PeP STATEMENT No. 7 ISSUED ON MONDAY, 18th JANUARY 2021: FOR IMMEDIATE RELEASE
1. As Patriots for Economic Progress (PeP) we have noted with regret the ongoing fuel shortages which initially started in the Copperbelt Province but have now escalated to other provinces such as Southern, Muchinga and North-Western Provinces. Fuel being a key production input, there is no question that these fuel shortages will further adversely affect our already ailing economy.
2. As Patriots for Economic Progress, we strongly believe that the main cause of these fuel shortages is the foreign exchange controls that are currently being implemented by the Bank of Zambia (BOZ) which are aimed at maintaining an artificial exchange rate of the Kwacha against major convertible currencies by restricting how much forex someone can purchase from their banks. Although these BOZ foreign exchange controls have so far managed to maintain the Kwacha at an artificial exchange rate of about K21.5 to the US Dollar for the past two months or so, this mechanical approach is not sustainable in the medium to long term as it will soon result in serious shortages of other key commodities apart from fuel. Currently, vendors of fuel products have to wait for as long as 3 months before they can purchase forex from their banks which they need to import fuel products.
3. As Patriots for Economic Progress, we understand and commiserate with the
Government regarding the situation in which they have found themselves whereby on one hand they want to maintain an artificial exchange rate for the Kwacha for purposes of keeping up appearances for the August 12th elections, that the economy is fine, while on the other hand these foreign exchange controls are bringing about shortages of key commodities. Our view on this matter is that it is better for Government to remove the current exchange controls which BOZ is implementing and thereby allow the market to determine the equilibrium exchange rate for the Kwacha. Foreign exchange controls failed to work during the Kenneth Kaunda regime and they will definitely fail to work again this time around.
4. As Patriots for Economic Progress, it is our considered view that without the foreign exchange controls by BOZ, the current equilibrium exchange rate for the Kwacha is in the range of K24 to K26 per US Dollar. It must be noted that even though the current foreign exchange controls might appear successful in terms of preventing a further deterioration of the exchange rate, they will definitely undermine the productive capacity of the economy. In other words, the medicine is worse than the disease. We therefore call upon Government to consider suspending all the foreign exchange controls that the Bank of Zambia is currently implementing, as they are retrogressive to the overall well-being of our economy.
Thank You and May God Bless the Good Citizens of the Republic of Zambia and Our Ailing Nation.
YOURS SINCERELY
SEAN ENOCK TEMBO (SET)
PARTY PRESIDENT
PATRIOTS FOR ECONOMIC PROGRESS (PeP)