Socialist Party President Dr Fred M’membe has welcomed the continued appreciation of the Zambian kwacha, describing it as good news for the country.
He cautioned, however, that while a stronger currency brings benefits, both an overly strong and an overly weak kwacha can pose challenges to the economy.
Dr M’membe observed that the economy consists of two key segments: exporters and importers, who are affected differently by exchange rate movements.
He explained that exporters tend to lose out in kwacha terms when the currency strengthens, while importers benefit from reduced costs.
Dr M’membe stressed the need for a careful and balanced economic analysis to ensure that both groups are supported fairly.
He warned that if the kwacha gains too much, exporters whose revenues are in dollars but incur costs in kwacha may see their profit margins eroded.
Dr M’membe noted that while importers enjoy lower costs, the same currency strength could threaten local industries by making imported goods cheaper than locally produced ones.
He pointed out that Zambia’s production costs remain suboptimal, and without proper management, local factories could shut down in favour of cheaper imports.
Dr M’membe questioned what factors beyond high copper prices are driving the rapid appreciation of the kwacha.
He urged authorities to clarify whether the gains are due to Central Bank interventions or genuine improvements in economic fundamentals, so that Zambians can fully understand the basis of the currency’s performance.