The Weight of Money: Inflation, Honesty, and the Fate of the Kwacha
By Dr Mwelwa
Dr. Steve Hanke, an economist of international repute, has stirred the waters of Zambia’s economic discourse with his claim that the true inflation rate stands at a staggering 47% per year—four times higher than the official figures. His assertion cuts deep, for it suggests not just a miscalculation but a misalignment between lived reality and official pronouncements. It is said among the elders that “a man who hides his wounds will only make them fester.” If Zambia’s economic managers are to guide the nation wisely, they must first be honest with themselves.
The recent introduction of higher-denomination notes, particularly the K200 and K500, raises pertinent economic questions. To the untrained eye, it may seem like a practical measure—one of convenience, a response to the wear and tear of existing notes. But to those who read the language of money, the arrival of bigger notes is often a whisper of inflation’s roar. It signals a quiet admission that smaller denominations are losing relevance, their purchasing power diminished by the silent but relentless tide of rising prices.
Currency is a mirror to a nation’s economy. When a nation prints larger notes, it is akin to a man needing bigger baskets to carry the same harvest—it is rarely a sign of bounty, but rather an indication that the weight of necessity has increased. Money, after all, is not merely paper; it is trust, it is stability, it is the promise that what you hold today will still hold value tomorrow. When the people sense that this promise is wavering, they adjust their behaviors accordingly—hoarding dollars, speculating on goods, distrusting the very medium through which trade flows.
The wisdom of our ancestors tells us that “when termites eat the granary from within, it collapses in silence.” The challenge in Zambia today is not just about currency redesign but about the deeper termites of economic mismanagement, fiscal deficits, and policy inconsistencies. Inflation does not rise in isolation—it is a symptom of excess liquidity, poor monetary discipline, and structural weaknesses that allow external shocks to shake the foundations of the economy.
The response to these challenges must be more than cosmetic. Changing banknotes without addressing the underlying economic imbalances is like painting a cracked wall without fixing the foundation. It is here that wisdom must reign over pride, for no leader, no matter how learned, can know everything. We hire advisors to learn from them, yet too often in Africa, leaders despise wisdom from anthills because they see themselves as mountains. True leadership listens, adjusts, and acts with clarity, for “a wise man does not test the depth of a river with both feet.”
To stabilize the Kwacha and rein in inflation, Zambia must embrace policies that restore confidence. Industrial productivity must be the engine that drives currency stability, not mere monetary gymnastics. The country must earn more than it borrows, produce more than it consumes, and manage its debt with prudence. The Bank of Zambia, instead of merely issuing new notes, must ensure that money supply growth aligns with economic output. The exchange rate must be defended with real economic strength, not just temporary interventions.
History teaches us that no nation prints its way to prosperity. If it were so, Zimbabwe and Venezuela would be among the world’s wealthiest. True economic growth comes from the sweat of industry, the discipline of fiscal management, and the trust of the people in their institutions. Without this trust, money becomes nothing more than decorated paper.
Let us be clear: the road to stability is not an easy one. It requires sacrifices, hard decisions, and, most importantly, honesty. As our elders remind us, “the one who tells you the truth is not your enemy.” If Zambia is to navigate these turbulent waters, it must heed the wisdom of both local elders and global economists alike. For in the end, it is not the size of the currency that defines a nation’s prosperity, but the strength of its economy and the wisdom of its leadership.