MINISTERIAL STATEMENT ON INTRODUCTION OF NEW FAMILY OF THE ZAMBIAN CURRENCY, DELIVERED BY HON. DR. SITUMBEKO MUSOKOTWANE, M.P. MINISTER OF FINANCE AND NATIONAL PLANNING

Madam Speaker,

It is my privilege to address the House and the Nation at large on the introduction of a new family of Zambian Currency. This development represents a significant step in strengthening our monetary system, improving the security of our currency, and enhancing transaction efficiency across our economy.

BACKGROUND AND LEGAL FRAMEWORK

Madam Speaker, the decision to introduce a new series of banknotes and coins was made on July 30, 2021, at a special meeting of the Bank of Zambia Board of Directors. This is in line with the constitutional and legal mandate of the Bank of Zambia as stipulated in Article 213(2)(A) of the Constitution of Zambia (Amendment) Act No. 2 of 2016, which grants the Bank of Zambia the authority to issue the currency of the Republic.

It is also important to note that the Bank of Zambia Act, 1996, was repealed and replaced by the Bank of Zambia Act, 2022. This updated legislation under Section 17(1) reinforces the exclusive right of the Bank of Zambia to issue legal tender for the Republic.

Accordingly, the Bank of Zambia is introducing a new family of six banknotes, that is, K500, K200, K100, K50, K20, K10 and six coins, that is, K5, K2, K1, 50N, 10N, and 5N. Of special note, the 10N and 5N coins from the existing currency will be retained to facilitate small transactions and prevent unnecessary price adjustments.

Madam Speaker, the process of designing, producing, and introducing this new currency series is a complex one, requiring careful attention to detail to ensure the notes and coins are as secure and durable as possible, particularly in an era of rapidly evolving technology regarding copying and imaging.

RATIONALE FOR INTRODUCING THE NEW CURRENCY SERIES

Madam Speaker, the introduction of this new currency series is driven by a number of factors. The new bank notes will come with enhanced security features to protect against counterfeiting and ensure public confidence in our currency. With economic changes over time, the note-coin boundary has also been redefined with the introduction of higher-value coins that will facilitate everyday transactions and reduce wear and tear of lower-value banknotes.

The new series will help improve transaction efficiency, in that the optimal mix of notes and coins will make cash transactions smoother and more convenient for businesses and individuals. As you are aware, the K100 banknote is currently the highest denomination in circulation. However, over time, it has come to represent over 70 percent of the total currency in circulation by value due to inflation. In other words, for every K1,000 in circulation over K700 is in K100 banknotes. This exceeds the international benchmark of 60 percent.

According to international best practice, when the highest denomination exceeds 60 percent of the currency in circulation by value, it triggers the need to restructure the currency family. While the K100 note has served its purpose, it has surpassed its ideal role as a store of value and is now primarily used for transactions.

Madam Speaker, to address this, two higher-denomination banknotes, K500 and K200, have been introduced to promote more efficient transactions, in line with international best practices. These new denominations will reduce the number of banknotes needed for everyday transactions. It will also reduce the cost associated with printing the banknotes. Where we required five notes of K100 banknotes for the value of K500, we now only need to incur the cost of printing one K500 banknote.

Finally, a well-designed and secure currency will boost the trust in the financial system and reinforcing the value of the Zambian Kwacha.

FEATURES AND TRANSITION PLAN

Madam Speaker, the new family of currency has been designed with enhanced security features and a refreshed visual aesthetic that highlights Zambia’s key economic pillars, flora, and fauna. The new currency series will maintain the alpha code (ZMW), Numeric Code (967), and currency symbol (K), ensuring a seamless transition with no need for system updates in accounting or financial operations.

The official launch date for the new currency series is 31ST March, 2025. Leading up to this date, the Bank of Zambia will coordinate the calibration of all cash-handling equipment across the country to ensure smooth adoption. The Bank will also conduct a national sensitisation campaign, targeting major cash handlers, law enforcement agencies, businesses, and the general public. This campaign will also extend to border towns where the Zambian Kwacha is widely used for trade.

Madam Speaker, I must state, that the introduction of the new currency series will not affect the value or purchasing power of the Kwacha as it remains the same currency, with the same value.

WITHDRAWAL OF THE OLD CURRENCY SERIES

Madam Speaker, as required under Section 25 of the Bank of Zambia Act, 2022, we will issue a Statutory Instrument (SI) to guide the withdrawal of the existing currency. The transition period will be twelve months during which both the old and new currency series will circulate side-by-side. As I mentioned earlier, the new currency series will neither affect the purchasing power nor value of the Zambian Kwacha.

CONCLUSION

Madam Speaker, this initiative is a progressive milestone in the continued evolution of our financial system. By modernising our currency, we are ensuring a secure, efficient, and trusted monetary system that supports national economic growth.

Madam Speaker, I Thank You.