Zambian currency on the spotlight
By Staff Reporter
The battle for survival continues in the Zambian business sector.
With an unpredictable currency, the business environment has unarguably been hit hard. On Friday, the kwacha opened on a slightly strong note at K11.85 to one US dollar, but closed weakly at K12.09, according to the First National Bank money market. In fact, an assessment of the last three months will reveal that our currency has been trending at an average K12 to a dollar.
What worries more is that the situation does not give hope to any importer of commodities, especially small-scale entrepreneurs. This week, we look at second hand motor vehicle importers. This is another sector of our economy that has really been hit hard by the frailty of our currency. In several interactions with entrepreneurs in this field, a lot of sad stories came out.
‘’There are only about five of us old starters in this business. When we opened this market in 2013 there were about 30 of us. And it was easy to order cars that time straight from Japan, and the profit was good,’’ Mwiya Moonga, a trader from Kamwala area explained. ‘’I remember that time there were a lot of politics for us to open this market because, as you can see, it’s just opposite the freedom statue. But we talked to the Council people and they finally gave us authority. In terms of customers, this is a very good market; a lot of people pass here. But we have reduced in the number of cars to import because the dollar has become too expensive to acquire now. In fact, most of the people we started with left this business.’’
Dean Mutambo, another trader, feels that government policies have always contributed to a somewhat collapse in this business. According to him, the huge import duty imposed by the government two years ago on second hand motor vehicles has added salt to the injury.
‘’In 2016 the kwacha was already performing poorly against the dollar; we were already struggling. It was a situation that called for economic relief from our government through good policies,’’ he explained. ‘’Now, when we were already stressed by the poor kwacha, the government increased duty on the product we import – the [second hand] motor vehicles. So, in a situation where I was having at least two customers in a weak, I remained with nothing because the vehicle prices increased by almost 50 percent. First, we reduced on the number of cars we were importing, and, secondly, even the little we ordered became too expensive for our customers to buy. Even now my brother we live in a time where we do not know what the value of our currency will be tomorrow.’’
For Harry Mwambazi, his view is that the government is not helping upcoming entrepreneurs. To him, it has become a hand to mouth situation.
‘’We used to have big clients here, even schools coming to buy light trucks. But now most of them have stopped coming. Just yesterday I had a customer who told me that it’s even better to buy an already registered vehicle locally from an auction sale, or from an individual who is selling. You see, that in itself explains to you that we are at a loss,’’ lamented Mwambazi.
For sure, this is a business that relies heavily on the use of foreign currency. And the people involved have a life to live and families to look after. This simply means that everyday they have to contend with such hardships in order to find space and eke out a profit. Well, let’s look at another group of citizens that have been hit by the weak kwacha in our next article.
