Overview of the Zambia Economy
Zambia is endowed with abundant natural mineral resources, including copper, cobalt, and precious stones, which have been the main drivers of its economy.
The Zambian economy is heavily reliant on the mining sector, which contributes around 12% of the country’s GDP.
Copper mining, in particular, has been a significant contributor to the country’s economic growth, accounting for around 70% of its export earnings.
Zambia has around 6% of the world’s known reserves of copper and is Africa’s second-largest producer of copper with 800,696 tonnes produced in 2021.
Apart from the mining sector, the agriculture, manufacturing, and tourism sectors also play a crucial role in the country’s economy.
The World Bank (WB) indicates that the real GDP growth of Zambia was negative in 2020 at -2.8%, reaching USD 18.11 billion versus USD 23.32 billion in 2019 (current prices).
Preliminary data by the Bank of Zambia (BoZ) indicates that nominal GDP at market prices reached USD 21.160 billion in 2021 versus USD 19.384 billion in 2019.
The real GDP growth rate was 3.6% in 2021.
Challenges Facing the Zambia Economy
Despite its recent economic growth, the Zambia economy still faces several challenges.
One of the significant challenges is the country’s high debt levels, which have been exacerbated by the COVID-19 pandemic.
The country’s external debt is estimated to be around USD 12 billion, equivalent to around 68% of its GDP.
Another significant challenge facing the Zambia economy is the high levels of poverty and inequality.
According to the World Bank, around 58% of the country’s population lives below the poverty line, with high levels of inequality between rural and urban areas.
In addition to these challenges, the country’s infrastructure remains underdeveloped, with poor road networks and limited access to electricity and clean water.
These infrastructure deficits pose significant barriers to the country’s economic growth and development.
Inflation has remained in double digits since mid-2019, reflecting exchange rate and food price pressures.
The average inflation rate for 2021 was 22.1%.
The Zambian Economy Current Outlook
According to WB, Zambia’s GDP growth in the first three quarters of 2021 picked up to 4%, reflecting a recovery in activities across all sectors except mining, which has been beset by Covid-related supply chain disruptions and excessive rainfall.
High copper prices, improved market confidence following the August 2021 elections, and normal rainfall patterns are expected to buoy economic activity in 2022.
Economic activity is expected to gradually pick up, averaging 3.8% over 2022-25. However, risks stemming from prolonged debt negotiations and low Covid-19 vaccination rates will need to be managed.
AfDB projects that Zambia’s GDP will expand by 3.2% and 3.8% in 2022 and 2023.
Last Updated: 30th March 2023