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Tighten up financial regulatory framework, ZACCI urges govt

Tighten up financial regulatory framework, ZACCI urges govt
Written by Kabanda Chulu
Sunday, June 07, 2009 4:08:19 PM

ZAMBIA Association of Chambers of Commerce and Industry (ZACCI) has challenged the government through the Bank of Zambia to tighten up financial market regulation framework to avoid speculative investment behaviour.

And ZACCI chief executive officer Justin Chisulo has said there is need to set up mechanisms to monitor the inflows of all remittances by Zambian nationals living abroad.

Making submissions to the parliamentary committee on economic and labour affairs on the impact of the global economic crisis on Zambia’s economy and stability of the financial markets, Chisulo said there was a direct link between the global economic downturn and the fall in the kwacha.

Chisulo explained that the economic downturn meant that demand for copper had reduced, resulting in reduced US dollar earnings.

“There were other factors that contributed to the fall but the predominant one is the fall in the price of copper. Unfortunately, those short-term investors also felt unsafe to continue investing in monetary instruments and thus pulled out their investments and the end result is a shortage of the hard currency and yet more and more demand on the US dollar is increasing, therefore exerting pressure on the treasury leading to instability of the exchange rate,” Chisulo said.

“So there is no doubt that the depreciation of the kwacha is partly attributable to the withdrawal of speculative investments and the current regulatory environment allowed this to take place hence the urgent need to tighten it up especially on this matter.”

He urged the government to act and not just talk about economic diversification.

“Dependence on one commodity [copper] for export earnings is a huge risk that the country shoulders on and it is time we diversify and not just talk about it and Zambia should borrow money from the IMF or the World Bank to assist in the stabilisation of the kwacha since a facility does exist and all we need to do is apply for it,” said Chisulo.

“And we should set up a committee to be making rational recommendations on a month-by-month basis on what is to be done to mitigate the effects of the downturn on the economy of the country and it should also set mechanisms to monitor the inflows of all remittances from our nationals working outside of Zambia.”

Labels: BOZ, JUSTIN CHISULO, REGULATION, ZACCI

posted by MrK @ 3:12 PM