$ 8. 5 million in the similar period this year. exchange rate volatility and domestic inflation the global financial meltdown caused a contagion effect to our foreign exchange market and led to volatility in the exchange rate of the kwacha against major currencies. this unfavourable development was partly a consequence of reduced earnings from copper exports arising from the fall in copper prices as reflected in the lower supply of foreign exchange on the market by mining companies. for instance, the supply of foreign exchange to the market by mining companies declined by 35. 7 % to a monthly average of us $ 62. 4 million in the first half of this year from an average of us $ 97. 0 million in the last half of 2008. in addition, the weakness of the local currency was a consequence of increased risk aversion to emerging and developing economy financial assets, as stated earlier, attributed to the deepening global financial crisis. in this regard, the supply of foreign exchange by foreign portfolio investors for the purchases of kwacha financial assets, such as government securities and domestic company equities, declined significantly, with most non - residents preferring to liquidate their investments and externalising the foreign exchange. the result of this is the volatility in the exchange rate of the kwacha against major foreign currencies. in the last quarter of 2008, the kwacha depreciated by 26. 9 % to trade at an average of k4, 394. 76 / us $ ( boz mid - rate ) from an average of k3, 462. 00 / us $ in the third quarter. it should also be noted that the depreciation of the kwacha against major currencies partly contributed to higher inflation, particularly as zambia remains dependent on imports for a wide variety of consumer goods as well as inputs for domestic production. further, this unfavourable development had a strong role in shaping inflation expectations. in q4, 2008 boz made net sales of foreign exchange to the market of us $ 127. 6 million, whilst in q1, 2009 boz made net sales of us $ 208. 5 million, in a continued effort to minimize exchange rate volatility. this meant utilizing international reserves to calm the foreign exchange market. tourism sector contracted apart from mining and related companies that were affected by the effects of the global recession, tourism was also negatively impacted. the number of foreign tourists visiting zambia declined owing to

caleb m fundanga : advanced payment system oversight and management opening remarks by dr caleb m fundanga, governor of the bank of zambia, at the macroeconomic and financial management institute of eastern and southern africa ( mefmi ) workshop on advanced payment system oversight and management, lusaka, 12 july 2010. * * * the director – financial sector management at mefmi representatives from mefmi secretariat distinguished resource persons dear participants ladies and gentlemen it is my pleasure and honor to be here today to officiate at this important regional workshop on advanced payment system oversight and management organized by the financial sector management programme of the macroeconomic and financial management institute of eastern and southern africa ( mefmi ). ladies and gentlemen, allow me to begin by expressing my gratitude to mefmi, for having organized this workshop that has brought together officials from the regional central banks and ministries of finance and economic planning to address and brainstorm on important aspects concerning regulation and supervision of the payment systems. i warmly welcome you all to zambia and in particular to the city of lusaka. in particular, i would like to welcome and thank our distinguished resource persons, some of whom are here present and others still to join us during the week. we thank you for accepting invitations to join us for this workshop and hope that your participation will enrich the deliberations of this workshop as well as the knowledge of the participants. i am aware that the quest to hold this workshop was driven by the deep conviction that a well developed and regulated payment system plays an important role in enhancing and promoting soundness in the financial system and is a catalyst for creating efficient transmission of monetary value in the economy. a well functioning and developed payment system is an essential requirement for the development of a market economy and deep financial markets. equally important is its role in the enhancement of the conduct and transmission of monetary policy. conversely, inefficient payment system operations can be a channel for causing distortions in the economy through inordinate delays in the monetary policy implementation and in settlement of financial transactions. this will invariably prevent the central bank from achieving its objectives of price stability and a sound financial sector. the mefmi region still faces a lot of challenges with respect to the development and oversight of payment systems. notable among these are : 1. regulation of non - bank payment system providers such as mobile phone companies ; 2. regulation of innovative payment system products ; 3. ensuring the law contributes to payment system developments and operations ; 4. ensuring full