28/06/2026
ABOUT RESERVES…, ARE THEY IDLE?
1] The stable exchange rate is a beneficiary of sufficient reserves; reserves curb exchange rate speculation and enable the BoZ ability for short term intervention in case of unfavorable fluctuations.
2] Sufficient reserves are good for signaling stability of the financial system, hence, boost investor confidence in our economy.
3] Reserves enable us to meet our financial obligations with minimased disruption to our exchange rate market.
4] Reserves are a mitigation measure for any shocks in the global economy that are external to us. Given the many volatilities in the global economy, having sufficient reserves is a winning strategy.
5] Macroeconomic parameters are very interconnected, for instance, reserves feed into exchange rate stability, which feeds into controlled inflation, feeding into stable value of the Kwacha, thereby, ensuring the Kwacha that a marketeer who sells vegetables earns has stable value.
6] Growing up, before “processed seed” was a thing, we used to keep “normal” maize as seed. Sometimes you would say we have no mealie meal and maybe sleep without a meal but we have ka maize (…seed equivalent to reserves here) in the house. Even the wisdom of old understood some form of reserves at the household level.
7] Ideas/strategies can be crafted outside depleting the reserves because of the strategic importance of reserves in the financial system.
Ma reserves “nichitu chambwino manigi”. KEEP those RESERVES please!!!
John Musantu, PhD
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John Musantu is a Zambian based economist, lecturer, researcher and author
Email: [email protected]