A STRONGER KWACHA IS NOT A MAGIC WAND
Many people think that when the dollar falls from K27 to K17, the price of bread should immediately fall from K27 to K17. Economics does not work that way.
Imagine a farmer wanted to buy a tractor from abroad. When the dollar was K27, a US$50,000 tractor would cost about K1.35 million. Today, at K17 per dollar, that same tractor costs about K850,000. That farmer has just saved about K500,000.
What should he do with those savings? Buy a luxury vehicle? Or buy more equipment, plant more hectares and produce more food?
As President Hakainde Hichilema recently observed, a nation develops when resources go into productive assets such as tractors, irrigation systems, factories and machinery, not merely consumption.
When more farmers buy tractors, production increases. When production increases, there is more maize, more wheat, more vegetables and more goods on the market. When supply becomes greater than demand, prices begin to fall. That is how lasting price reductions happen.
A stronger Kwacha helps make productive inputs cheaper. Cheaper inputs lead to higher production. Higher production leads to greater supply. Greater supply eventually leads to lower prices. This is why economic recovery is a process, not an event.
As a nation, we must also move beyond emotional politics. Too often we become impatient, abandon reforms halfway through, and start another experiment before the previous one has borne fruit. Zambia can never become prosperous through constant policy reversals. We can only become prosperous through discipline, consistency and patience.
Do we continue building on the progress already achieved, or do we once again start from zero?
Saviour Chishimba
President
United Progressive People (UPP)
UPND Alliance Partner