Power and Politics

Tembo blames PPP business model as partly responsible for unstable value of Kwacha


Patriots for Economic Progress (PeP) party leader, Sean Tembo, says government should reconsider the use of the Public-Private-Partnership (PPP) model as a primary means of infrastructure development.

Tembo said that this was because of its adverse impact on the exchange rate between the Kwacha and major convertible currencies.

The PeP leader advised government in a statement issued in Lusaka on Friday and made available to the media.

He noted that when infrastructure such as roads were financed using the PPP model, the investors, who are mostly foreign, get a revenue share from toll-gates on a monthly basis, which was in Zambian Kwacha.

“Chingola-Chililabombwe, even Lusaka-Ndola (Macro Ocean started collecting toll fees upon signature of the contract, that’s what the contract said),” Tembo cited.

He claimed that since the investors were mostly foreign, they have to convert their revenue share into foreign currency every month, in order to repatriate their money.

Tembo stated that since the revenue share amounts to billions of Kwacha, its conversion to foreign currency puts a lot of pressure on the Kwacha, resulting in its continuous depreciation.

Read More: Fears of Kwacha trading at a loss mounts, as scarcity of United States dollar persists

“That is one of the reasons why the interventions from the Bank of Zambia (BOZ) to reverse the depreciation of the Kwacha, only work for a few days, after which the Kwacha resumes it’s downward streak of depreciation,” he added.

Tembo said it was because the underlying issues such as the high use of the PPP model to develop infrastructure projects, were not addressed.

“As Patriots for Economic Progress, we wish to advise the UPND government to consider funding infrastructure development using local resources, as opposed to always resorting to the PPP model as the preferred model for funding infrastructure projects,” he advised.

Tembo said a reduction in the use of the PPP model would see some stabilization of the exchange rate against major convertible currencies.

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