Experts Call for Local Solutions to Halt Kwacha’s Free Fall
As the Zambian kwacha continues to lose value against major international currencies, social economist Kelvin Chisanga has urged both the government and the public to adopt local solutions to stabilize the economy.
Speaking on the current economic challenges, Chisanga attributed the kwacha’s depreciation to Zambia’s heavy reliance on imports and foreign direct investment (FDI), warning that this approach fuels an unsustainable demand for the US dollar.
“We do so much of import-driven activities, and this weighs heavily on our economy,” Chisanga said. “The more we import, the more we push up the demand for foreign currencies like the dollar, which in turn weakens the kwacha. The key to addressing this is to drive local production and cut back on unnecessary imports.”
Chisanga further pointed out that while FDI is vital for growth, over-reliance on it exposes the country to external economic shocks. He emphasized the need for a balanced approach that empowers Zambian businesses.
“We cannot continue depending solely on FDI. The government must deliberately support local investors and producers, especially in sectors like agriculture, manufacturing, and mining. This will help build a strong secondary economy and reduce pressure on foreign exchange,” he said.
Another factor Chisanga highlighted is the increasing “dollarization” of Zambia’s economy, where even local transactions are often tied to foreign currencies. He warned that this practice fuels instability.
“What we’re seeing is a dangerous trend even small transactions are linked to the dollar. This only increases demand for foreign currency, further straining the kwacha. We need to strengthen the use of our local currency for trade and reduce unnecessary reliance on the dollar,” Chisanga explained.
He urged the government to implement import substitution policies, encouraging the production of goods locally rather than relying on foreign suppliers. According to Chisanga, such measures would help Zambia save foreign reserves and stabilize the kwacha.
“The government must ask itself why we are importing goods that can be produced locally. We need clear policies that empower local industries, create jobs, and reduce the import bill. This is one way to protect the kwacha,” he said.
Chisanga also stressed the importance of strengthening local supply chains, saying Zambia should boost sectors like agriculture and small-scale manufacturing to balance supply and demand. He believes this would not only stabilize the economy but also generate export revenue.
Economists have warned that without urgent action, the continued weakening of the kwacha could trigger further inflation, making basic commodities even more expensive for ordinary Zambians.
Chisanga’s call for action comes as pressure mounts on the government to introduce long-term strategies that will protect the local currency and promote economic resilience.
February 26, 2025
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