Key facts: Zambia is betting on making its economy independent of the dollar. Venezuela has seen a similar case, banning the use of the dollar, weakening the bolivar. Zambia, in southern Africa, has imposed a ban on paying with foreign currency, punishable by up to 10 years in prison. The aim behind the measure is to curb inflation; however, the International Monetary Fund (IMF) suggests that these de-dollarization measures may be counterproductive due to the lack of monetary infrastructure. Annual inflation in Zambia, recorded until last June, reached 15.2%, the highest figure in the last 29 months, product of one of the worst droughts experienced in decades. This scenario has caused the Central Bank of Zambia to take these measures, stating that they seek to «stop the dollarization» of the country, according to a note from Bloomberg. Although in Zambia the only recognized currency is the kwacha, Most prices in the country are expressed in dollars due to the devaluation that the national currency has experienced in recent years. Between 2020 and 2025, the kwacha has devalued by more than 60% against the dollar, currently costing ZMW 25 for USD 1. Now, the Central Bank wants to stop the advance of de facto dollarization.imposing punitive measuresCompanies have already started to complain about the situation.
The ban would be counterproductive.
The IMF was consulted by Bloomberg about these prohibitive measures in Zambia, to which it responded, through its representative Eric Lautier, that for this type of measures to be effective, “macroeconomic stability” is required, including low and stable inflation. “These measures Forced de-dollarization will likely prove ineffective “And they could even be counterproductive,” Lautier said, noting that if there is no stabilization plan, the measures could lead to problems. One thing that is striking is that Zambia currently has an economic program with the IMF for an amount exceeding 1.7 billion dollars; however, the IMF was not consulted before the publication of this new jurisdiction, Lautier said.
Zambia and an old memory of Venezuela
Although it seems that we are talking about a scenario that occurs on a distant continent, something not so far away occurred within Latam. In 2005, the then President of the Republic, Hugo Chávez, signed the decree on foreign exchange offences and a currency control was established that would last for 12 years in the country. These measures basically eliminated the free convertibility of the bolivar (national currency of Venezuela) for any foreign currency without going through the control of the State. Citizens They were imposed an annual quota on how many dollars they could exchangeThe government argued that this measure was to stop capital flight. Although the economy was not affected in its first years, with the increasing devaluation of the bolivar against the dollar, the situation became complicated. This was because people could not escape the bolivarwhich was increasingly losing its purchasing power due to exchange restrictions. A year before the law was finally repealed in 2018, in 2017, bitcoin served as a solution to the crisis. It allowed the free convertibility of bolivars to bitcoins through P2P platforms such as LocalBitcoins, which reached record exchange figures in Venezuela, as reported by BitcoinDynamic.