Zambia’s proposed regulations that could impose 10-year jail terms for using foreign currency in local transactions have raised questions and criticism from local businesses, in what could be a crucial test of President Hakainde Hichilema’s pro-investment government.
Real Estate Investments Zambia Plc, a property developer, called the planned regulations punitive and hostile. They come as Zambia’s nearing the end of a near-four-year debt-restructuring process that’s hammered the local economy, with the currency showing extreme volatility since the nation in 2020 became Africa’s first to default in the pandemic era. Plunging copper output has further strained the kwacha.
“We’re still trying to understand the rationale,” said Ashu Sagar, president of the industry group. “We are an import-based economy and unfortunately most of our inputs are dollar-driven.” ADVERTISEMENT: CONTINUE READING BELOW Manufacturers often borrow in dollars to manage currency risks around imported inputs. Kwacha-denominated loans usually carry rates above 30%, while banks charge less than half of that for dollar loans.