Reserves are armour, not assets
….. economists school Mundubile on central bank’s reserves built for protection

Reserves are armour, not assets
….. economists school Mundubile on central bank’s reserves built for protection

By DAVID KANDUZA
National reserves are an economic shield, not an idle savings account, an economist has said.

Responding to misleading statements by Tonse-Pamodzi Alliance presidential candidate Brian Mundubile, financial expert Mwila Kafula clarified the actual, critical defense mechanisms of central banks.

Mr Kafula said far from hoarding cash, central banks actively sell foreign currency from their reserves to buy up the local currency during times of heavy market pressure, effectively neutralising extreme volatility.

Mr Mundubile during a political rally held on June 24, 2026 in Nyimba, Eastern Province dismissed the UPND administration’s celebrated macro-economic milestones, describing Zambia’s historic US$6.5 billion foreign exchange reserves as ‘useless’ to ordinary citizens facing high living costs.

The opposition leader argued that top-tier economic statistics mean very nothing to everyday Zambians struggling with the local cost of living.

Mr Mundubile’s fiery speech directly challenges the central economic narrative of President Hakainde Hichilema’s re-election campaign ahead of the August 2026 general elections.

Mr Mundubile told Nyimba residents that the massive accumulation of foreign exchange buffers—which the Government and the Bank of Zambia (BoZ) recently reported at a record high of more than US$6.4 billion—fails to translate into real tangible benefits for the public.

He argued that international reserves simply reflected a government’s capacity to pay foreign creditors and stabilise international trade.
“They do not put food on the table for average families. Boasting about multibillion-dollar buffers while households struggle to afford basic commodities like mealie-meal is a disconnect from reality,” he said.

Commenting on recent reports from the Zambia Statistics Agency (ZamStats) showing annual inflation easing to 6.6 per cent Mr Mundubile stated that lower inflation was a ‘mirage’

He explained that disinflation simply meant prices were rising at a slower pace, but things were still becoming more expensive for the poor.

But economists said it was unfortunate that Mr Mundubile was misleading voters as central banks build reserves to serve distinct, critical functions that protect an economy.

Mr Kafula, said central banks sell foreign currency from reserves to buy local currency when it faces heavy pressure, curbing extreme volatility. 

He explained that reserves act as a national wallet to pay for critical imported items like medicines, fuel, emergency food and industrial machinery..

“Central banks sell foreign currency from reserves to buy local currency when it faces heavy pressure, curbing extreme volatility.. Reserves act as a national wallet to pay for critical imported items like medicines, fuel, emergency food and industrial machinery,” he said.

Inonge Mwaala said Governments tap into foreign reserves to pay back external international creditors on time, which prevents catastrophic defaults.

Ms Mwaala said large vaults of foreign currency signal national economic strength, improving global credit ratings and attracting foreign investment.

“Reserves act like emergency savings to keep a country afloat during unexpected crises, such as pandemics, severe droughts, or sudden export collapses.

Critiques said Mr Mundubile’s perspective centres on how macro-economic data translated to the average household.

In public debates, his focus highlights a real friction point having billions of dollars in central bank vaults does not automatically equate to affordable meal prices or immediate youth employment.

Many economists have framed the reserves as a necessary foundation for stability, rather than the ultimate goal of prosperity.