Thursday, January 15, 2009
Written by Mwiinga Mukuwa
Thursday, January 15, 2009 3:05:56 AM
NATIONAL Milling Cooperation managing director Peter Cottan has asked the government to come up with a deliberate policy that will compel traders to quote prices in the local currency.
In an interview, Cottan said millers spent millions of dollars when purchasing wheat and soya beans from commercial farmers who insisted on being paid in US dollars.
“That is a huge strain on the treasury and exchange rate. We have to buy millions of dollars to pay for wheat. I don’t think there is justification for that, I think we can go all the way down the chain,”he said.
Cottan said the government must ensure that the suppliers of fertiliser and chemicals which were imported into the country and trading through local companies should be quoting prices in kwacha.
“This will ensure that the whole chain is kwacha denominated. Some years when the kwacha hit K5,000 against the dollar, a meeting was held between Bank of Zambia and the private sector…we had a voluntary code of conduct where we wanted to put measures of the exchange rate controls. We agreed that we were all going to invest in kwacha,” he said.
Cottan said there was need to get back to those fundamentals owing to the global financial crisis and the kwacha’s devaluation against the US dollar.
“We cannot afford to have any dollarisation of our economy as it is a strain on the treasury,” Cottan said.
He said only the tourism industry could justify the quoting of prices in US dollar as it directly dealt with foreign tourists who mainly use foreign currency while in the country.
“It’s important we go back to these fundamentals and ensure that every body invests in the kwacha and not trading in dollars, “said Cottan.
Late last year, Bank of Zambia (BoZ) governor Dr Caleb Fundanga indicated that the Central Bank would not tolerate the issue of foreign currency quoting and invoicing of goods and services within Zambia. He noted that Zambia’s pursuance of an open economy should not, in any way, be construed to mean that dollarisation became an accepted norm governing local business transactions. Dr Fundanga said the Central Bank was fully aware that the recent depreciation of the kwacha may have been precipitated by the rebirth of the practice where traders quoted prices in US dollar.