 million has come in so far through this initiative.
Reacting to the execution of the framework, Standard Chartered Bank Zambia Chief Executive Officer, Sonny Zulu, suggested that these proceeds must be spent in Zambia for the initiative to have a positive impact on the local currency.
Mr Zulu made this suggestion at the CEO’s briefing in Lusaka on Wednesday.
“We are yet to see the full benefits of that but also it is very important for us to know that for this money to be spent in the country because if it comes in and still sited in the dollar account and there is no transaction happening, the dollar balances will go up but there will still be pressure on the local currency.
“That is why the entire ecosystem has to work. It is important for those earnings to be converted for payments within the country,” he said.
Mr Zulu also commended the central bank for measures taken to stabilise the exchange rate such as the Statutory Reserve Ratio (SRR).
While admitting that this measure has had a negative impact on commercial banks, Mr Zulu noted that it has put some relief on the Kwacha.
“Increasing the SRR… we can see that it begins to reduce the availability of the local currency and that helps to put some relief on the local currency,” he said.
In a move seen as a desperate attempt to thwart the free-fall of Kwacha and rising inflation, the BoZ this month hiked the SRR by nine percent to 26 percent.
The minimum statutory reserve ratio was increased to 26 percent from 17 percent respectively.
Mr Zulu also encouraged Zambians to be patriotic by buying local products to support the Kwacha.
“Manufacturing has also remained kind of static and in some case declined a bit. As long as we continue to import, our local currency will continue to depreciate.
“I know that we may not impose tariffs on any…but it is very important that as Zambians to begin to be patriotic and begin to buy Zambian products. The more we buy Zambian, the less the pressure on the local currency,” he said.