IF THE transport infrastructure – particularly roads – is the engine of the economy, the oil and grease of it is the local currency, the kwacha. And it needs to come down a grade or two from an unbelievable performance against the US dollar and the South African rand particularly. It has strengthened by up to 60% at times against these currencies and provided exporters with a headache as big as the mighty Victoria Falls, and importers with a windfall. By way of example, when FTW visited Zambia for last year’s (2005) feature, the exchange rate was in the region of K4500 to the dollar. This year it was about K3200, going down to K3000 when we left five days later. Exactly why this has happened is not all that clear, although the greenback has travelled turbulent times globally in the past 18 months. Some cry conspiracy to suit overseas investors – citing an imminent maturation of Treasury Bills held mainly by American investors in July. The investors bought in kwacha when the dollar was strong 12 months ago and are now converting back while it is weak, thus making them many more dollars. The strengthening of the kwacha also came in an uncertain political environment, with President Levy P Mwanawasa playing the national presidential election date later this year close to his chest. Constitutionally, there are no dictates for him to formally announce elections and give time for electioneering, so one of the cornerstones of the new order as seen by the West and its financial handmaidens, the World Bank and IMF, is not being met. It appears that democracy is being toyed with whilst the world has eased Zambia’s financial burden.
