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‘Lack Of Banks Surveillance Leads To Manipulation’
GOVERNMENT says there is an element of manipulation by inter-banks in the determination of exchange rates due to lack of surveillance and supervision of the banking system.
Minister of Finance Alexander Chikwanda said in a ministerial statement to Parliament yesterday that the rates are determined by inter- bank arrangements and since the banks are few and a cartel, “there is clearly an element of manipulation”.
Mr Chikwanda said setting exchange rates is a profitable undertaking and the banks are obviously “led into temptation”.
He said efforts to improve the exchange rate through Statutory Instrument number 33 stipulating that all domestic transactions be done in the country’s currency – the Kwacha – has not worked effectively.
“For a month or two, there was a significant increase in the foreign exchange availabilities, but soon companies, especially the major players, detected a weakness in our compliance mechanisms,” Mr Chikwanda said.
He said breaches have been rampant and that there is need to strengthen compliance arrangements so that those caught in the act can face stiff sanctions stipulated in the law.
Mr Chikwanda said Government has reinforced its position including activating the Financial Intelligence Centre.
He said the Bank of Zambia Amendment Bill is currently before Parliament and will enable Government to regulate the foreign exchange system and monitor the balance of payments.
“Once the bill is passed, it will enable the government to issue detailed regulations including requirements for export earnings to be repatriated,” he said.
He said companies will retain unfettered recourse to their foreign currency deposits through commercial banks.
The minister said Government through the Zambia Revenue Authority is refining the monitoring system of production in the mining industry, to enhance revenue based on correct volumes of production.
“We want to do things in responsible ways and still maintain Zambia as a credible investment destination which has policy consistency and predictability,” Mr Chikwanda said.
He said a weak Kwacha raises the costs of all imports and transactions in foreign currencies for citizens.
And Senga Hill member of Parliament Kapembwa Simbao (MMD) raised concern over the weak Kwacha and that small companies risk closing down.
Posted by
kakolwe
February 27, 2013 at 2:09 pm
It is good that you’ve noted the flows in the system. Those control measures you are suggesting ought not take too long to implement. Be mindfull also that there is never a water tight economic system in the world. There is always going to be a shift. More like Le chartelere’s principle in chemistry.
Umutekatima wabushishe ikonge amabula
March 10, 2013 at 2:15 am
Awe sure its too much manipulation especially at ZANACO. I remember once or twice took my mother to withdraw her monthly pension money,the casher gave her less money,Not only that if I buy airtime through xapit,if its worth K10 rebased or more,they wont send to my moderm,but if its K4 they will send.ZANACO should be properly monitored.Moreover I have come across a number of friends complaining about the same.
Umutekatima wabushishe ikonge amabula
March 10, 2013 at 2:16 am
Awe sure its too much manipulation especially at ZANACO. I remember once or twice took my mother to withdraw her monthly pension money,the casher gave her less money,Not only that if I buy airtime through xapit,if its worth K10 rebased or more,they wont send to my moderm,but if its K4 they will send.ZANACO should be properly monitored.
Umutekatima wabushishe ikonge amabula
March 10, 2013 at 2:17 am
Awe sure its too much manipulation especially at ZANACO. I remember once or twice took my mother to withdraw her monthly pension money,the casher gave her less money.