BOZ DECISION TO INCREASE STATUTORY RESERVE RATIO TO CHOKE PERFORMANCE OF SMEs
By Balewa Zyuulu
Opposition Patriotic Front-PF- Presidential Candidate Emmanuel Mwamba says the decision by the Bank of Zambia to increase the kwacha and foreign currency statutory reserve ratio is retrogressive.
The central bank recently announced its decision to increase commercial lenders’ reserve ratios on domestic- and foreign-currency deposits to 11.5% from 9%, to slow a slide in the nation’s currency and the increased reserve-ratio requirements effective February 13.
But Mr. Mwamba tells Phoenix News that such measures by the central bank are not sustainable and will choke the performance of the small to medium enterprises in the country.
Mr Mwamba argues that addressing the increased volatility in the exchange rate which intensified in December 2022 and has persisted in 2023 in the absence of increased production capacity in the country will not yield any tangible results.
According to experts, Zambia’s kwacha was Africa’s second-best performer in 2021 after president Hakainde Hichilema won the elections in august that year as he brought a wave of optimism into an economy battling inflation of more than 20% after it became the first on the continent to default in the pandemic era.
PHOENIX NEWS