Bo Lishala C. Situmbeko writes
Zambia’s Foreign Reserves: What They Are and What They Are Not 🇿🇲
Someone asked me last week whether the government is “sitting on” six billion dollars while roads need attention and clinics need medicine.
It is an honest question. It deserves an honest answer. I want to answer this not from rumour or politics, but from having done the job.
I spent several years as an Economist in the Financial Markets Department of the Bank of Zambia. My work included the daily management of the foreign reserves portfolio. I monitored the currency mix each morning. I tracked maturities. Every single day, the overriding instruction was the same. Safety first. Not return. Not spending. Just safety.
I left the Bank of Zambia nearly twenty years ago. I do not speak for the institution, the government, or the central bank’s clients. I speak as a professional economist who has spent a career working with exactly the kind of money people are now asking questions about. I think the public deserves a clear explanation.
Let us start with the biggest misconception. The government does not have a key to the reserves vault.
The Bank of Zambia is a separate legal entity. Think of it this way. You might own shares in a bank where you also hold an account. Owning those shares does not entitle you to walk into the treasury and help yourself to the cash. The bank is separate from its shareholders. The relationship between the government and the central bank works on the same principle.
If the government needs foreign currency, it does what any customer does. It goes to its banker and buys it. The Bank of Zambia is the government’s banker.
There are moments when government revenues in Kwacha may not fully cover a foreign currency obligation at a specific time. This is normal. When it happens, the government can discuss a facility with the central bank to bridge that gap. This is not raiding reserves. It is standard economic management under the law. It is no different from you arranging an overdraft facility with your bank when your salary has not cleared but a payment is due.
So, what do reserves actually do? They perform three functions that matter to your daily life:
🚢 1. They support our ability to pay for imports. Most foreign exchange for everyday trade flows through the commercial banking system. Exporters earn foreign currency and hold it in their accounts at commercial banks. Importers buy from those banks. The central bank’s reserves are not the source of every dollar that crosses the border. They are the backstop. They keep the system moving when private sector flows fall short. Without adequate reserves behind it, the whole system stalls. Banks cannot find foreign exchange for their clients. Importers wait for weeks. Fuel shipments stall, and medicine runs short.
🛡️ 2. They protect the Kwacha. When reserves are strong, the central bank can step into the market to smooth out big price changes. That stability is what keeps the price of mealie meal, cooking oil, and rent from going up every time global markets shake.
🤝 3. They maintain confidence. Every investor considering Zambia looks at one number. They want to know how many months of imports this country can cover. Our 6.7 billion dollars comfortably exceeds the international benchmark of three months. That number is Zambia’s reputation in a single figure.
Reserves are not a sovereign wealth fund. They are not savings put away for a rainy day. Our reserves are working capital.
They are the fuel that keeps the engine running, not cargo to be offloaded at the next stop.
Let me put it plainly. The person who says “spend the reserves on roads” is not asking for development. They are asking, without knowing it, for the Kwacha to weaken. They are asking for import costs to rise, for fuel prices to spike, and for the investors who fund our infrastructure to leav
You do not build a country by draining the fuel tank.
Zambia has worked hard to reach 6.7 billion dollars. Those of us who remember what it felt like when the Kwacha was falling fast know exactly what that number is worth.
It is worth protecting. It is worth understanding. And it is worth explaining properly.