Depreciation of the Kwacha against the major global currencies is taking the sheen out of Zambia’s small and medium businesses. This has resulted in a spike in operational costs which makes the local industry incompetent and unsustainable. Depreciation of the national currency is adversely impacting businesses at all levels but gravely affecting small and medium-sized enterprises (SMEs) that employ 90 % of the workforce outside the formal sector.
Depreciation of the Kwacha against the major global currencies is taking the sheen out of Zambia’s small and medium businesses. This has resulted in a spike in operational costs which makes the local industry incompetent and unsustainable. Depreciation of the national currency is adversely impacting businesses at all levels but gravely affecting small and medium-sized enterprises (SMEs) that employ 90 % of the workforce outside the formal sector.
The Zambian economy basically is an import-based one and the country heavily depends on its imports, and predominantly consumer spending drives the economic growth for Zambia. The depreciation of the local currency has made it tough for local businesses to import goods and materials, leading to sudden inflation and rising operational costs.
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The Zambian business bodies are urging the government for immediate remedial measures to combat the current crisis such as tax levies, and statutory incentives to small and medium businesses so as to reduce the cost of doing business and scale up production. Meanwhile, there are concerns about the country’s debt restructuring efforts and it is widely said that delayed debt restructuring is one of the main reasons behind the Kwacha’s depreciation.
