Legislation must be introduced if the use of dollar in Zambia is to be stopped, says economist Professor Oliver Saasa.
Prof Saasa said that would be important because presently there were no exchange controls to take care of the situation.
In an interview Prof Saasa said that Zambia presently had a liberalised market which meant that it did not have a legislation that banned business operators from using dollars.
“If they want to introduce exchange controls that will ban the use of dollars then pieces of legislation have to be put in place,” he said.
But Finance Minister Alexander Chikwanda says he will soon issue a Statutory Instrument (SI) 33 of 2012 which recognises the Kwacha as legal tender in Zambia and prohibits dollarization, according to Ministry’s Head of Public Relations Chileshe Kandeta.
In an interview with the Daily Nation, Mr Kandeta said the process was in motion and had so far made great strides.
“The minister will guide the process which will come in form of an SI,” Mr Kandeta said.
On Thursday last week, President Edgar Lungu directed the Bank of Zambia (BOZ) to ensure enhanced monitoring of dollarization and take punitive measures against non-compliance He explained that businessmen were free to determine prices because there was no dollar equivalent system which prohibited them
“Let me say this first, fortunately or unfortunately, it is not illegal in Zambia to trade in dollars. The foreign exchange regulations presently does not ban the use of dollars,
“They are free to determine their price according to their determinations because there are no price controls but what it does is that if you do not put a dollar equivalent system then you will have to change the price tag every day,” he said. Prof Saasa said there was need to manage some of the macroeconomic fundamentals which would lower the price of commodities on the market
“We have to manage some of the macroeconomic fundamentals that will lower prices, you see telling business men not to operate in dollars is good because it is an appeal and we cannot do anything beyond that,” he said.
He however said the most important instrument to stabilise the economy was productivity, adding that the more productivity was enhanced, the faster the economy would find its bearing because prices were determined by laws of demand and supply.
Prof Saasa commended President Edgar Lungu for the recent policy statement he made on Thursday last week when he held a press conference.
He said the President announced good policies which if operationalized by both Government and the private sector would take Zambia to greater heights. He was however quick to mention that those policies needed to be translated into reality saying otherwise they would remain loft policy choices.
“This is not new, it was also said 30 years ago; the difference is that we need to translate policy pronouncement from Government into reality, that’s the level of implementation,
“Can we walk the talk and do we have the capacity to translate what the President has said, that’s where we should focus. Let us build the capacity to operationalize what he said by the private sector,’’ he said.
Prof Saasa said there was need to have transparent systems where operators in the private sector would predict the policy environment.