A sharp decline in the value of Zambia’s currency has led to rising poverty and unemployment, John Kalumbi, the director of Zambia’s Central Statistical Office (CSO), told Anadolu Agency on Monday.
According to government statistics, the Zambian kwacha has fallen by 35 percent against the U.S. dollar over the past 18 months.
The declining value of the local currency has resulted in company closures and layoffs, increasing unemployment rates in a country where 70 percent of the population already lives below the poverty line.
“Zambia is an import-oriented country; we import literally everything,” Kalumbi told Anadolu Agency on Monday. “So when the exchange rate deteriorates, the cost of imports automatically goes up.”
While some companies were scaling-down production in hopes of protecting their profit margins, Kalumbi noted that many firms had already been forced to close as a result of mounting losses.
This, in turn, he explained, had led to extensive job losses.
“Those companies that opt to increase their prices risk losing business,” he said. “So there is no other way forward for these companies except by laying off some of their workers.”
Kalumbi also pointed out that, although Zambia’s GDP growth rate had averaged 4.5 percent annually over the past five years, this growth had not translated into increased employment opportunities for citizens.
The recent spate of layoffs, meanwhile, has made it increasingly unlikely that the government will be able to reach its target of creating 500,000 new jobs by 2016.
Labor and Social Security Minister Fackson Shamenda, for his part, has warned that his ministry would not tolerate employers taking advantage of the economic downturn to sack employees with a view to protecting profits.
“I’m aware that some companies are retrenching workers on account of the kwacha depreciation,” Shamenda told Anadolu Agency on Friday.
“I warn these companies that my ministry will not take kindly to this behavior,” he said.
“As for those companies looking to close and run away from the challenge of standing by their workers during this trying moment, we shall not give them back their trade licenses when the situation normalizes again,” he added, going on to assert that the kwacha would eventually rebound.