Zambia’s economy is showing signs of renewed stability following periods of volatility, particularly in exchange rates and inflation, Finance and National Planning Minister Situmbeko Musokotwane has said. Speaking at a media briefing in Lusaka, the Minister acknowledged that while progress has been made, the cost of living continues to place pressure on households across the country.
Musokotwane highlighted that recent economic performance indicates improved stability after difficult years marked by sharp fluctuations. He noted that the developments have brought relief to businesses, consumers, and investors, even as the government remains vigilant about underlying vulnerabilities that could affect growth.
The Minister explained that government policy is focused on balanced exchange rate management. This approach considers the needs of both importers who rely on foreign currency and exporters who earn in dollars. He emphasised that maintaining equilibrium between these groups is essential for sustained economic growth.
Bank of Zambia Governor Denny Kalyalya reinforced the government’s stance that all domestic transactions will continue to be conducted in the local currency, the kwacha. He stressed that allowing widespread use of foreign currency for domestic trade weakens monetary policy and increases pressure on foreign exchange demand. Kalyalya clarified that foreign currency is intended for external transactions, such as imports, and not for everyday purchases within Zambia.
The government’s approach to currency management gained attention following its decision to accept the Chinese yuan for a limited portion of mining taxes and royalties. Musokotwane said the measure applies only to four Chinese-owned mines and is intended to minimise conversion costs when servicing debt obligations to China, which accounts for a large share of Zambia’s external debt.
He explained that the move is driven by fiscal prudence rather than geopolitical considerations. Savings from reduced conversion costs could be redirected toward public priorities such as health, education, and student support. Only about 15 percent of total mining tax obligations will be paid in yuan, forming part of a measured strategy to manage currency exposure while preserving stability in public finances.
Musokotwane said the bulk of mining taxes will continue to be paid in established currencies used for government budgeting and expenditure planning. The limited acceptance of yuan is aimed at streamlining transactions within the mining value chain without undermining the integrity of Zambia’s tax system. He dismissed concerns that the policy signals a broader shift toward collecting taxes predominantly in Chinese currency, stressing that the framework restricts the scope of such payments.
Despite signs of macroeconomic stabilisation, the Minister acknowledged that the cost of living remains a significant challenge for many households. He cited lingering effects of climate shocks, which have contributed to electricity shortages and disrupted domestic and business operations. Musokotwane also noted that many micro and small enterprises still face difficulties accessing affordable financing, while a significant number of young Zambians continue to seek stable employment.
The government, he said, remains committed to addressing these challenges under the 2026 national budget themed “Consolidating Economic and Social Gains Towards a Prosperous, Resilient and Equitable Zambia,” balancing fiscal discipline with measures to support citizens and promote inclusive growth.