Home > Uncategorized > New Year = New Money

New Year = New Money

  While Zambia’s currency has been fairly stable for a number of years, there was a time in which it underwent significant inflation.  As a general rule, today we equate 5,000 Kwacha to 1 US dollar.  Of course, the actual exchange rate changes but this is nice round number for mental math.  Zambia used to have coins but they were replaced with bills and the smallest bill was 50 Kwacha.  50 Kwacha is 1/100 of 5,000 kwacha, so a 50 Kwacha bill is the rough equivalent of 1 US penny.  I really liked the Zambian system.  No coins to weigh down your pocket and accumulate on the dresser and the bills were light and colorful.  But…

   On January 1st, a “new” Kwacha was introduced.  The “rebased” currency essentially lost three zeros, meaning a 50,000 ZMK note was replaced with a 50 Kwacha note.  They also reintroduced the ngwee, which is the coin.  So milk, for example, now costs 11.5 Kwacha rather than 11,500 last week. 

   The government spent lots of money on this change and in the larger scheme of things, there are better uses.  The change does help a bit in terms of perception as paying 5 million for a TV seems crazy but I don’t see any real difference.  The only other benefit that I can imagine is that it will cause people who may be hoarding cash to exchange it.  As you may recall, with the most recent election a new party took power.  The MMD had been in power for over 20 years and there were lots of stories of politicians embezzling money.  For example, one former minister was found with several billion kwacha buried on his property.  He hired a man to dig to hole and then placed crates of money in the hole and poured cement over it.  The man who dug the hole was curious and never got a good reason so he alerted the authorities.  It is hard to tell how much corruption there is in Zambia but it is definitely here.

New bill 

On top is the “old” kwacha and on the bottom is the “new” kwacha.  These two notes have the same value and are interchangeable (for now). 

50 Kwacha Notes

On top is the “old” 50 kwacha note and the “new” note on the bottom.  These two bills are both in circulation now but the red note is worth a penny and the blue note is worth $10.  People better pay close attention.

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