Zambia cracks down on dollar use

No longer widely accepted in Lusaka

Traders in Zambia who do business in US dollars could soon face fines or even jail.

The government in Lusaka is struggling to shore up its currency, the kwacha, at a time when inflation has risen above 20%.

It is already illegal for shopkeepers and other businesses to accept dollars, but the law has been widely flouted.

The government is now cracking down on such illegal activity, and will soon unveil sanctions for those who do not comply.

"This is a warning of the consequences of continuing not to use the kwacha," Zambia's Deputy Commerce Minister Eugene Appel told BBC's World Business Report.

Devaluation concerns

But firms and traders have complained that excessive government spending and high inflation has made the local currency less reliable, and caused devaluation.

Mr Appel insisted that the currency would stabilise and that no one would have to lose out.

"The government is hoping to stabilise the exchange rate by controlling the deficit and bringing down the interest rates," he said.

Firms have been given until 7 October to switch to the kwacha, while all dollars must pass through official exchanges.