Natalie Sindile Nyathi
President Hakainde Hichilema has turned around the fortunes of Zambia less than three years after coming to power.
This is being reflected by the strengthening of the country’s currency the Kwacha.
The Zambian currency has gained over 18.5% making it the world’s best perfoming currency compared to U.S Dollar.
Zambia is doing better economically than South Africa, Zimbabwe, Nigeria, Ghana, and Kenya who have been unable to contain growing inflation and rapidly depreciating currencies.
According to a continental website the Kwacha has gotten stronger against the U.S Dollar due to an agreement with the International Monetary Fund (IMF) to restructure Zambia’s debt.
There is also the issue of the 1.4 billion U.S Dollars bailout package that has helped slow down the rate at which prices were rising.
Bulawayo businessman and economist Busisa Moyo told ZIM GBC NEWS that the Kwacha is in fact weakening.
“These comparisons are meaningless, remember the current Kwacha had zeros removed from it. People misunderstood what was happening. The Kwacha has actually started weakening.
“It was a positive political sentiment, but now the country has to go back to fundamentals of arrears clearance, foreign direct investment attraction, production expansion, corporate viability and ease of doing business at employment creation”, said Busisa Moyo an economical analyst.
Another analyst Sibonginkosi Ncube said that the Kwacha draws its strengths from the gold in Zambia’s Reserve Bank.
Morris Nkala a business advisor based in Bulawayo credited much of the Kwacha’s progress on the fact that there is a new government in power in Zambia.
“It reflects the hope of what could be after a fresh new start from a new political change that transpired. It isn’t yet backed by sustained fundamentals on the economy as such fundamentals take long to cement the upward trajectory of the country”, he said.
“Currency value is based on perception among many other factors and Zambia has so far projected responsibility, accountability, rule of law, respect for property rights, implementing correct governance issues, commitment to abide by international best practices, eager to fight corruption and all”, he added.
Meanwhile, studies show that a currency’s strength is determined by many factors. Not only are there a number of country specific variables that go into determining a currency’s strength but there is also other benchmarks other currencies, for example as well as commodities against which a currency’s strength can be measured.