Dollarisation

IT IS very clear that some of our business players are up to no good. Their motive seems to rest in maximising profits by speculating in a volatile Kwacha against foreign currencies.
This has resulted in the phenomenon of dollarisation of all goods and services, even those locally produced in Zambia.
The pricing we are witnessing cannot be attributed to market forces. It can only be attributed to forces of malevolence.
Although Zambia has a liberalised economy in which market forces should price commodities on the basis of demand and supply, this appears not to be working as it should.
We say this because when the local currency hit a rock bottom of K14 to US$ 1, all prices of goods and services were increased.
Traders and businessmen mourned about how expensive wholesalers had increased their goods because of a weak currency which could not withstand the convertible currencies which were medium of exchange in importation of foreign goods.
For Zambians who are lovers of imported goods, this excuse of a weak Kwacha was easy to understand.
It is for this reason that some of our businessmen increased their commodity prices by over 50 percent.
Even local products received the same treatment and the reason was the some inputs in the production chain are imported.
But the irony of this price increase is that the same reasons applied when traders and businesses increased prices are not being followed in the wake of the appreciation of the Kwacha.
If indeed the market forces were the sole determinants of the commodity pricing in our liberalised economy, we would have seen a reduction in prices of goods after the Kwacha gained against major convertible currencies.
Even if the Kwacha has not appreciated to its former level of K7 to a US$ 1, still there should have been a reduction in prices to reflect how market forces work in liberalised economies.
It is for this reason that we welcome the suggestion by Professor Oliver Saasa that legislation to ban the use of the dollar in local transaction is put in place.
In fact, Prof Saasa is not the first to suggest the enactment of an anti-dollarisation bill.
During a press conference by President Edgar Lungu, he did reaffirm Government’s stance against quoting of the US dollar in pricing of goods and services in the country.
We are hoping that the officials tasked with this responsibility of drafting the anti-dollarisation law will move with speed to curtail the abuse of market forces.

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