Historical Sketch

In 1889, the British South Africa Company (BSAC) of Cecil Rhodes was granted a concession for the exploitation of territories in south central Africa. The concession area was initially referred to as “Zambezia”, later split into Northwest and Northeast Zambezia. In 1891, the territory was extended towards the Lake Malawi, the new acquisition being called British Central Africa protectorate. The BSAC continued its conquest with the Mashonaland and Matabeleland protectorates in 1894. A year after, the different BSAC territories were reorganized and renamed into Northwest, Northeast, and Southern Rhodesia, the two northern ones being merged in 1911. The Central Africa protectorate was handed over to British colonial administration in 1907 and subsequently renamed Nyasaland. In 1953, the three colonies were joint into the Central African Federation (of Rhodesia and Nyasaland), which did not prove successful. In preparation for independence, the federation was dissolved again. In 1964, Northern Rhodesia attained independence as Republic of Zambia.

Monetary History Overview

The British South Africa Company did not introduce any monetary order into its possessions, in the 1890s the correaponding legislation of the Cape Colony had been adopted globally. In 1938, Britain established a currency board for Southern Rhodesia, creating the Southern Rhodesian Pound as distinct currency. The jurisdiction of the currency board also comprised Northern Rhodesia and Nyasaland, which thereby also separated from the South African monetary area. The common currency area was renamed in 1954, but the Central African Pound was identical to its predecessor. In 1964, independent Zambia immediately withdrew from the common currency area with neighboring Malawi and Rhodesia (later Zimbabwe). In July of the year, the central bank was (provisionally) established and the Zambian Pound as national currency, the central bank act was passed a year later. The Kwacha was at par with the Pound Sterling but repegged to the US Dollar when Great Britain devalued its currency in 1967. In 1968, Zambia decimalized the currency introducing the 1st Zambian Kwacha at half a Pound. The currency repegged to the IMF Special Drawing Rights (SDR) unit in 1976. In the early 1980s, the exchange rate was first devalued, then set to float in 1983. In 1986, the depreciation of the previous years was suddenly reverted in parts, and the Kwacha got repegged, first to the US Dollar, then to the SDR. In 1989, the floating regime was finally reinstated, and the depreciation turned into hyperinflation. A decade later, after more than 99.5% of the currency valued had gone, the situation began to stabilize. In 2013, a currency redenomination was carried out. Three zeros were cut, and the 2nd Zambian Kwacha became the new unit. It lost 50% of its value within two years. After a short period of currency stability, the Kwacha has begun to depreciate again in 2019.

Zambia joined the International Monetary Fund (IMF) on 23.09.1965.

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