Examining The Role of Commercial Banks’ Treasury Departments in Managing Long-Term Liquidity in Zambia: Case Study of Zambia National Commercial Bank Plc (ZANACO)

Abstract

This study investigates the role of treasury departments in managing long‑term liquidity within Zambia’s commercial banking sector, with Zambia National Commercial Bank (Zanaco) as the focal case. The research begins by situating liquidity management within Zambia’s volatile financial environment, where exchange rate fluctuations, dollarization of deposits, sovereign debt restructuring, and monetary policy interventions pose persistent challenges. Key concepts such as liquidity, treasury operations, asset‑liability management, interbank market reliance, and dollarization are defined to provide analytical clarity. A mixed‑methods approach was employed, integrating quantitative analysis of liquidity ratios and funding structures with qualitative insights from treasury staff, supported by regulatory reports and industry surveys. The findings reveal that exchange rate volatility, dollarization, tight monetary policy, government borrowing, and technology gaps are the dominant risks undermining effective liquidity management. Although compliance with Basel III standards has improved, reliance on interbank markets and limited adoption of digital treasury systems reduce resilience, while ESG and climate‑related risks remain insufficiently integrated. Recommendations emphasize diversifying funding sources, investing in modern digital treasury platforms, embedding ESG considerations into treasury strategies, and strengthening collaboration with regulators to anticipate policy shifts. The study concludes that treasury departments are pivotal to financial stability, but systemic and operational risks must be addressed through modernization, diversification, and regulatory alignment to safeguard Zambia’s financial system.