Prominent Zambian Economist Professor Oliver Saasa has called for concerted efforts to fight the corona virus disease – COVID 19 and not politicized its effect on the economy as the entire world is battling with it and that many economies have been affected due to restrictions in the movements of people and goods.
Prof. Saasa told Zambian Business Times – ZBT in an exclusive interview on March 18th 2020, that the Covid-19 pandemic has gone beyond expectations of any factor that contribute to the slowing of the economy. He said Zambia is greatly affected economically because of its notable foreign trade with China, which is the epicenter of the disease right now.
‘‘China imports close to 30% of our copper, China is the major source of our merchandise in terms of imports, we rely greatly on trade with them. China is also a major investor in the mining sector in Zambia as well as a leading investor in the infrastructure development with huge capital investments. China had a big intimacy with Zambia in terms of trade relations and the Virus was reported from right there in Wuhan, China’’ he said.
Prof. Saasa explained that the country is not generating enough foreign exchange due to less confidence in the market by those that come and invest, foreign investors or portfolio investors that come to buy treasury bills and government bonds. He said currently there is a starvation of foreign exchange on market relatively to the demand for the green bag.
‘‘At the moment there are less dollars on the market for a number of things. The first reason is that the mining sector is not performing too well, the mining sector account for close to 80% of foreign exchange receipt from exports of copper. At the moment, the price of copper is on average about US$ 5,500 per metric tonne with further reductions expected from COVID 19 threats, which is relatively much lower, we expected it to move up to around US$ 6,000 per metric tonne. So it means our foregn exchange earnings from copper is dwindling significantly,’’ Prof. Saasa added.
He has encouraged the government to dialogue with the mining sector, which it seems is currently at loggerheads with. ‘‘There are major differences between the government policy on mining and the investors mainly because of the 2019 fiscal regime, where taxes were increased quite significantly which discouraged investors that are already in the country and also those which were to come to do business,’’ he said.
During vice president question time last Friday, Vice President Madam Inonge Wina told parliament that the Kwacha had continued to depreciate due to Covid-19. The Veep was responding to a question from Manyinga legislator Robert Lihefu who wanted to know if government has failed to manage the economy and currency, leading to what he termed as ‘the free failing’ of the local currency.
The response by the Veep received many attacks from the civil society organisations including the opposition political parties who argued to say that kwacha began depreciating way back before the issue of the Covid-19 intensified. Prof. Saasa however has backed her statement saying the effect of COVID 19 should be not be politicized.
