6 December 2012

Zambia: Kwacha Rebasing Will Trigger Inflation - Zacci

The Zambia Association of Chambers of Commerce and Industry (ZACCI) has insisted that the costs associated with the implementation of the Kwacha rebasing exercise may trigger a rise in inflation in the country.

But the Zambia Information and Communications Technology Authority (ZICTA) has assured the public that there will be no price increases by operators in the telecommunications sector arising from the Kwacha rebasing exercise.

ZACCI president Geoffrey Sakulanda said Bank of Zambia (BoZ) should monitor the situation during the transition period of the rebased Kwacha as inflation was expected to be triggered by an increase in the cost of goods and services.

He said the central bank should keep a close check on inflation during the transition period of the rebased currency as inflation could be influenced by a rise in the cost of goods arising from unplanned and unbudgeted expenses incurred by the business community.

Addressing journalists during an Airtel Media Club meeting in Lusaka yesterday, Mr Sakulanda said due to the unplanned and unbudgeted costs on the part of the business community, the cost would be passed on to consumers in the long run.

Some economic experts have said the costs involved in the full implementation of the rebasing exercise would fuel inflation as a result of the business community passing onto the consumers the costs through higher prices.

However, Mr Sakulanda said it was encouraging to note that ZICTA had put in place measures to ensure that no telecommunication operators increased tariffs during the transition period.

But the country does not have many robust regulators like ZICTA in other sectors of the economy to monitor the situation and ensure that the costs associated with the rebasing were not passed on to the consumer.

Mr Sakulanda said the timing for rebasing the national currency was good as the country had attained a favourable macroeconomic condition of low and stable inflation as well as economic growth, although the exchange rates appear to be weak.

Speaking at the same event, ZICTA manager in charge of information technology, Garry Mukelabai said there would be no hikes in tariffs from mobile operators, adding that the regulator did not want to surprise the customers during the changeover.

He said ZICTA was next week expected to inspect all information technology communication companies to ensure that they complied with BoZ with regard to the rebasing exercise.

And Bank of Zambia assistant director-payment system Lazarous Kamanga said: "We will not allow any commercial bank to operate if they will have not calibrate their busing system by December 31, 2012."

When asked whether the new banknotes and coins were in the country, Mr Kamanga said he was not aware but assured the nation that the new notes would be in circulation come January 1, 2013.

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