Zambian Kwacha is Africa’s Best Performing Currency in 2024

This year, the Zambian Kwacha has outperformed all other African currencies when compared to the US dollar, solidifying its position as the top performer on the continent. The currency is on its longest winning streak in a year, largely because of President Hakainde Hichilema’s government’s decision to increase interest rates and mandate that the central bank retain money in the reserve.

On 5th February, the country increased the minimum reserve ratio for lenders. The interest rates are currently the highest they have been in nearly seven years. By purposefully constricting the flow of funds the Kwacha has climbed in value. This has been further supported by  increasing the base interest rate just over a week later.

With the Kwacha strengthening, imports will become cheaper. As a country that relies heavily on exports for a range of necessities including fuel, foodstuffs, fertiliser, and vehicles, this is welcome news. Moreover, Zambian exports will similarly gain in value. These exports include Zambian copper, which accounts for 70% of the continent’s production, as well as gemstones, tobacco, and sugar.

Analysts have warned that the Kwacha’s positive streak—and sustainable growth of the currency—will occur only if the country can secure more international investment, something that is already being promoted across all sectors of Zambia’s economy. In particular, President Hichilema’s improvement in mining policy has attracted billions of dollars worth of international investment to the country, with the policies offering predictability and confidence.

Some optimistic projections see the Kwacha continuing to rise to 22 per dollar. In a note to clients, Mulenga Kawimbe, from the First National Bank of Zambia, stated that the bank believes “a break of the 22.00 level is possible.”

This economic engineering has boosted the Kwacha, breaking its steady decline for 75 consecutive days. Its largest fall occurred between October 16th and February 5th, dropping 21% against the US dollar.

Zambian officials have credited the currency’s fall to hampering international investment because of stalled debt restructuring talks. Since then, Secretary to the Treasury Felix Nkulukusa has assured that Zambia is “on course to reach a new agreement.”