Bank of Zambia (BoZ)

Overview

The Bank of Zambia (BoZ) was established on August 7, 1964, to assume the functions of the Bank of Northern Rhodesia following Zambia's attainment of independence. As Zambia's central bank and monetary authority, the BoZ operates under the Bank of Zambia Act of 2022 and holds the primary mandate to formulate and implement monetary policy that maintains economic and price stability, issues the Zambian kwacha as legal tender, and supervises the financial system.

Dr. Denny H. Kalyalya has served as Governor since February 2015 and was reappointed for a six-year term effective October 28, 2024. The Bank operates from its headquarters in Lusaka with a mandate encompassing monetary policy, banking supervision, payment systems regulation, financial inclusion, and prudential oversight.

Key Statistics:

• Establishment: August 7, 1964
• Current Governor: Dr. Denny H. Kalyalya (reappointed 2024)
• Headquarters: Lusaka, Zambia
• Legal Framework: Bank of Zambia Act, 2022; Banking and Financial Services Act, 2017
• Regulatory Scope: Banks, microfinance institutions, payment service providers, mobile money operators

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

The Bank of Zambia maintains comprehensive authority over banking institutions operating within Zambia, with supervisory functions exercised through on-site examinations and off-site monitoring.

Licensing Requirements

Banks seeking to operate in Zambia must obtain a license from the BoZ. The licensing process evaluates applicants' capital adequacy, governance structures, anti-money laundering systems, and operational readiness. Banks must demonstrate compliance with all regulatory conditions as a prerequisite for license issuance.

Prudential Requirements

Supervised banks are subject to prudential standards covering:

• Capital Adequacy: Banks must maintain minimum capital requirements and risk-weighted asset ratios consistent with international standards
• Liquidity Management: Minimum liquidity coverage ratios and reserve requirements
• Asset Classification and Provisioning: Loan classification standards and minimum provisions for problem assets
• Large Exposure Limits: Restrictions on credit concentration to single borrowers or connected parties
• Risk Management Systems: Requirements for internal controls, risk identification, and compliance frameworks

Supervisory Approach

The BoZ employs a dual supervisory methodology:

• On-Site Examinations: Direct assessments of bank operations, financial health, governance, and adherence to regulatory standards
• Off-Site Monitoring: Analysis of prudential reports and data submissions to evaluate compliance trends and identify emerging risks

Banks are required to submit regular prudential reports detailing their capital position, asset quality, liquidity, profitability, and risk exposures.

Microfinance Regulation

The Bank of Zambia regulates microfinance institutions through its Non-Bank Financial Institutions Supervision Department, with regulatory authority established since January 2006.

Legal Framework

Microfinance institutions operating in Zambia are governed by the Banking and Financial Services Act (BFSA) and the Banking and Financial Services (Microfinance) Regulations.

Regulatory Requirements

Microfinance institutions must comply with prudential standards including:

• Capital Adequacy: Minimum capital requirements, scaled to institutional tier
• Governance: Board composition, internal controls, and risk management systems
• Liquidity and Reserves: Minimum reserve requirements and liquidity standards
• Lending Limits: Restrictions on insider lending and exposure concentrations
• Interest Rate Regulation: BoZ prescribes a national interest rate formula for MFI lending

Supervision and Reporting

• Deposit-Taking MFIs: Submit monthly prudential reports to the BoZ
• Non-Deposit-Taking MFIs: Submit quarterly reports
• On-Site Inspections: Regular examinations ensure compliance with capital, reserve, and liquidity regulations

Tiered Regulatory Approach

The BoZ classifies microfinance institutions into tiers based on capital levels and activities, with differentiated regulatory requirements for each tier.

Other Lending Institutions

Money lenders operating under the Money Lenders Act (Chapter 398) are regulated by the Magistrate's Court and the Ministry of Finance, rather than the BoZ, creating a bifurcated regulatory landscape for consumer lending.

The Bank of Zambia plays a critical supervisory role in enforcing anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements across the financial system.

Financial Intelligence Centre Act

The Financial Intelligence Centre (FIC) was established in November 2010 by the Financial Intelligence Centre Act, No. 46 of 2010, and became operational in September 2013. The FIC serves as Zambia's Financial Intelligence Unit and is the sole designated national agency mandated to receive, request, analyze, and disseminate disclosures concerning suspected money laundering, terrorist financing, and other serious offenses to competent authorities.

Legal Basis for AML/CFT

Zambia's AML/CFT legal framework includes:

• Prohibition and Prevention of Money Laundering Act (2001): Amended by Act No. 44 of 2010, establishing prohibitions on money laundering and terrorist financing
• Banking and Financial Services Act (2017): Incorporating AML/CFT compliance obligations for regulated financial institutions
• Suspicious Transaction Reporting Guidelines: Issued by the FIC to clarify reporting requirements and standards

Reporting Obligations

All reporting entities regulated by the BoZ and other supervisory authorities are required to:

• File Suspicious Transaction Reports: Submit reports to the Financial Intelligence Centre concerning suspected money laundering, terrorist financing, and serious offenses
• Customer Due Diligence: Implement Know-Your-Customer (KYC) and beneficial ownership identification procedures
• Transaction Monitoring: Monitor and analyze customer transactions for indicators of suspicious activity
• Record Retention: Maintain transaction records and customer files for examination by authorities

BoZ's AML Supervisory Role

The Bank of Zambia enforces AML/CFT compliance through:

• On-Site Examinations: Direct assessment of banks' AML/CFT systems and procedures
• Prudential Reporting: Required AML/CFT compliance disclosures in regulatory reports
• Enforcement: Enforcement action against institutions failing to implement adequate AML controls

The Bank of Zambia actively promotes financial inclusion through regulatory frameworks that support innovation, agent banking, and digital financial services.

National Financial Inclusion Strategy

Zambia's National Financial Inclusion Strategy (NFIS) framework encompasses two phases:

NFIS I (2017–2023):

• Policy measures promoting interoperability across payment service providers
• Removal of agent exclusivity restrictions to expand agent banking networks
• Implementation of the National Financial Switch enabling cross-platform transactions

NFIS II (2024–2028):

• Launched March 2024
• Six broad-based thematic areas addressing barriers to financial inclusion
• Two cross-cutting areas for strategy operationalization
• Focus on expanding accessible delivery channels

Agent Banking Strategy

The BoZ developed a dedicated agent banking strategy with incentives for agents and tools to manage account balances and grow their enterprises. The strategy has resulted in a remarkable expansion of mobile money touchpoints across Zambia, particularly in underserved rural areas.

Mobile Money and Digital Financial Services

Mobile money has become the primary vehicle for financial inclusion in Zambia:

• Active Wallets: Over 11 million active mobile money wallets as of 2024
• Dominant Payment Channel: Mobile money transactions represent the largest transaction volume in Zambia's payment system
• Service Providers: MTN Mobile Money, Airtel Money, and Zamtel operate as primary mobile money platforms
• Tiered Account Access: Tiered account structures allow customers to access services with differentiated KYC requirements

Fintech Ecosystem

Zambia's fintech sector has experienced rapid growth:

• Number of Fintech Companies: 57 fintech companies operating in Zambia as of 2023 (more than double the 25 recorded in 2018)
• Innovation Areas: Digital lending, payments, remittances, and financial aggregation platforms
• Regulatory Support: The BoZ provides regulatory sandboxes and guidance documents supporting fintech innovation while maintaining prudential standards

Regulatory Framework for Fintech

The BoZ regulates fintech service providers through:

• Payment Service Provider (PSP) Licensing: Digital payment providers, including mobile wallets and digital money transmitters, require PSP licensing
• Technical Standards: Compliance with security, data protection, and transaction processing standards
• Consumer Protection: Requirements for transparency, dispute resolution, and customer complaints handling

Regulatory Powers

The Bank of Zambia maintains comprehensive enforcement authority over regulated institutions, with powers to investigate violations, impose penalties, and revoke operating licenses.

Investigation and Examination Powers

The BoZ has statutory authority to conduct investigations and examinations of regulated institutions, including:

• On-Site Examinations: Direct assessment of operations, systems, records, and compliance
• Information Requests: Authority to require submission of financial reports, risk data, and compliance information
• Third-Party Requests: Power to request information from customers, counterparties, and service providers of regulated institutions

Enforcement Actions and Penalties

The BoZ may impose enforcement actions ranging from warnings to significant penalties:

• Administrative Penalties: Fines ranging from minor amounts to substantial sums depending on violation severity
• Remedial Actions: Requirement to implement corrective action plans addressing deficiencies
• Suspension of Operations: Temporary prohibition of specific activities or business lines
• License Revocation: Termination of operating authority in cases of serious or persistent non-compliance

License Revocation

A license may be revoked if the licensee:

• Fails to comply with conditions or qualifications of the license or BoZ orders
• Is seriously or persistently in breach of provisions of the Bank of Zambia Act or regulations
• Fails to commence business within 12 months of license grant
• Ceases authorized business without BoZ approval

Revocation Procedures:

• The licensee must surrender copies of the license
• The Registrar publishes notice of revocation in the Government Gazette and in newspapers of general circulation
• Licensees may lodge appeals against revocation decisions

Remedial and Precautionary Measures

Before license revocation, the BoZ may impose precautionary measures including asset freezes, transaction restrictions, and restrictions on dividend distributions to address emerging risks.

Regulatory Role and Function

Legal Foundation

The Bank of Zambia derives its legal authority from multiple statutes that establish its regulatory mandate and supervisory powers:

Bank of Zambia Act, 2022

The Bank of Zambia Act (2022) serves as the principal enabling legislation. Under Section 4(1), the BoZ's primary objective is to formulate and implement monetary policy and supervisory policies ensuring the maintenance of price stability and financial system integrity. The Act mandates the BoZ to license, supervise, and regulate the activities of banks and financial institutions to promote safe, sound, and efficient operations and development of the financial sector.

Banking and Financial Services Act, 2017

The Banking and Financial Services Act (BFSA), 2017 supports and amplifies the legal framework established by the Bank of Zambia Act. The BFSA provides the comprehensive regulatory architecture for licensing, supervising, and regulating financial service providers including banks, microfinance institutions, payment service providers, and other authorized financial institutions.

Organizational Structure

The Bank of Zambia maintains several specialized departments to execute its regulatory mandate:

• Bank Supervision Department: Supervises and regulates commercial banks to promote safe, sound operations
• Non-Bank Financial Institutions Supervision Department: Oversees microfinance institutions, money lenders, and non-bank financial service providers
• Payment Systems Department: Manages payment system regulation and oversight, including ZIPSS (the real-time gross settlement system)
• Financial Intelligence Unit Coordination: Works with the Financial Intelligence Centre on anti-money laundering compliance

Licensing and Authorization Relevance

The Bank of Zambia (BoZ) is a key licensing authority in Zambia's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The Bank of Zambia exercises comprehensive authority over payment systems and service providers under the National Payment Systems Act, 2007 and its implementing regulations.

Zambia Interbank Payment and Settlement System (ZIPSS)

ZIPSS is Zambia's real-time gross settlement (RTGS) system, managed and operated by the Bank of Zambia as the settlement provider. The system processes high-value interbank transactions on a transaction-by-transaction basis with continuous settlement in real time, eliminating credit and settlement risk.

Key Features:

• Membership: Open to all banks operating in Zambia; all banks are directly connected to ZIPSS
• Settlement: Pre-funding required; payments are final and irrevocable upon settlement
• System Upgrade: Upgraded and launched October 14, 2023, transitioning to ISO20022 messaging standard and V-Mode topology
• Transaction Volumes: Significant daily transaction processing for high-value interbank payments

Payment Service Provider Regulation

The BoZ licenses and supervises payment service providers (PSPs) including money transmitters and remittance service providers. Regulatory requirements include:

• Licensing Standards: Minimum capital, governance, and operational requirements
• Know-Your-Customer (KYC) Requirements: Tiered KYC obligations based on transaction amounts and customer risk profiles
• Transaction Limits: FX bureaus and remittance service providers limited to US$1,000 per person per day and US$5,000 per person per month
• Consumer Protection: Reporting requirements and grievance mechanisms

Mobile Money Regulation

Mobile money services have become a dominant payment channel in Zambia, with over 11 million active mobile money wallets. The BoZ regulates mobile money through PSP licensing and transaction monitoring.

Mobile Money Service Providers:

• MTN Mobile Money
• Airtel Money
• Zamtel (ZESCO)

Regulatory Framework:

• Tiered Account Model: Customers access tiered mobile money accounts with differentiated KYC requirements per tier
• Agent Network: Mobile money agents operate under PSP oversight; agent exclusivity restrictions removed to promote agent banking
• Interoperability: Initiatives promoting interoperability across mobile money platforms through the National Financial Switch
• Transaction Volumes: Mobile money transactions dominate payment system volumes, reflecting the shift toward digital financial services

The Bank of Zambia maintains strict oversight of foreign exchange transactions and market participants to manage foreign exchange flows and maintain capital account stability.

FX Bureau and Remittance Service Provider Regulation

Foreign exchange bureaus and remittance service providers are licensed and supervised by the BoZ with specific transaction limits:

• Per Person Limits: Transactions limited to US$1,000 per person per day and US$5,000 per person per month
• Currency Transaction Reporting: Significant transactions exceeding specified thresholds (US$10,000 equivalent for goods/services; US$5,000 for cross-border money transfers) are monitored and reported

Capital Account Management

The Bank of Zambia monitors foreign exchange inflows and outflows through comprehensive FX market guidelines and currency directives.

Recent Directives (2025):

• Currency Restriction for Domestic Transactions: Domestic transactions involving government parties must be quoted, invoiced, and settled in Zambian kwacha only
• Cross-Border Transaction Flexibility: Cross-border transactions may be conducted in foreign currencies
• Kwacha Legal Tender Status: The Zambian kwacha is the sole legal tender for domestic transactions

FX Market Monitoring

The BoZ monitors all foreign exchange dealings involving importers, exporters, and money remittance services. Financial service providers, importers, and exporters of goods or services exceeding US$10,000 or equivalent in foreign currency are subject to FX monitoring and reporting requirements.

Payment Systems Governed or Overseen

The Bank of Zambia (BoZ) operates and/or oversees the national payment and settlement infrastructure of Zambia. Specific systems include:

[Further detail on specific system names requires verification from official sources]

Relationship to Other Regulators

The Bank of Zambia participates in international financial governance through coordination with the International Monetary Fund (IMF), regional economic communities, and global standard-setting bodies.

IMF Coordination

Zambia maintains an Extended Credit Facility (ECF) arrangement with the International Monetary Fund, with continuing reviews and program conditionality addressing:

• Monetary Policy Framework: Strengthening monetary transmission mechanisms through improved policy governance
• Banking Supervision: Development of effective deposit insurance schemes and financial services frameworks
• Debt Sustainability: Coordination on inflation targeting and financial stability objectives

The BoZ engages with IMF staff on surveillance missions, program reviews, and policy coordination on monetary policy, financial stability, and regulatory reform.

Regional Economic Community Participation

Zambia maintains membership in two major regional economic communities with distinct payment and financial integration objectives:

COMESA (Common Market for Eastern and Southern Africa):

• Focused on reducing trade and non-trade barriers
• Alignment of trading regimes, regulations, and standards
• Cross-border payment infrastructure development

SADC (Southern African Development Community):

• Designed to promote economic trade and collective political security
• Regional coordination on financial sector development
• Harmonization of banking and financial services standards

Global Financial Governance

The Bank of Zambia participates in:

• Financial Stability Board (FSB): Governor Denny Kalyalya serves on the FSB, representing emerging market central bank perspectives on global financial stability
• Basel Committee Coordination: Alignment with international prudential standards and capital adequacy frameworks
• FATF Engagement: Coordination on anti-money laundering and terrorist financing standards through the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Official Website and Contact Information

Bank of Zambia

• Website: https://www.boz.zm/
• Headquarters Address: Bank of Zambia, Lusaka, Zambia
• Email and Phone: Available through official website contact forms

Key Regulatory Documents and Resources

Governance and Management:

• Governor Biography and Management Structure: https://www.boz.zm/about/governor-bio.htm
• List of Previous Governors: https://www.boz.zm/about/governors.htm

Banking Supervision:

• Banking Laws and Regulations: https://www.boz.zm/laws-and-regulation.htm
• Regulatory Framework: https://www.boz.zm/financial-stability-regulatory-framework.htm
• Supervised Banks: https://www.boz.zm/banks.htm
• Non-Bank Financial Institutions: https://www.boz.zm/registered-non-bank-financial-institutions.htm

Payment Systems:

• ZIPSS (Zambia Interbank Payment and Settlement System): https://www.boz.zm/zipss.htm
• ZIPSS Rules 2021: https://www.boz.zm/ZIPSSRules2021April.pdf
• Payment Systems Statistics: https://www.boz.zm/payment-systems-statistics.htm

Financial Inclusion:

• National Financial Inclusion Strategy I (2017–2022): https://www.boz.zm/National-Financial-Inclusion-Strategy-2017-2022.pdf
• National Financial Inclusion Strategy II (2024–2028): https://www.boz.zm/NFIS_II_2024_-_2028.pdf

Foreign Exchange and Currency Management:

• Currency Directives 2025 Explanatory Notes: https://www.boz.zm/Explanatory-Notes-on-the-Currency-Directives-2025.pdf

Anti-Money Laundering:

• Financial Intelligence Centre: https://www.fic.gov.zm/
• AML/CFT Framework: https://www.fic.gov.zm/aml-cft-framework

Related Agencies and Resources

Financial Intelligence Centre (FIC):

• Website: https://www.fic.gov.zm/
• Mandate: Receive, analyze, and disseminate reports on suspected money laundering and terrorist financing
• Contact: Available through FIC website

Banking Association of Zambia:

• Website: https://www.baz.co.zm/
• Role: Industry association representing licensed banks in Zambia
• History: https://www.baz.co.zm/history/

Payments Association of Zambia (PAYZ):

• Website: https://payz.co.zm/
• Focus: Coordination on payment systems and financial infrastructure

Notes on Naming and Language