How Ordinary Zambians Can Defend Their Savings from the Squeeze of Kwacha Depreciation
Zambia's kwacha ($zm) has had its fair share of ups and downs, especially when inflation rears its head or global shocks hit the region. For most of us, watching the value of our hard-earned savings erode is frustrating. But there are hands-on ways to insulate your finances from the worst effects of currency depreciation and inflation. This article builds on real experience—my own and others'—by walking through practical, sometimes overlooked steps you can take, what pitfalls to avoid, and concrete examples from Zambia and other countries facing similar challenges.
What’s really at stake?
Say you’ve been saving a bit each month in your local bank account. Suddenly, the kwacha slips 15% against the dollar in just a few months (as Bloomberg reported in late 2023). Your bank balance remains the same, but what you can actually buy with that money drops. That’s the gut-punch of currency depreciation.
My First Wake-Up Call
A few years ago, I had what looked like a decent nest egg sitting in kwacha savings. Then, I went to buy a used car—something I’d been planning for ages. The price had shot up so much (because car dealers import in dollars) that I could only afford a much older, less reliable vehicle. That was my “never again” moment.
Step-by-Step: Building a Currency-Resistant Savings Plan in Zambia
1. Diversify, Don’t Just Save in Kwacha
It sounds simple, but most Zambians I know keep everything in one place: a standard kwacha account. Here’s what I do now:
- Open a foreign currency account. Most major Zambian banks (like Stanbic, Absa, and Zanaco) offer USD or ZAR accounts. The process involves a bit of paperwork—passport, proof of address, sometimes a minimum deposit. I opened a USD account at Stanbic; the teller explained that I could transfer between my kwacha and dollar accounts via online banking. Here’s a screenshot from Stanbic’s online portal showing the two balances side by side (sensitive info blurred out):
- How much should you keep in foreign currency? There’s no one-size-fits-all. Experts interviewed by the Zambia Daily Mail recommend at least 20-30% of savings in USD if you can manage it.
Now, when the kwacha dips, I don’t feel the full brunt. The catch: getting dollars out as cash can be tricky in times of shortage, so don’t wait until the last minute.
2. Consider Hard Assets: Gold, Real Estate, and Livestock
A friend of mine, Chanda, started buying small gold coins at local jewelers and even through reputable gold dealers (always verify licenses—see Bank of Zambia for regulated dealers). When the kwacha tanked in 2022, the value of his gold in kwacha terms shot up. Gold is not as easy to “spend” as cash, but it’s a classic hedge.
Real estate is another option, but the initial investment is higher. I’ve seen people pool resources via “village banking” groups to buy plots of land or small rental units. Even goats and cattle can work as a store of value—prices for livestock often rise with inflation, and it’s culturally familiar.
3. Explore Mobile Money and Digital Tools
While Airtel Money and MTN MoMo are mostly kwacha-based, some fintech apps are adding multi-currency options. I tested Chipper Cash, which lets you receive USD transfers and store dollars digitally (though limits apply, and exchange rates can jump around). Here’s an example of a Chipper Cash wallet with both ZMW and USD balances:
But be careful: regulatory changes can freeze these services or tighten rules overnight (see BoZ’s digital finance directives). Always keep an offline backup.
4. Invest in Inflation-Protected Assets
Government bonds and Treasury bills are safer than stashing cash under the mattress. Zambia has started offering “inflation-linked” bonds—these adjust the payout as inflation rises. I bought some through my broker at Stockbrokers Zambia, and while the process was a bit daunting (lots of forms, a minimum K1,000 investment), the returns have kept pace with rising prices.
A step-by-step guide from the Lusaka Securities Exchange is available, or you can walk into most banks and ask for their investment desk.
5. Stay Informed—Don’t Let News Catch You Off Guard
I once missed a major policy announcement from the Ministry of Finance that led to a sudden kwacha drop. Now, I follow updates on the Bank of Zambia website and financial news channels. There are Telegram groups and WhatsApp forums (like “Zambia Investor Talk”) where people share tips and alerts, but always double-check rumors.
6. Learn from International Best Practices—What Do Other Countries Do?
It’s not just Zambia. Many emerging markets face this battle. Here’s a table comparing how “verified trade” standards and currency protection differ between countries:
| Country | Verified Trade Standard Name | Legal Basis | Enforcement Body |
|---|---|---|---|
| Zambia | Bank of Zambia Anti-Money Laundering Directives | Bank of Zambia Act | Bank of Zambia |
| South Africa | Exchange Control Regulations | South African Reserve Bank Act | SARB Financial Surveillance |
| United States | Verified Exporter Program | USTR Regulations | U.S. Customs and Border Protection |
| OECD Members | OECD Due Diligence Guidance | OECD Guidelines | National Compliance Authorities |
The main takeaway: Countries with stricter currency and trade rules tend to give savers more ways to access stable currencies or inflation-proof investments. Zambia is catching up, but policy gaps remain.
Case Study: When Policy Gaps Bite
Let’s say Zambia and South Africa both face inflation spikes. A Lusaka-based importer tries to pay a supplier in South Africa. South Africa’s strict exchange controls require detailed proof of trade and currency source. Zambia’s regulations are less tight, so the importer sends kwacha, which gets converted at a poor rate. The result? The Zambian buyer loses value not just from depreciation but from lack of policy harmonization.
Here’s how an industry expert, Mr. Banda from the Zambia Institute of Banking & Financial Services, puts it:
“Currency hedging isn’t just for big companies. Even small savers can protect themselves—if they use the right tools. But too many people only wake up when their money has already lost value.”
My Experience: Where I Got It Wrong (And Right)
Honestly, I didn’t get it right the first time. I once tried to convert all my savings to dollars at a bureau, thinking I’d beat the market. The next week, the kwacha rebounded, and I lost out on the exchange rate difference. The lesson? Don’t try to time the market perfectly. Diversify gradually.
On the flip side, the small stash of gold coins I bought hasn’t just protected my savings—when an emergency popped up, I sold a coin to a family friend at market price. The process was much smoother than I expected.
Takeaways and What to Do Next
Protecting your savings in Zambia from currency depreciation isn’t about one big move—it’s about building small, practical habits and using the tools available. Open a foreign currency account, consider hard assets, try digital wallets with care, and invest in government bonds if you can. Above all, keep learning: the more you understand the risks, the better you can dodge them.
Next step? Start by checking if your current bank offers foreign currency accounts, or talk to an investment advisor at a trusted institution. Even if you only move a small part of your savings, you’ll sleep better knowing you’re less exposed to the next kwacha wobble.
References:
If you want more technical details or have a personal story to share, feel free to drop a comment or check with local financial advisors who know the latest policies inside out.