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Potential Impact of the Kwacha Appreciation on Zambia Agriculture

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Author Info

  • Fynn, John
  • Haggblade, Steven

Abstract

The rapid recent appreciation of the Kwacha has placed these gains at risk. The sudden strengthening of the Kwacha since November 2005 has reduced the Kwacha value of agricultural exports by 30%, forcing reductions in farmgate prices and eroding exporter profit margins. As in a classic case of Dutch Disease, large inflows of foreign exchange–whether from surging international copper prices, foreign aid or speculative financial inflows–have contributed to the strengthening Kwacha. The subsequent rapid appreciation of the Kwacha risks making much of Zambia’s export agriculture uncompetitive on world markets.

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Bibliographic Info

Paper provided by Michigan State University, Department of Agricultural, Food, and Resource Economics in its series Food Security Collaborative Policy Briefs with number 54617.

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Date of creation: 2006
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Handle: RePEc:ags:midcpb:54617

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Postal: Justin S. Morrill Hall of Agriculture, 446 West Circle Dr., Rm 202, East Lansing, MI 48824-1039
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Fax: (517) 432-1800
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Web page: http://www.aec.msu.edu/agecon/
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Related research

Keywords: food security; food policy; Zambia; appreciation impact; Farm Management; Q18;

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Cited by:
  1. Tschirley, David L. & Kabwe, Stephen, 2007. "Cotton in Zambia: 2007 Assessment of its Organization, Performance, Current Policy Initiatives, and Challenges for the Future," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 54485, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  2. John Weeks, 2008. "The Reduction of Fiscal Space in Zambia?Dutch Disease and Tight-Money Conditionalities," Country Study 14, International Policy Centre for Inclusive Growth.

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