Kwacha Now World's Best Performing Currency, Boosting Prospects For Zambian Workers

Despite inheriting a burdensome foreign debt of over $14 billion, and soaring inflation rates, Hichilema’s monetary and fiscal policies continue to strengthen the Zambian Kwacha, bettering the daily economic prospects for the nation’s people.

The $1.4 billion bailout package recently agreed between International Monetary Fund (IMF) and Hichilema’s administration, in addition to another $1.3 billion special drawing rights allocation from the fund the Government received in August 2021, appears to have helped strengthen the Kwacha against the US dollar. Indeed, it is now the best performing currency in the world – up over 18.5% from January 22nd to September 1st this year. Similarly contributing to the currency’s appreciation is the way in which the loan has allowed the Bank of Zambia to stop offloading forex and to provide a consistent foreign exchange supply to the market.

Consequently, inflation has fallen from 24.4% when Hichilema came to power (August 2021) to a manageable 9.7% in June of this year. While the ambition remains to stabilise inflation at 6-8% by mid-2023, this initial fall in rate is expected to alleviate the present strains on the cost of living in Zambia. Whilst a decline in the rate of inflation does not equate to immediate price falls, although down from 12% food prices still rose at a rate of 11.3% in August, individuals will experience a relative increase in purchasing power – in sum, price stabilisation is expected to ease the strains of the recent rise in the cost of living for ordinary Zambians.

For the economy as a whole, price stabilisation is expected to result in greater business investment and increase the rate of employment. To help farmers and boost the agricultural industry the Government has also removed the 5% customs duty on cattle imports and on chicken breeding.

Regionally this compares favourably; in South Africa workers continue to protest the rising cost of living as inflation rises to a 13 year high whilst in Zimbabwe inflation has now reached a staggering 192%