Monday, April 02, 2012
By Gift Chanda
Mon 02 Apr. 2012, 12:59 CAT
THE rebasing of the kwacha should be postponed to allow for more sensitisation, urges Consumer Unity and Trust Society. CUTS international Zambia board chairperson Ambassador Love Mtesa yesterday observed that the time frame allocated for the rebasing of the kwacha or knocking out of three zero from the local currency was not enough.
"We are cognizant of the fact that the Bank of Zambia is in a hurry to finish this work, however, the time frame which is six months allocated for this mammoth task vis a vis sensitisation is too little," Ambassador Mtesa said.
"A massive sensitisation is paramount hence the need to postpone the launch."
Ambassador Mtesa said postponing the rebasing of the kwacha would give the government a sufficient window period for effective country wide sensitisation.
He said enough sensitisation before the new currency comes into effect mid this year was fundamental in avoiding rampant fraud and swindling activities during the transition period when consumers are not yet sure of fair pricing.
"The time frame that has been allocated for this process is not enough. We say this because when the members of parliament have been sensitised about it, it needs a bit of time for them to assimilate and understand the whole concept of rebasing," Ambassador Mtesa said.
"This is the first time Zambia is going to rebase her currency, as such there is great need for the Bank of Zambia to sensitise the members of the public and other stakeholders on the process before implementing it. This would help both BoZ and the stakeholders to reflect and understand the benefit that would come along rebasing and thereby spell over the doubts in many minds. As a consumer organisation, we realise that this process will adversely affect consumers on a number of fronts."
He proposed that the rebasing of the kwacha be delayed until the country ensures that all macro-economic variables are stable, including exchange rates.
"At the moment, the exchange rates in the financial markets are far from stable as the kwacha is currently in a downward spiral and so before government rebases the kwacha, there is great need that this and other macro-economic variables are in a more predictable and stable state which is not the case at the moment. The local currency has since depreciated by over 10 per cent against major convertible currencies the lowest in more than two years trading at K5, 400 to one US dollar," said Ambassador Mtesa.
"The government is also yet to explain to the public its plan on how to handle the short term inflationary pressure that is likely to arise from the rebasing process through speculation and rounding off effects. It is most likely that prices for certain goods that are slightly less than a rounded kwacha figure will be rounded off cumulatively causing short term inflation. For instance, a retailer selling a good currently priced at K850 will have to adjust it to K0.85. This retailer is likely to round off this figure to K1 for accounting simplicity's sake but on an aggregate scale this will cause the general price level to rise. Hence, the need for government to set measures to cater for this inflationary bump and mitigate negative consumer effects."