FORMER secretary to the Cabinet Dr Sketchley Sacika says the country risks facing an economic breakdown and social disorder if the kwacha continues falling at the current rate. The kwacha on Tuesday touched the worst depreciating level against major currencies, trading at an average rate of K14.50 against the dollar and K21 per British pound, while the South African rand traded at K1.10. The currency gained slightly after Bank of Zambia’s intervention on Tuesday afternoon, closing trading at a mid bank rate of K13.70 by close of trading. Commenting on the continued fall of the kwacha, which is not showing any signs of recovery in the short term, Dr Sacika said the people that are most affected by the local currency’s depreciation are the poor.
“It is not normal for a currency of a country to depreciate by more than one hundred per cent in four years. We are in a crisis. The depreciation of the kwacha is not such a big deal to people with loads of cash; such people will always find a way of protecting themselves. The people most affected are the poor Zambians to whom depreciation is a matter of life and death,” he said. “Our country cannot afford to continue on this path. If we do, we run the risk of a breakdown and social disorder along the way.” Dr Sacika said the country was going in a wrong direction. “The national development taking place in our country is not in the direction we expect our country to go; the development is in the opposite direction: more and more of our people are becoming impoverished; the rural areas have seen negligible development; squalor in the sprawling shanty compounds of urban Zambia is the order of the day,” he said. “Unemployment and underemployment are rife and bound to become even more severe because the economy is failing to create jobs for the millions of youngsters joining the labour market. Four years ago, the standard of living for the ordinary Zambian was much higher than it is today.” Dr Sacika said the measures that the Bank of Zambia has taken so far to save the kwacha from further collapse were not yielding tangible results. “On the evidence available, the measures the governor of the Bank of Zambia proposes to take to prevent further depreciation of the kwacha will amount to naught, unless the supply of foreign currency improves and there is an improvement in how the government manages the fiscal policies,” said Dr Sacika. “As far as things stand, I cannot see this happening. We may have no choice but to seek an engagement with the IMF in order to protect the kwacha from further depreciation. Dr Denny Kalyalya has been unable to protect the value of the kwacha, despite his interventions in the market, partly because the management of the fiscal policies by government has been very weak.”