CURRENCY CAN GAIN VALUE ONCE CREDIBLE LEADER IS SWORN, IT DOES LOSE VALUE ONCE DEMAGOGUE IS INAUGURATED
*** It’s a settled law of economics
Social media is flooded with memes insinuating that the statement by the UPND President Hakainde Hichilema on gaining of the local currency shortly after his inauguration is depicted as impossible.
There are a number of fundamentals that have an immediate impact on an economy among them is confidence and perception which can affect a currency or perhaps stock movement either positively or negatively.
Perception plays a vital role as when people lose confidence in a particular economy in this case Zambia under the Patriotic Front, the results are visible to an ordinary person who is feeling the heat at house hold level.
The statement by Hakainde Hichilema is both timely and practical as when there is a change of goverment, there is a relief and economic players are revitalized with hope for a stable and new insight for the next five years.
However, this is not dependent on their perception of him and his team as individuals per ser.
What is taken into account is the various economic statements made, proposed economic agenda and the manifesto.
If these inspire hope, then various stakeholders will respond positively and this can be seen through currency and stock movements.
One may say that the PF could provide such stability as they have been in power for sometime.
Unfortunaterly the current investor perception especially in the mining sector is not positive.
Once the new President is sworn in, the perception that Hakainde Hichilema is an economic manager who brings confidence among the economic players will temporarily stabilise the kwacha.
However, depending on the structure of the economy and its sensitivity to positive perception and the speedy and timely implementation of right policies would determine the continuous strengthening of the currency thereby changing the outlook of our economy.
Investors from America, Asia or South Africa are not looking at Mr Hichilema as someone they would like or dislike as a person but they are looking at the ideas, the team he has, the manifesto and policies he is promising to implement.
While this could also apply to President Edgar Lungu, he has however been tried and tested, and might therefore not inspire new investor confidence in the economy.