Again, Bank of Zambia promises smooth transition on new currency rules to safeguard investor confidence

The Bank of Zambia (BoZ) has assured the business community that the newly introduced Currency Regulations will be implemented in a phased and simplified manner to safeguard investor confidence and ease the transition for businesses.

BoZ Governor, Denny Kalyalya, said the measures were part of broader reforms aimed at reinforcing the Kwacha as the sole legal tender for all domestic transactions.

He noted that the reforms build on previous milestones, including the Electronic Balance of Payments system (2019), the Export Proceeds Tracking Framework (January 2024), Foreign Exchange Market Guidelines (May 2024), and revised Interbank Foreign Exchange Market Rules (June 2024).

“The use of foreign currencies in local transactions—commonly referred to as dollarisation—has become increasingly prevalent. This practice carries significant risks for our economy, undermining the Kwacha and weakening the effectiveness of monetary and exchange rate policies,” Dr. Kalyalya said during a stakeholder engagement under the Public-Private Dialogue Forum on Friday.

He stressed that exemptions provided in the regulations were carefully crafted to ensure market stability while acknowledging the need for certain foreign-currency transactions to continue.

Read more: ZICA raises concerns over draft foreign currency regulations, warns of implications for economic stability (Video)

Dollarisation, he warned, eroded the Kwacha’s role as a unit of measure, medium of exchange, and store of value, while exposing banks and borrowers to currency risks.

“It is for these reasons that the Bank of Zambia Act (2022) stipulates that the Kwacha and Ngwee are the sole legal tender for domestic transactions,” he said.

Public-Private Dialogue Forum representative, Kanja Ilunga, welcomed the consultation, noting that currency regulations directly affect export earnings, import costs, and SME competitiveness.

“The PPDF provides a structured channel for feedback from stakeholders like yourselves — so that your perspectives feed directly into national reform processes,” he said.

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