Economic and Political Overview

flag Zambia Zambia: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The economy of Zambia, the second-largest copper producer in Africa after the Democratic Republic of the Congo, is highly dependent on copper prices, which generate three-quarters of export earnings. The country's growth has slowed in recent years, due to the fall in the price of copper, but also to the consequences of the drought on agricultural and hydroelectric production, as well as the pandemic - which brought on the first recession recorded in the country since 1989. However, the economy resumed growing in 2021, when the country recorded a GDP growth of 1%, mainly thanks to high copper prices, the commissioning of the Kafue Gorge Lower hydroelectric plant, and a return to normal rainfall patterns. In 2022 and 2023, growth is expected to remain stable at 1.1% and 1.3%, respectively, with private consumption being its main driver.

In 2021, government deficit decreased thanks to higher mining revenues and a record dividend payment from the central bank, which put general government at the rate of 101%. Still, debt remain substantial in 2021 mainly due to increased government spending - including on fuel, agricultural input subsidies, and election-related spending. In 2022, however, the debt-to-GDP ratio is expected to slightly increase to 106.8%, and continue that upward trend in 2023, when it is expected to reach 109.2%. The country recorded an inflation rate of 22.8% in 2022, and it is expected to decrease to 19.2% in 2022 and 13% in 2023, on a continued downward trend toward the 6%-8% target range established by the central bank. With the easing of inflationary pressures, household incomes should benefit in 2022, boosting consumption. Underlying this projection is the positive impact of higher copper prices mainly through the exchange rate. In 2021, the government continued implementing various supportive measures to minimise the economic and social impact of the pandemic. Despite the efforts to contain the economic impact of the pandemic and ensure a quick recovery, the country's economic rebound has been slow but steady.

While Zambia achieved lower middle-income status in 2011, after a decade of strong growth, widespread and extreme rural poverty (half of Zambians still live in poverty) remains a significant problem and is compounded by a rate high birth rate and a relatively high burden of HIV/AIDS (one in eight Zambians has the virus). The coronavirus crisis has potentially affected 8 million people. The decision of the government not to subside the price of electricity to ease the burden on companies during the pandemic will have an impact on employment in the country. In 2020, the unemployment rate in the country was at 12.8% (ILO Estimate), with youth unemployment being particularly high, leading more young people in Zambia venture in businesses to counter unemployment.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 23.31e19.32e21.7023.9724.50
GDP (Constant Prices, Annual % Change) 1.4e-3.0e1.01.11.3
GDP per Capita (USD) 1,2721,023e1,1151,1961,187
General Government Gross Debt (in % of GDP) 97.4128.7101.0106.8109.2
Inflation Rate (%) 9.215.7e22.819.213.0
Current Account (billions USD) 0.132.002.933.584.11
Current Account (in % of GDP) 0.610.413.514.916.8

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector is the backbone of the Zambian economy: although the sector represents only 2.9% of the country's GDP, it employs 49.6% of the workforce (World Bank). Zambia spans 75 million hectares, of which 58% is classified as medium to high potential for agriculture production; however, agriculture in Zambia remains largely underexploited, with only 15% of its potential arable land under cultivation. The sector's low contribution to GDP is attributable to poor rural infrastructure and an extreme vulnerability to drought. Zambia's agricultural sector focuses mainly on crop-farming (maize, cotton, soybeans, tobacco, groundnuts, paprika, sorghum, wheat, rice, sunflower seeds) and livestock production. The country is also one of the biggest seed exporters in Africa. In 2021, despite the ongoing pandemic, there was a considerable growth in agriculture, mainly helped by good whether outturn, which shows positive prospects not only for the country's economy as a whole, but also for the rural population in particular.

The industrial sector is estimated to account for 40.2% of GDP and 10.5% of employment, mostly thanks to the mining, construction and manufacturing sub-sectors. Major industries of Zambia include copper mining and processing, construction, emerald mining, beverages, food, textiles, chemicals, fertiliser and horticulture. Growth in the manufacturing industry is largely driven by the agro-processing of food and beverages as well as the textiles and leather sub-sectors. However, dependency on copper which is the country’s main export makes Zambia vulnerable to fluctuations in the world commodities prices. While the country's industry sector, especially mining, was negatively impacted during the early stages of the pandemic, high copper prices and the reintroduction of measures allowing mining royalties to be deducted from corporate income tax have supported investment in the mining sector, which showed a significant recovery in 2021. In 2022, the development of the manufacturing sector should benefit from further tax breaks for export-oriented investments, as well as the reduction of the corporate tax rate from 35% to 30%.

Services play a major role in the Zambian economy. They represent 53.6% of GDP, and employ 39.8% of the total workforce. The tertiary sector includes a large wholesale and retail industry. Tourism is also growing and has a positive ripple effect on the transport and hotel sectors. Even though COVID-19 dampened the growth of tourism the country was experiencing, 2021 saw a slight recovery in the sector, a trend which is expected to continue in the coming years.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 49.6 10.5 39.8
Value Added (in % of GDP) 2.7 42.7 48.3
Value Added (Annual % Change) 17.2 0.6 -6.2

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Zambian Kwacha (ZMW) - Average Annual Exchange Rate For 1 MUR 0.290.280.310.360.47

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
50,4/100
World Rank:
159
Regional Rank:
39

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Zambia is open to foreign trade, which accounts for 68.8% of the country's GDP (World Bank, 2019). Zambia's trade policy aims to diversify its economy through privatization programs and the expansion of its export base. The country mainly exports copper (74.4%), cement (1.6%), tobacco (1.4%), electrical energy (1.4%), and sulphuric acid (1.2%). As for the country's main imports, they include mineral or chemical fertilizers (7.6%), petroleum oils (8.7%), medicaments (3.9%), and motor vehiacles (2.4%).

The country is a member of COMESA and has signed Interim Economic Partnership Agreements (Interim EPAs) with the European Commission. The country became a member of the WTO in 1995. Customs duties are high, but the country has few non-tariff trade barriers. Certain products such as crude oil, medical supplies, and fertilizers are exempt from import duties. However, irregularities in the tax system and high transportation costs are real trade barriers. Zambian products are oriented towards Switzerland, China, the Democratic Republic of Congo, Singapore, and South Africa, while the country mainly imports from South Africa, China, the United Arab Emirates, India, and the United States.

Zambia's trade balance has been experiencing a structural surplus in recent years. In 2020, exports of goods amounted to USD 7.8 billion, while imports reached USD 5.3 billion, resulting in a trade balance of USD 3.2 billion. As for services, exports reached USD 554 million, while imports amounted to USD 1.1 billion, amounting to a trade balance of USD 2.6 billion (WTO).

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 7,0457,9839,4667,1805,323
Exports of Goods (million USD) 5,8018,0079,0347,0477,819
Imports of Services (million USD) 1,3931,4671,6161,4741,150
Exports of Services (million USD) 8858659531,012554
Imports of Goods and Services (in % of GDP) 38.636.636.934.2n/a
Exports of Goods and Services (in % of GDP) 35.335.038.034.6n/a
Trade Balance (million USD) -49605147443,221
Trade Balance (Including Service) (million USD) -512351-2102222,623
Foreign Trade (in % of GDP) 74.071.674.968.8n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2020
Switzerland 44.3%
China 18.7%
Democratic Republic of Congo 12.4%
Singapore 11.6%
South Africa 2.6%
See More Countries 10.4%
Main Suppliers
(% of Imports)
2020
South Africa 33.2%
China 16.8%
United Arab Emirates 8.8%
India 5.4%
United States 2.2%
See More Countries 33.6%

Source: Comtrade, Latest Available Data

 
 

Main Products

7.8 bn USD of products exported in 2020
Copper, unrefined; copper anodes for electrolytic...Copper, unrefined; copper anodes for electrolytic refining 53.9%
Copper, refined, and copper alloys, unwrought ...Copper, refined, and copper alloys, unwrought (excl. copper alloys of heading 7405) 18.2%
Copper ores and concentratesCopper ores and concentrates 2.3%
Cement, incl. cement clinkers, whether or not...Cement, incl. cement clinkers, whether or not coloured 1.6%
Unmanufactured tobacco; tobacco refuseUnmanufactured tobacco; tobacco refuse 1.4%
See More Products 22.6%
5.3 bn USD of products imported in 2020
Mineral or chemical fertilizers containing two or...Mineral or chemical fertilizers containing two or three of the fertilizing elements nitrogen, phosphorus and potassium; other fertilizers (excl. pure animal or vegetable fertilizers or mineral or chemical nitrogenous, phosphatic or potassic fertilizers); animal, vegetable, mineral or chemical fertilizers in tablets or similar forms or in packages of a gross weight of <= 10 kg 4.6%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 4.4%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 4.3%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 3.9%
Mineral or chemical nitrogenous fertilizers (excl....Mineral or chemical nitrogenous fertilizers (excl. those in pellet or similar forms, or in packages with a gross weight of <= 10 kg) 3.0%
See More Products 79.9%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import Export Flows.

 

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Political Outline

Current Political Leaders
President: Hakainde Hichilema (since 24 August 2021)
Vice-President: Mutale Nalumango (since 24 August 2021)
Next Election Dates
General elections: 2026
Main Political Parties
Zambia is a multi-party democracy country. The main political parties are:

- Patriotic Front (PF) - centre-left, social democrat
- Party of National Unity and Progress (PNUP) - centre-right, liberal, environmentalist
- United Party for National Development (UPND) - centre, liberal

Minor parties include the Alliance for Democracy and Development (ADD) and the Forum for Democracy and Development (FDD).

Type of State
Zambia is a democratic republic.
Executive Power
The executive is exercised by the President (elected by universal suffrage for a 5-year term, for a maximum of two terms), who also appoints the Cabinet and his Vice-President.
Legislative Power
The legislative power is vested in the Parliament, which has of only one chamber: the National Assembly of Zambia. It is the highest law-making body and it is currently formed of 167 members, of which 156 directly elected in single-member constituencies using the simple majority system, 8 are appointed by the President, and 3 are ex-officio members: the Vice President, the Speaker, and a deputy speaker (with one being elected from outside the National Assembly, while the other is chosen among the elected members of the house). The term for all the members of the National Assembly is 5 years.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
115/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Zambia, please visit the Ministry of Health’s website.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Zambia consult the Ministry of Health’s website and Coronavirus Disease 2019 (COVID-19) Fact Sheet. Also refer to the fact sheet U.S. Government’s Response to COVID-19 in Zambia.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports), refer to Measures Taken to Mitigate the Impact of COVID-19.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult  the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
For  information on the economic recovery scheme put in place by the Zambian government to address the impact of the COVID19 pandemic on the Zambian economy, refer to Measures Taken to Mitigate the Impact of COVID-19 and KPMG’s report Government and institution measures in response to COVID-19.

For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal monetary and macroeconomic) taken by the Zambian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Zambia in the IMF’s Policy Tracker platform.
Support plan for businesses
For information on the local business support scheme established by the Zambian government and other organizations to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity refer to the COVID-19 SME Relief and Support Directory and the Sukuma Relief Programme.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

There are no specific support plans for exporters in Zambia so far. For future possible up-to-date information please visit the Export Promotion page of the Zambia Development Agency.

 

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Latest Update: June 2022