A | B | C | D | E | F | G | H | CH | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
 | |
| Currency | Zambian kwacha (ZMW) |
|---|---|
| calendar years | |
Trade organisations | AU, AfCFTA (signed), WTO, SADC, COMESA |
Country group |
|
| Statistics | |
| Population | (2021 est.) 19,473,125[3][4][5] |
| GDP | |
GDP growth |
|
GDP per capita | |
GDP by sector |
|
| 12.5% (2022 est.)[6] | |
Population below poverty line | 60.5% (2010) |
Labour force | 6.906 million(2015) |
Labour force by occupation | agriculture: 54.8%, industry: 9.9%, services: 35.3% (2017) |
| Unemployment | 7.2% (2018)[10] |
Main industries | copper mining and processing, construction, foodstuffs, beverages, chemicals, textiles, fertilizer, horticulture |
| External | |
| Exports | $11.111 billion (2021 est)[11] |
Export goods | copper/cobalt 64%, cobalt, gold, electricity, gemstones tobacco, flowers, cotton, raw sugar |
Main export partners | |
| Imports | $6.899 billion (2021 est)[13] |
Import goods | machinery, transportation equipment, petroleum products, electricity, fertilizer; foodstuffs, clothing |
Main import partners |
|
| Public finances | |
| $17.00 billion (December 2021)[15] | |
| Revenues | $4.94 billion (2021) |
| Expenses | $6.74 billion (2021) |
| |
| $3.000 billion (2 July 2022 est.) [17] | |
All values, unless otherwise stated, are in US dollars. | |
Zambia is a developing country, and it achieved middle-income status in 2011. Through the first decade of the 21st century, the economy of Zambia was one of the fastest-growing economies in Africa, and its capital, Lusaka, the fastest-growing city in the Southern African Development Community (SADC).[18] Zambia's economic performance has stalled in recent years due to declining copper prices, significant fiscal deficits, and energy shortages.[19][20]
Zambia is currently ranked 8th in Africa, 5th in the Southern African Development Community (SADC) and 4th in the Common Market for Eastern and Southern Africa (COMESA) in terms of the ease of doing business. Furthermore, Zambia is ranked the 8th most competitive country in Africa on the Global Competitiveness Index. Recently, Zambia was ranked 7th by Forbes as the best country for doing business among 54 African countries.[21]
The government has succeeded in reducing the cost of doing business, but other important indicators of the business environment, such as restrictions on trade and government and judicial integrity, have deteriorated.[22]
Zambia itself is one of Sub-Saharan Africa's most highly urbanized countries. About one-half of the country's 16 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are under-populated. Unemployment and underemployment are serious problems. National GDP has actually doubled since independence, but due in large part to high birth rates per capita, annual incomes are currently at about two-thirds of their levels at independence. As of 2019, Zambia's GDP per capita (current international dollars) stands at $1,305.00.
In the area of trade, Zambia recorded a positive trade balance of US$300.6 million in 2014, as well as an increase in non-traditional exports (NTEs) over the years from US$1,381.8million in 2010 to US$3,550.3 million in 2013. Copper and cobalt are among Zambia's main exports, while non-traditional exports include cotton, coffee, fresh flowers, burley tobacco, gemstones and maize (corn), among others. Zambia is also eligible to export duty-free goods to the United States under the African Growth and Opportunity Act (AGOA); the Act allows eligible countries from sub-Saharan Africa to export over 6,400 goods to the United States.[21]
For the first time since 1989, in 2007 Zambia's economic growth reached the 6%–7% mark needed to reduce poverty significantly. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. The maize harvest was again good in 2005, helping boost GDP and agricultural exports. Cooperation continues with international bodies on programs to reduce poverty, including a new lending arrangement with the IMF in the second quarter of 2004. A tighter monetary policy will help cut inflation, but Zambia still has a serious problem with high public debt.[21]
In October 2021, to spur economic development, Zambia took measures to promote local development in its ambitious 2022 national budget. The Government announced an unprecedented constituency development fund (CDF) increment from ZMW 1.6 million (U$91,000) to ZMW 25.7 million (U$1.5million) for each constituency taking the total development fund injection into the local communities from ZMW 250 million (U$14.2 million) to ZMW 4 billion (U$228.4 million).[23][24] After winning a crucial Staff-Level IMF Deal, in early December 2021, Zambia went on to cut fuel subsidies later that month as a key step in seeking U$1.4 billion from the IMF.[25]
At the end of July 2022, the Official Creditor Committee co-chaired by China and France, and vice chaired by South Africa agreed to provide the financing assurances under the G20 Common Framework for debt treatment that Zambia had been waiting for to secure final approval from the International Monetary Fund for a US$1.4 billion bailout under the Extended Credit Facility.[26][27][28] In early August 2022, at the symposium on the midyear budget and economic performance and the 2023 to 2025 medium term budget plan, Zambia's Minister of Finance and National Planning, Dr. Situmbeko Musokotwane said the IMF board was expected to meet at the end of August 2022 to approve the loan programme.[29]
On 31 August 2022, the International Monetary Fund (IMF) board approved a US$1.3 billion extended credit facility to help Zambia restore fiscal stability.[30][31]
In June 2023, Zambia reached an agreement in principle to restructure US$6.3 billion of debt with bilateral lenders.[32][33][34][35] In October 2023, Zambia agreed a memorandum of understanding (MoU) with its bilateral creditors on restructuring about $6.3 billion of debt. Following the signing of the MoU, the terms would be implemented through bilateral agreements with each member of the OCC (Official Creditor Committee).[36][37][38]
In March 2024, Zambia struck an 76.5 billion kwacha (US$ 3.0 billion) restructuring deal with bondholders.[39][40][41] The agreement included important concessions from the Bondholders, while providing the required debt relief to the Government.[42] Under the agreement, Bondholders would forego approximately 21.4 billion kwacha (US$ 840 million) of their claims, and provide cash flow relief of approximately 63.8 billion kwacha (US$ 2.5 billion) during the IMF programme period.[42][43][44]
History
Economic policies soon after independence (1964–1967)
The British South Africa Company (BSAC, originally set up by the British imperialist Cecil Rhodes) retained commercial assets and mineral rights that it acquired from a concession signed with the Litunga of Barotseland in 1892 (the Lochner Concession). Only by threatening to expropriate the BSAC, on the eve of independence, did the incoming Zambian government manage to get the BSAC to relinquish the mineral rights. The Federation's government assigned roles to each of the three territories: Southern Rhodesia was assigned the responsibility of providing managerial and administrative skills; Northern Rhodesia provided copper revenues; and Nyasaland provided the Black labour.
After independence, Zambia instituted a program of national development plans, under the direction of a National Commission for Development Planning: the Transitional Development Plan (1964–66) was followed by the First National Development Plan (1966–71). These two plans, which provided for major investment in infrastructure and manufacturing, were largely implemented and were generally successful. This was not true for subsequent plans.
The Mulungushi Economic Reforms (1968)
A major switch in the structure of Zambia's economy came with the Mulungushi Reforms of April 1968: the government declared its intention to acquire equity holdings (usually 51% or more) in a number of key foreign-owned firms, to be controlled by a parastatal conglomerate named the Industrial Development Corporation (INDECO).[45] By January 1970, Zambia had acquired majority holding in the Zambian operations of the two major foreign mining corporations, the Anglo American Corporation and the Rhodesia Selection Trust (RST); the two became the Nchanga Consolidated Copper Mines (NCCM) and Roan Consolidated Mines (RCM), respectively. The Zambian government then created a new parastatal body, the Mining Development Corporation (MINDECO). The Finance and Development Corporation (FINDECO) allowed the Zambian government to gain control of insurance companies and building societies. However, foreign-owned banks (such as Barclays, Standard Chartered and Grindlays) successfully resisted takeover. In 1971, INDECO, MINDECO, and FINDECO were brought together under an omnibus parastatal, the Zambia Industrial and Mining Corporation (ZIMCO), to create one of the largest companies in sub-Saharan Africa, with the country's president, Kenneth Kaunda as chairman of the board. The management contracts under which day-to-day operations of the mines had been carried out by Anglo American and RST were ended in 1973. In 1982 NCCM and RCM were merged into the giant Zambia Consolidated Copper Mines Ltd (ZCCM).
In 1973 a massive increase in the price of oil was followed by a slump in copper prices in 1975, resulting in a diminution of export earnings. In 1973 the price of copper accounted for 95% of all export earnings; this halved in value on the world market in 1975. By 1976 Zambia had a balance-of-payments crisis, and rapidly became massively indebted to the International Monetary Fund (IMF). The Third National Development Plan (1978–83) had to be abandoned as crisis management replaced long-term planning.
By the mid-1980s Zambia was one of the most indebted nations in the world, relative to its gross domestic product (GDP). The IMF was insisting that the Zambian government should introduce programs aimed at stabilizing the economy and restructuring it to reduce dependence on copper. The proposed measures included: the ending of price controls; devaluation of the kwacha (Zambia's currency); cut-backs in government expenditure; cancellation of subsidies on food and fertilizer; and increased prices for farm produce. Kaunda's removal of food subsidies caused massive increases in the prices of basic foodstuffs; the country's urbanized population rioted in protest. In desperation, Kaunda broke with the IMF in May 1987 and introduced a New Economic Recovery Programme in 1988. However, this did not help him and he eventually moved toward a new understanding with the IMF in 1989. In 1990 Kaunda was forced to make a major policy volteface: he announced the intention to partially privatize the parastatals. Time, however, was running out for him. Like many African independence leaders Kaunda tried to hang on to power but unlike many he called multiparty elections and lost them to the Movement for Multiparty Democracy (MMD) and abided by the results. Kaunda left office with the inauguration of MMD leader Frederick Chiluba as president on 2 November 1991.
Chiluba's economic reforms (1991–2000)
Zambia's Economic System of Government is Unitary because of that the Frederick Chiluba government (1991–2001), which came to power after democratic multi-party elections in November 1991, was committed to extensive economic reform.[46][page needed]
Zambia's economic transformation into a free market system began toward the end of 1991 following a change of government. To tackle a serious economic crisis, the government agreed to introduce substantial economic reforms to secure much-needed loans from the World Bank and IMF.[22]
One of the greatest challenges was the privatization of the country's copper mines, Zambia's prime export earner. The government privatised many state industries, and maintained positive real interest rates. Exchange controls were eliminated and free market principles endorsed. It remains to be seen whether the Mwanawasa government will follow a similar path of implementing economic reform and undertaking further privatization. Zambia has yet to address issues such as reducing the size of the public sector, which still represents 44% of total formal employment, and improving Zambia's social sector delivery systems.
After the government privatized the giant parastatal mining company Zambian Consolidated Copper Mines (ZCCM), donors resumed balance-of-payment support. The final transfer of ZCCM's assets occurred on March 31, 2000. Although balance-of-payment payments are not the answer to Zambia's long-term debt problems, it will in the short term provide the government some breathing room to implement further economic reforms. The government has, however, spent much of its foreign exchange reserves to intervene in the exchange rate mechanism. To continue to do so, however, would jeopardize Zambia's debt relief. Zambia qualified for HIPC debt relief in 2000, contingent upon the country meeting certain performance criteria, and this should offer a long-term solution to Zambia's debt situation.
2001–2010
On 2 January 2002, MMD's Levy Mwanawasa won the presidential election which many observers claimed had actually been won by the opposition.[47] In January 2003, the Zambian Government informed the International Monetary Fund and World Bank that it wished to renegotiate some of the agreed performance criteria calling for privatization of the Zambia National Commercial Bank and the national telephone and electricity utilities.
Foreign investors liked Mwanawasa, owing partly to his anti-corruption drive. During his presidency, Zambia received foreign investment.[48] The main driver of economic growth was minerals. Mwanawasa's policies helped to lower inflation to single digits in 2006, a record the country had not seen in over 25 years, and spread some benefits to the poor.[48][49] Tourists and white farmers diverted from Zimbabwe and helped the Zambian economy.[48] The policies turned the Zambian town of Livingstone, near Victoria Falls, into a tourist hub.[50] Zambia received a relatively large amount of aid and debt relief because of liberalisation and Mwanawasa's efforts.[48] Overall, economic growth increased to about 6% per year.[48]
After Mwanawasa suffered a stroke while attending an African Union summit in Egypt on 29 June 2008, Rupiah Banda became acting president and subsequently President.[51] With divisions within the MMD, Banda promised to "unite the party and the entire nation" and to "continue implementing programs".[52] Though, after taking office, Banda dismantled much of the anti-corruption effort put into place by his predecessor, Mwanawasa.[53] This, compounded with the effects of the Global Financial crisis of 2007–2008 led to a sustained period of increased inflation.[49]
2011–2020
In September 2011, the social democrat, Michael Sata led the Patriotic Front (PF) to victory with a vow to improve conditions for their Zambian employees.[54] Though known to previously oppose Chinese investment, he declared his change in perspective prior to his election victory.[55] Sata died on 28 October 2014 and was succeeded by Edgar Lungu. The period, saw an infrastructure boom with the development of the Kafue Gorge Lower Power Station, two multi-purpose stadiums, Levy Mwanawasa Stadium and National Heroes Stadium, expansions of the Kenneth Kaunda International Airport, the Harry Mwanga Nkumbula International Airport and the Simon Mwansa Kapwepwe International Airport, and the Pave Zambia 2000 project[56] intended to create and repair major urban roads countrywide.
Unfortunately this came at a huge debt cost that slowed the economy and compounded by corruption and the COVID-19 pandemic resulted in weak GDP growth and a recession in 2019 and 2020 respectively. Zambia's GDP had shrunk from US$29 billion to US$19 billion and its debt grew from 16% to 140% of GDP from 2010 through 2020.[57][49] In November 2020, Zambia became Africa's first coronavirus-era default when it opted to bow out of a US$42.5 million eurobond repayment.[58]
From 2021
In August 2021, the Zambian populace ushered in a new government with a promise for jobs growth.[59] Hakainde Hichilema's United Party for National Development (UPND) government delivered an ambitious budget that included an increase in the Constituency Development Fund (CDF) from ZMW 1.6 million (US$91 thousand) to ZMW 25.7 million (US$1.5 million) for each of Zambia's 156 constituencies and its decentralization in release to these constituencies.[60] The expectation is that this will generate jobs growth in addition to the government's targeted employment of 30,000 new teachers[61] and 11,200 health workers.[62] In mid July 2022, the government recruited 30,496 Teachers.[63] At the end of July 2022, 11,276 health workers, being doctors, nurses and ancillary staff such as drivers were recruited by the government.[64]
With a push for Zambia to be able to produce 3 million tonnes of Copper per annum within the next 10 years, the government reintroduced the deductibility of mineral royalty for corporate income tax assessment purposes.[65][66][67][68] The results of these policy changes are yet to be seen.
At the 2022 IMF-World Bank Spring Meetings, the World Bank announced it would fund projects worth US$560 million in Zambia in 2022.[69][70]
In July 2022, to address its debt challenges, the Zambian government engaged creditors of undisbursed loans to facilitate the formal cancellation of loans estimated to be about US$2.0 billion. Projects that were already ongoing would now be financed through government revenues.[71][72]
In early August 2022, the Zambia Development Agency, a quasi-government institution under the Ministry of Commerce, Trade and Industry reported that it had recorded numerous investment pledges worth US$3.8 billion in the first half to 2022 targeting the agriculture, tourism, construction and mining sectors with a potential job market of 19,000.[73]
Public-Private Dialogue Forum (PPDF)
In April 2022, Zambia launched a mechanism aimed at unlocking the potential of the private sector as a driver of economic development and job creation. The Public-Private Dialogue Forum (PPDF) is meant to act as a structured mechanism for interactions between the public and the private sector in tackling bottlenecks that have hindered the growth of the private sector.[74]
European Union (EU)–Zambia Economic Forum
In May 2022, the inaugural European Union (EU)-Zambia Economic Forum was launched in Lusaka by President Hakainde Hichilema under the theme ‘Economic transformation through green growth’.[75] It was a high-level event that brought together entrepreneurs, experts, financial institutions, innovators, and policy decision-makers from Zambia, the EU and representatives of its 27 member states.[75][76] Additional special guests included the EU Commissioner for Agriculture Janusz Wojciechowski and the commissioner for Trade and Industry of the African Union Commission, Albert M. Muchanga.[77] The forum was launched as a platform with a view to promoting employment, value addition and increased trade through business-to-business (B2B) and business-to-government (B2G) collaboration and economic synergies for EU and Zambian businesses.[75]
UK–Zambia Green Growth Compact
In November 2021, the Zambian and British government signed the UK-Zambia Green Growth Compact, an agreement expected to boost the United Kingdom's investment into Zambia by £ 1.0 billion (US$1.26 billion) with a focus on job creation and green energy production.[78] In May 2022, the British High Commissioner to Zambia Nicholas Woolley, indicated that the British government had set aside the £ 1.0 billion to be spent over the next 5 years with £ 100.0 million (US$126.0 million) targeted for funding Small Medium Entrepreneurs (SMEs) and £ 500.0 million (US$629.9 million) for investment in renewable energy.[79]
World Bank Support
In July 2022, the World Bank approved US$155.0 million in International Development Assistance for Social Cash Transfer to mitigate the high cost of living pressures in Zambia and a further US$27.0 million credit facility to support the government's development programs.[80]
In July 2022, the World Bank approved a further US$665.0 million to fund projects in Zambia to spur economic recovery and growth and also lighten the debt burden.[81] Through 2032, the World Bank plans to support Zambia with new financing of over US$2.0 billion in the form of concessional loans.[28]
In late October 2022, the World Bank approved US$275.0 million concessional loan targeted at fiscal stabilization and accelerated economic programs. Financing was provided by the World Bank's International Development Association (IDA).[82]
African Export-Import Bank (Afreximbank) Support
In July 2022, the African Export-Import Bank President Benedict Oramah, whilst in Lusaka Zambia, announced that the bank would put up an investment of about US$250 million for Zambia's first-ever Battery Electric Vehicle (BEV) manufacturing plant.[83]
EAC-SADC-COMESA Free Trade Area
In July 2022, during the 4th Mid-Year Coordination Meeting of the African Union, Regional Economic Communities and Regional Mechanisms in Lusaka, Zambia, the three regional blocs, East African Community (EAC), Southern African Development Community (SADC), and Common Market for Eastern and Southern Africa (COMESA) agreed to have a tripartite ministers' summit to fast track the finalization of the border control-free travel and free movement of goods and services area by the end of 2022.[84][85]
Zambia-China Trade and Investment Forum
In September 2022, Zambia and China launched the inaugural trade and investment forum aimed at unlocking trade and investment potential between the two countries. The event also saw the signing of an Exchange Letter of the Duty Free Treatment for Zambian products corresponding to 98-percent of the tariff lines by Finance Minister Situmbeko Musokotwane and Chinese Ambassador to Zambia Du Xiao.[86][87]
Zambia-China bilateral trade growth
In mid-September 2023, President Hakainde Hichilema met with The President of The Peoples Republic of China, Xi Jinping in Beijing where they witnessed the signing of over 15 MOUs amounting to a potential investment of about ZMW 62.3 billion kwacha (US$ 3.0 billion) by China into Zambia and the leaders also agreed to increase the use of local currencies in trade between the two countries.[88][89] One of the MOUs signed during Mr. Hichilema's visit to China was with the international telecoms manufacturer ZTE to construct and open a smartphone manufacturing plant in Zambia.[90][91] In late-September 2023, China Nonferrous Metal Mining Group (CNMC) unveiled plans to inject an additional ZMW 27.0 billion kwacha (US $1.3 billion) into Zambia from 2023 through 2028, spanning the mining, energy, education and technology economic sectors.[92]
U.S.-Zambia Business Summit
In October 2022, more than 50 United States and Zambian business and government leaders gathered in Lusaka for the two-day inaugural U.S.-Zambia Business Summit at the Intercontinental Hotel. Representatives from the U.S. Trade and Development Agency, U.S. International Development Finance Corporation also attended the Summit. The Summit focused on promoting Zambia as one of the most attractive business environments for investment on the African continent.[93]
Sectors
Mining
In 2019, the country was the world's 7th largest producer of copper.[94]
The Zambian economy has historically been based on the copper-mining industry. The industrialization of the copper industry is owed partly to Frederick Russell Burnham, the famous American scout who worked for Cecil Rhodes.[95] By 1998, however, output of copper had fallen to a low of 228,000 tonnes, continuing a 30-year decline in output due to lack of investment, and until recently, low copper prices and uncertainty over privatization. In 2001, the first full year of a privatized industry, Zambia recorded its first year of increased productivity since 1973. The future of the copper industry in Zambia was thrown into doubt in January 2002, when investors in Zambia's largest copper mine announced their intention to withdraw their investment. However, surging copper prices from 2004 to the present day rapidly rekindled international interest in Zambia's copper sector with a new buyer found for KCCM and massive investments in expanding capacity launched. China has become a major investor in the Zambian copper industry, and in February 2007, the two countries announced the creation of a Chinese-Zambian economic partnership zone around the Chambishi copper mine.[96]
Today copper mining is central to the economic prospects for Zambia and covers 85% of all the country's exports, but concerns remain that the economy is not diversified enough to cope with a collapse in international copper prices.