Economy

Government To Prioritise Gold Over The US Dollar – BoZ.

Zambia’s US dollar reserves have been under pressure following the perpetual depreciation of the local currency – the Kwacha. Servicing US dollar denominated external debt has been ballooning as more Kwacha is needed to be converted to US dollar to service debt.

Establishing of gold reserves is viewed as a diversification strategy that would enable the country to buy gold which is locally mined in the local currency – Kwacha and be used to shore up reserves over and above the direct US Dollar forex earnings and inflows.

The advantage of establishing gold reserves include the greater security of gold reserves kept at home. Relative to foreign exchange reserves, which are claims against foreign banks and authorities, which can be blocked any time for political reasons.

The other known advantage is that most suited to Zambia is that gold reserves would provide a more stable asset to diversify from only holding US Dollar reserves. Zambia has struggled to have a stable Kwacha and gold reserves could provide a war chest to draw on and counter the perpetual Kwacha slides experienced year in year out.

And The Bank of Zambia (BoZ), has disclosed that negotiations on the resumption of the purchase of gold to establish gold reserves have advanced and that the central bank has concluded the initial negotiation stage and submitted a draft contract to the identified supplier that will govern gold purchases.

The Central Bank had in December 2019 announced plans to start the process of buying gold locally as an alternative to US dollar forex reserve as a way of revamping Zambia’s national reserves as well as diversifying from the concentration risk of only holding US dollar reserves.

BOZ has confirmed that they have sent out a draft contract to the identified supplier(s) and currently expecting feedback. The supplier is to deliver purified gold bullion to a standard that it can be held as part of international reserves.

BoZ Acting Assistant Director for Communications, Besnat Mwanza, on May 18, 2020, said that the date of resumption of gold purchases is dependent on the conclusion of the contract. She said that the mechanisms of purifying gold to international bullion standard and stored safely have also been agreed in principle with the relevant stakeholders.

Even on the economic front, Zambia has every reason to prioritise gold mining. Although copper might be fetching a staggering US$6.300/ton on the London Metal Market, with cobalt fetching a whooping US$80,000/ton, gold is in a class of its own, relatively fetching US$445.58 per gram with price per kilo averaging US$45,594.94.

It is no surprise that President Edgar Lungu has given special attention to the commodity and has put in place a specific vehicle to drive this agenda to push Zambia out of its current economic status.

ZCCM-IH through ZCCM Gold has been mandated to drive the national gold agenda, working in collaboration with the Ministry of Mines and Minerals Development and other stake holders. ZCCM Gold is undertaking and overseeing all gold related investments throughout the gold value chain in the country including exploration, mining, processing, refining, marketing, trading and beneficiation in Zambia. ZCCM Gold is a wholly owned Zambian firm.

Copyright © 2020 ZR.

You can get in touch with our news team by emailing us at: editor@zambiareports.com

 

24 Comments

  1. edgar chibuta

    nice diversification move

    Reply
  2. GMW

    Comment this is great, now we have the hope at last, please BOZ walk the talk,let not this brilliant idea die a natural death or land in wrong hands.

    Reply
  3. GMW

    with this move our economy can be redeemed

    Reply
  4. Bemba champ

    This is the best thing and it is about time,
    The problem is the transparency and corruption surrounding the whole system,but all in all it is long over due.

    Reply
    • Tititit

      The truth is everything seems to be going well on paper but implementation for the benefit of the nation is something else

      Reply
  5. Mulesu WeSU

    I pray that this plan is protected in Jesus Christ name. This is the only way Zambia will be redeemed. Kindly advise how to sao the gold.

    Reply
  6. pinky

    This should be done as soon as possible.. We are suffering with the rate of the dollar… Us small business owners

    Reply
  7. Michael

    nice move if other countries have done this we too can manage with discipline.

    Reply
  8. Mudododo

    Comment
    this is what the country has been waiting for.

    Reply
  9. Brotherman

    The discovery of gold should be regarded as one of best thing to have ever happened to Zambia . Things such as legal and security procedures should be gazetted. Its should be against the law for anyone to export gold outside Zambia except ZCCM Gold. Even the copper mines who have been secretly exporting this commodity should be compelled to sell it to ZCCM Gold, who should eventually deposit at Bank of Zambia as the national asset. Transparency, accountability and risk management should serve as the hallmark of the entire gold chain in Zambia.

    Reply
  10. Kent

    Almost everything in Zambia is imported, the Chinese are externalising the profits they make in china malls country wide, can the kwacha b strong, grow up ba pf.

    Reply
  11. Razor

    But you still need the US dollar to trade. Look at Zimbabwe they have gold mines there and gold reserves but their economy is finished because they don’t have foreign currency.

    Reply
  12. Moses

    Corruption is wht kills us Zambians. A goat eat at the place it as be tight. Let us wait and see

    Reply
  13. Phiri

    How can I as a diasporan with cash to burn buy into Zedian gold stock?

    Reply
    • You

      My brother there are vast mineral resources here at home but no one to put money in ,that is why govt is crying for investor’s. But my question is why look for investors outside when villagers were picking the gold nuggets and gold flour using plates! How ignorant are we. Govt should rather encourage small scale mining in so doing employing thousand instead of looking for external investors and hoping to get something in return. Our people should be empowered! “The one who feeds you controls you”..Sankara

      Reply
  14. Kwame Sankara

    Razor they can re build and obtain the currency. Zimbabwe Zambia Botswana DRC South Africa Mozambique are all sitting on massive reserves of natural resources and mineral resources but they are waiting for Western prospectors, Western markets Western investors Western industries Western entrepreneurs and parhaps a western government to turn these into wealth for their citizens.
    They don’t think they can utilize their own human resource in the exploitation and converting of these resources into wealth. The problem is our schools are busy teaching students to continue depending on the West for everything churning out economists and businesses that think we have to follow the guidelines of the west.
    Its time there was a revolutionary leadership that can address our dependenncy. Zimbabwe doesn’t need USA trade. Africa can trade with itself. This is not a pipedream

    Reply
  15. Saimbwende

    Brilliant idea my motherland Zambia I pray that this time you are winning.
    All potential saboteurs must be kept at bay because they can strangle our economy

    Reply
  16. Big Moze

    Its great to hear, our country is greatly endowed with a lot of minerals and other natural resources and yet we remain the poorest in the world, why? Only copper is widely talked about, what about cobalt, malachite, diamonds, red,green,blue tomorine,etc.we have all these precious minerals,but the govt only talks about copper why? We don’t deserve to be this poor as a nation, something is terribly wrong some where. Its heart breaking to see our leaders always begging for captivating loans from IMF.When we can have and buid our own forex reserves out of all that the Good Lord has blessed us with. Zambia is not poor.

    Reply
  17. Muzumara P.M.

    It’s very commendable for government to come up with purchase of gold from local producers, controlled by ZCCM. This should also apply to other precious metals. We should not allow foreign investors to continue getting our wealth leaving us perpetually poor. We have enough Zambian mining engineers to mine these minerals. GRZ needs to empower them to mine and process these precious minerals for our country. ZCCM to ensure production is maximized to turn around our economy. Otherwise the government is moving in the right direction and will have the support from all well meaning Zambians.

    Reply
  18. Lewis Mwape

    Since historical times gold has been of value. Its time we went back to the kwacha- bullion equivalent thing as a country and not give in to the manipulation of the west on Africans’ currencies! Be cautious even then that with these inflated foreign currencies someone somewhere will be hurt and try dirty games! Remember the history on currencies domination / manipulations !

    Reply
  19. Jms

    You should be pointing some of these supplies,when giving us data give us every thing, I’m not sure what you say, do you know Chanda chime mhsrip.report facts which will help not just dreaming I the end apology.

    Reply
  20. Opener

    People of Zambia, don’t you think if it could be possible or better for government to enact a statutory instrument on gold reserves? This could strengthen and make strict observation on the gold reserves. I opt for a Gold Reserve Act in our constitution.

    Reply
  21. Mugala

    Brilliant Idea
    But let us not tolerate foreigners on this one….

    Reply
  22. MOSES MBEWE

    As a patriot citizen, I would love that our country puts the interests of our citizens first by allowing them to invest in the gold and other mining ventures upto 65 percent and only 35 percent allow foreign investors. This will make our economy more stable. Plus we need more processing facilities rather than exporting raw materials.

    Reply

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