The depreciation of the Zambian Kwacha against major currencies has been attributed to low foreign income from the mining sector.

This is according to Private Sector Development Association chairperson Yusuf Dodia, who said the reduced income stems from the recession in Europe, where the majority of the country’s mining firms’ parent companies are headquartered.

Dodia added that the impending load shedding by the state-owned power company, ZESCO, will have a negative impact on Zambia’s SMEs and the economy.

In a recent interview, Dodia said the country’s mining economy is the key forex earner for Zambia, and any external headwinds have a direct effect on the local currency’s performance, Lusaka Times reports.

“The weakening of the Kwacha to the low foreign exchange coming from the mining industry. As you know, our economy is largely dependent on the mining sector, and the mining industry is the major forex earner for Zambia. We are heading towards the end of the year, and most mining companies are making preparations to pay taxes as a statutory obligation, as well as paying bonuses and allowances for workers,” Dodia commented. 

“But most importantly, there is a recession in Europe, where most of Zambia’s mining firms’ parent companies are headquartered. So these mining companies want to keep their parent companies afloat, and that’s where they are channelling most of their revenue. And as such, the country is not getting enough forex to strengthen the Kwacha against major convertible currencies.”

In regard to ZESCO’s load shedding, the planned six hours will negatively impact productivity within SMEs.

“Load-shedding by ZESCO will affect all sectors of the economy in the country. But specifically talking about small and medium enterprises, six hours of no electricity means six hours of no productivity. And I hope that ZESCO is in dialogue with Zambia Association of Manufacturers and other key stakeholders so that load management is done during periods when there is less activity so that the SMEs and business, in general, will not suffer any inconvenience,” he stated.