Reserves, Reality, and the Zambian Election-What the Debate Is Getting Wrong on Both Sides
Savior Mwambwa
Africa’s Green Finance Agenda | IFI & MDB Reform | Sovereign Wealth Funds, Tax Justice & DRM
There is a debate happening right now in Zambia, loudly, on social media and at campaign rallies, about the meaning of foreign exchange reserves. It has in many ways, become the central argument of the 2026 election, and it is being conducted badly by almost everyone involved.
Let me try my best to remove some confusion.
What the Number Actually Is
On June 24, at a rally in Nyimba, Tonse-Pamodzi Alliance presidential candidate Brian Mundubile dismissed Zambia’s foreign exchange reserves, which the Bank of Zambia recently reported at a record high of more than $6.4 billion, as “useless” to ordinary citizens facing high living costs. The UPND side, predictably, fired back. Economists weighed in. The Zambian Observer published explainers. LinkedIn filled with hot takes. And yet, a week later, most people are no more informed than they were before.
So let us start with what we actually know. Zambia now holds more than $6 billion in reserves, the highest level recorded in modern Zambian history. That is a concrete number. It is traceable. In 2011, the PF government inherited reserves of about $2.3 billion. By the time the UPND took office in August 2021, those reserves had fallen to around $1.2 billion. They now stand at $6.5 billion.
These are the facts. The argument is about what they mean.
What Reserves Actually Are, and What They Are Not
This is where the debate keeps getting conflated. Reserves are not cash in a savings account that the government is hoarding while citizens go hungry. They are also not a magic measure of how well ordinary people are living. Both of these framings the “why not spend it?” framing from the opposition and the “look how wealthy we are” framing from the government misrepresent what the instrument does.
Forex reserves are a country’s stockpile of foreign currencies, gold, and other internationally accepted assets used to pay for imports, service foreign debt, stabilize the exchange rate, and protect the economy during times of crisis. Think of them as a country’s immune system. They do not tell you whether the patient is healthy and thriving. They tell you whether the patient can fight off infection when it comes.
In Zambia’s specific case, after a sovereign default in 2020 with reserves at $1.2 billion, the rebuilding of those buffers was not an abstract macroeconomic exercise. It was a precondition for everything else. Without adequate reserves: the kwacha collapses, fuel costs more, fertilizer costs more, medicine costs more, and the debt restructuring that unlocked concessional terms becomes impossible to finalize. The IMF does not sit at the table with a country that cannot signal basic external stability.
For Zambia specifically, rebuilding reserves from near-depletion was a prerequisite for debt restructuring, exchange-rate stability, and renewed access to concessional finance. Without reserves, inflationary pressure and currency shocks would likely have been worse, not better. That is not a UPND campaign line. That is just how these things work.
What the Opposition Gets Right
Mundubile and others are not entirely wrong, even if they are reaching for the wrong conclusions.
Poverty in Zambia is estimated at 60 percent. Child mortality stands at 55.6 per 1,000 births. The Human Development Index stands at 0.588. Growth is yet to be inclusive. Poverty rates remain high, with 81 percent of citizens living on less than $3.65 a day in 2022, with women and rural areas particularly hard hit. The 2023 Global Hunger Index describes the situation in Zambia as “serious,” with 31 percent of the people undernourished. Almost one third of children under five suffer from stunting.
These are not figures from a political pamphlet. They are World Bank, AfDB, and Global Hunger Index data. Zambia has, for decades, been one of the most unequal countries on earth. There are few other countries with such pronounced income disparities, with a Gini coefficient of 57.1. Much of the development progress achieved is cancelled out by the country’s rapid population growth of 2.8 percent.
None of this began under UPND. But it has also not been reversed under UPND. And the UPND does not get to celebrate $6.5 billion in reserves and then claim it has nothing to do with economic management decisions that kept fertilizer subsidies cut, mealie meal prices high, and fuel unaffordable for the working poor. The price of mealie meal has more than doubled from around K120 a few years ago to K300 or more now. That is a lived reality, not a narrative.
The restructuring of the Farmer Input Support Programme pushed the price of a 50 kg bag of fertilizer from K400 to K1,100. That policy had IMF fingerprints on it. The government chose to accept it. Those are choices, and they have consequences that do not show up in the reserves figure.
What the Opposition Gets Wrong
But here is where Mundubile’s critique falls apart. The argument that reserves are “useless” or merely “figures” conflates cause with effect. It implies the government should simply spend the reserves on food subsidies or social protection. That argument deserves to be taken seriously and then firmly rejected.
Mundubile is right that macro stability alone does not feed families. He is less convincing when he implies it is meaningless or cosmetic.
The international comparisons he reaches for also do not hold up. Nigeria had over $40 billion in reserves and people were still poor. But Nigeria and Italy did not suffer Zambia’s 2020 sovereign default. For Zambia, rebuilding reserves from near-depletion was a prerequisite. Without them, inflationary pressure and currency shocks would likely have been worse.
There is also a legitimate composition question that some in the opposition have raised intelligently, even if most have not. Foreign reserves are often misunderstood as simple cash holdings, when in fact they consist of multiple financial instruments, including foreign currency deposits, gold reserves, IMF Special Drawing Rights, foreign securities and investments, and interest earned on reserve assets. Knowing the gross headline figure without understanding what is liquid, what carries conditionality, and what represents genuinely earned export receipts versus SDR allocations, is not the same as understanding the country’s real external position. That is a fair point. It deserves a detailed public response from the Bank of Zambia.
The Kwacha Is Doing Well
Here is where I want to push back hard against the “we don’t eat statistics” framing, because it ignores what the kwacha recovery is actually doing in people’s daily lives.
The kwacha has strengthened by more than 34 percent against the US dollar over the past twelve months, earning the distinction of being the world’s best-performing currency in early January 2026. Currency strength has been a key driver of Zambia’s falling inflation, which declined from 15 percent in 2024 to 9.4 percent in January 2026. As of today, the USD/ZMW rate sits around K18, down substantially over the past year.
For a country where fuel, cooking oil, fertilizer and medicine are largely imported, a stronger kwacha does reach the market. Not immediately, not evenly, not without market failures in pass-through pricing. But it does reach it. The Zambia Association of Manufacturers has called on businesses to pass the currency gains on to consumers. That is the unfinished transmission problem. But the mechanism needs to play out.
What Both Sides Are Avoiding
The deepest problem with this debate is not that both sides are wrong about reserves. It is that both sides are avoiding the structural questions that reserves cannot answer.
Zambia’s poverty is not primarily a reserves management problem. It is a structural transformation problem. Economic growth is yet to generate the formal-sector employment opportunities Zambians desire, and much of it remains driven by extractive sectors. Copper prices are high right now. Mineral royalties are sensitive to four variables: production volume, copper price, exchange rate, and the effective take factor. Two of those variables are outside Zambia’s control. A structural surplus built on commodity price tailwinds is not the same as a diversified economy.
The UPND government’s own manifesto targets are ambitious but depend on conditions that include rainfall, commodity cycles, and investment timelines that no government can fully command. Reserves also do not tell you whether fiscal policy is reaching the poor. The Hichilema administration has reprioritized health care, increasing the health budget from ZMW 13.9 billion in 2024 to ZMW 23.1 billion in 2025. That is a real shift. But it is happening in a country where the debt-servicing burden continues to consume a significant share of public revenues, constraining what social investment can actually do on the ground.
In order for the opposition to be credible, it needs to answer the following question: how exactly do you propose to convert reserves into welfare without triggering the currency and inflation shocks that crushed Zambia between 2015 and 2021? What is the mechanism? What is the fiscal math? “Direct investment in smallholder farmers” is a sentence, not a programme.
The government, to be honest, needs to stop presenting macroeconomic stabilization as poverty reduction. They are related but they are not the same thing.
The Actual Question for August
The economic debate Zambia needs is not “are the reserves impressive?” Yes, they are. Not “do they feed people?” Not directly. The real question is: what is the government’s credible theory of how stability becomes welfare, and on what timeline?
Zambia’s growth is projected at 6.4 percent in 2026, with load-shedding easing significantly and major investments flowing into mining expansion, energy infrastructure and transport corridors. That is real. But the drought of 2023/24 was the worst in 40 years, affecting eight of Zambia’s ten provinces and placing millions of households at heightened risk of hunger and destitution. Climate shocks are not going away. Copper prices do not stay high forever. An economy that cannot buffer its people against either of those realities is not yet doing what it needs to do, regardless of what sits in the Bank of Zambia’s vaults.
$6.5 billion is genuinely an achievement but it is also not sufficient. Both things are true. The voter who can hold those two facts in their head at the same time is the one who is going to ask the right questions before August.
