THE business community must respond to the strengthening of the Kwacha by reducing prices of commodities, says Economic Association of Zambia (EAZ) president Dr Chrispin Mphuka.
Dr Mphuka said that reducing commodity prices was one aspect which was supposed to be looked at because the business enterprises were quick at increasing prices but reluctant to lower them when the currency appreciated.
“There is one aspect which we have seen and probably needs more research on. When the Kwacha loses value enterprises are quick to adjust the prices upwards, but when it gains they are reluctant to lower prices. This is what we call ‘sticking downwards’’’.
He said businesses in Zambia had a habit of maintaining the same high prices even after the Kwacha gained strength against other major convertable currencies.
“We hope that with the gaining of the Kwacha, people will also respond especially those running import businesses. We at least want to see a change in prices because the weak Kwacha had triggered so much price increases.
“People still maintain the high prices even after the Kwacha gains, so that they may make Zambia an expensive country compared to other countries,” he said. Dr Mphuka also said the strong Kwacha was as a result of some measures put in place by the Bank of Zambia such as tightening of monetary policy rate.
“The foreign exchange market is tight because of some measures BoZ has put in place to control the currency, probably that also could account for the stability.
“What we want to achieve, as a country, is stability, because it is what is important for investment,” he said.