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President Hakainde Hichilema

HH’s one year: Economy back on track

NKOMBO KACHEMBA, Lusaka

KEY economic fundamentals have been kept at bay since the country ushered into office the new dawn government of President Hakainde Hichilema a year ago. Mr Hichilema, who became endeared to the public as “Bally”, also rode on the mantra “Bally will fix it” and promising a united and prosperous Zambia. Top on his priority list was to fix a battered economy whose growth rate had slowed down to negative five percent. The country was also crumbling under mounting debt of up to US$32 billion. Immediately Mr Hichilema was announced winner of the 2021 general election on August 16, 2021, markets responded positively, with the Kwacha gaining by a record 20 percent, while the country’s international bonds reported an 11 percent gain. Since then, the Kwacha has been trending, with the recent ranking as the best performing currency in Africa after gaining by about 40 percent, to trade between K15 and K16. On the other hand, the country has returned to a single-digit inflation rate after touching 9.7 percent in June but lost 40 basis points to 9.9 percent in July. Monetary policy rate has been maintained at nine percent and bank reserve ratios at 8.5 percent in order to control the rate of inflation from further escalation, after the country witnessed a historical inflation rate of over 23 percent sometime in 2020.
Pundits have attributed the improved economic outlook to improved international confidence in the Hichilema administration, fiscal and monetary tightening and reduced pay-out to the country’s international creditors, among others. Players in various sectors of the economy are confident that Zambia’s economy will recover with the Kwacha’s bullish performance. Zambia’s leading economic research body, the Zambia Institute for Policy Analysis and Research (ZIPAR), attributes the appreciation of the Kwacha to positive market sentiments. Research fellow for macroeconomics Ignatius Masilokwa said “…the recorded appreciation of the Kwacha was mainly on account of positive market sentiments, which prompted higher inflows from non-resident investors in government securities and the allocation of the Special Drawing Rights (SDRs) from the IMF (International Monetary Fund) in August. Fast forward into 2022, the exchange rate has CLICK TO READ MORE