Bad government policies have contributed to the free-fall of the Kwacha and unless this is changed, the situation will continue to worsen, MMD director of communications Muhabi Lungu has said.
Lungu said the private sector has withdrawn foreign currency from the economy owing to lack of confidence in the governance system under the Patriotic Front (PF) government.
He said even the intention to reintroduce the Industrial Development Corporation (IDC) was seen as interference by the government in the operations of private business, which was against free economy princples.
“The negative attitude towards the private sector with the deportation of the KCM managing director and other such related incidences show that there is no investor security and confidence in the country. And the introduction of the IDC only proves the interference in private business operations,” Lungu said.
He charged that due to the poor policy framework, investors have decided to withhold their investments which has further affected the availability of foreign exchange in the country.
Lungu said Zambia’s bloated borrowing has created uncertainty, including the Eurobond which has contributed to pressure on the exchange rate.
He said lack of policy framework has seen the misapplication of the Statutory Instrument number 55 which should not have been instituted because of its implications on the business sector.
“It is no wonder we are saying imports and exports have no direct effect on the Kwacha value, but the internal policy mishandling is to blame for the dwindling of the currency. Government should give confidence to the business community, that the private sector is clear of interference,” he said. And Lungu advised against the move taken by the Bank of Zambia to inject foreign exchange into the economy stating that it was a temporal solution to the problem. He said government should have handled the fluidity of the Kwacha that has in the last three months depreciated by 15 percent making the currency the worst perming among other African currencies.