SMALL-SCALE suppliers have had their profit margins swallowed up by over 50 per cent owing to the depreciating kwacha, according to the Goods and Services Suppliers Association of Zambia.
And the association has appealed to the Ministry of Finance to release money owed to suppliers to settle outstanding bills for services rendered to key institutions, including the Zambia Police Service.
The kwacha’s volatility on the foreign exchange market has continued, with the local currency enduring its worst performance in the last two weeks.
The local currency depreciated by around K2, trading at an average rate of K13 to a dollar in the last week of September.
According to the Bank of Zambia, the struggling local unit has made a minor recovery to now trade at K11.86 and K11.88 for bid and offer respectively, following a frantic intervention to halt the kwacha’s terminal slide.
Goods and Services Suppliers Association of Zambia president Blackson Singoyi said profits margins for small-scale suppliers’ profit margins have dwindled in the face of the continued kwacha depreciation against major currencies.
“In 2011, one did supply goods when the [US] dollar was about K4, K5 somewhere there. At the current price, you will find over 50 per cent has been swallowed, so that makes everything very bad,” he said in an interview.
And Singoyi said suppliers want the Ministry of Finance to pay outstanding monies owed to them for services rendered to key government institutions, which included the Zambia Police and Prisons Service, among others.
“Even defence; a lot of suppliers are crying. The Zambia National Service is the only institution currently which is walking the talk because if you supply [to the ZNS], you are rest assured of the money at the end of the month. The rest are a non-starter; it is like we have become a charitable organisation! It is a lot of money,” he added.
The association’s members are engaged by government institutions to supply various foodstuffs such as kapenta and beans, among others, according to Singoyi.
Within a year, the kwacha has lost strength by over K4.50, and depreciated
by over 45 per cent, the highest depreciation ever seen.