By Zambian Economist Analyst
Zambia imports the overwhelming majority of its medicines. So a kwacha that has strengthened sharply through 2026 ought to be one of the most direct pieces of good news available to Zambian households.
Whether it reaches the pharmacy counter is a different question, and the answer is mostly no. Understanding why matters more than the exchange rate itself.
How import-dependent Zambia actually is
| Indicator | Figure |
|---|---|
| Pharmaceutical imports, 2020 | US$260.1 million (US$208.4m in 2019) |
| Medicines on the ZAMRA register, June 2022 | 8,154 |
| Of those, produced locally | 123 |
| Local production as share of demand | Estimated 10–15% |
| Registered pharmaceutical manufacturers, 2022 | 10, of which only 4 actively manufacturing |
Sources: UN COMTRADE; Zambia Medicines Regulatory Authority; Parliamentary Committee on Health and Community Services, 2022.
That first ratio is the one to hold onto. 123 out of 8,154. Roughly one and a half percent of the medicines approved for use in Zambia are made in Zambia.
When a country imports that proportion of an essential good, the exchange rate is not a financial abstraction. It is a health variable.
Why a stronger kwacha should help
The mechanism is simple. An importer buys in dollars and sells in kwacha. When the kwacha appreciates, the same consignment costs fewer kwacha to land. All else equal, that should show up as lower shelf prices, or at least as prices that stop rising.
This is the mirror image of what happened during the depreciation years, when import costs fed directly into the cost of living. We set out the full chain in how the copper–kwacha link actually works.
Four reasons it does not reach patients
1. The public sector problem is arrears, not exchange rates. Medicine shortages in public facilities have been driven substantially by government debt owed to pharmaceutical suppliers — on the order of K3 billion at the time the Parliamentary Committee reported. A supplier who has not been paid does not deliver more cheaply because the kwacha strengthened. They deliver less, or not at all. Patients then buy privately at their own cost, which is where the household burden actually lands.
2. Retail prices are sticky downward. Stock on a pharmacy shelf was bought at an older exchange rate, often on credit, and has to clear before cheaper stock arrives. Meanwhile importers who absorbed losses during depreciation rebuild margin during appreciation. Prices rise quickly with the dollar and fall slowly against it — a pattern well documented across import-dependent economies.
3. There is almost no domestic competitive pressure. With four active manufacturers and 123 locally produced products, there is no meaningful local alternative to discipline import pricing. Competition is the mechanism that forces a cost saving to become a price cut, and it is largely absent.
4. The exchange rate is one input among several. Freight, insurance, regulatory fees, distribution across a large and thinly populated country, and financing costs all sit between the port and the patient. Lending rates near 28% matter to a pharmacy financing inventory — see the policy rate and your loan.
The uncomfortable trade-off
There is a tension here worth stating plainly rather than smoothing over.
A strong kwacha lowers the cost of imported medicines, which is good for patients. It simultaneously makes local pharmaceutical manufacturing harder to establish, because imported product becomes cheaper to compete against. And it compresses the local-currency value of mineral revenue, which is what funds the public health budget in the first place — the mechanism in why a strong kwacha is not always good news.
So currency appreciation helps affordability today and works against building domestic capacity for tomorrow. Both things are true. Anyone presenting only one of them is selling something.
What would actually move prices
- Clearing supplier arrears. The fastest route to medicine availability in public facilities is paying the people who supply them. This is a budget execution question, not a monetary one.
- Registration throughput. More approved products means more competition. Regional harmonisation through the Zazibona collective process is the practical lever.
- Local manufacturing that survives a strong kwacha. That requires reliable power and competitive financing rather than protection — see the power deficit and the real cost to business.
- Price transparency. Published reference prices for common medicines would let households see whether import savings are being passed through. Nobody can hold a market accountable to a number that is not published.
The bottom line
The kwacha is doing its part. The pass-through is not happening, and the binding constraints are arrears, market structure and financing rather than the exchange rate.
Which means the honest answer to “why are medicines still expensive when the kwacha is strong?” is that the exchange rate was never the main problem. It was simply the most visible one.
For the wider macroeconomic picture see Zambia’s economy in 2026 and what to watch in the inflation data.
Import and registration figures as published by UN COMTRADE, ZAMRA and the Parliamentary Committee on Health and Community Services; the most recent comprehensive figures available date from 2020–2022 and are cited as such. This is economic analysis, not medical advice. Consult a qualified health professional about any medicine.
