2025 Economic Outlook:
Zambia’s Plans for Economic Reform

Zambia’s economy, which had previously grown by 5.4 per cent in 2023, experienced a slower growth rate of 2.3 per cent in 2024. This decline is primarily attributed to a persistent drought that severely affected agricultural production and power generation. However, the country’s GDP growth is expected to rebound in 2025, supported by the recovery of the agricultural sector and a rise in mining activities. Other vital sectors anticipated to contribute to economic growth include information and communication technology (ICT), accommodation and food services, and construction.

The country’s economic transformation agenda focuses on improving the livelihoods of Zambians, with particular emphasis on raising income levels and reducing inequality. Dr Situmbeko Musokotwane, Zambia’s Minister of Finance and National Planning, highlighted the importance of enhancing resilience to external shocks in his 2025 Budget Address. The budget sets several ambitious targets for 2025, including a GDP growth rate of 6.6 per cent, reducing inflation to a range of 6-8 per cent, maintaining international reserves at over three months’ import cover, and cutting the fiscal deficit to 3.1 per cent of GDP. The nation also aims to increase domestic revenue to 21.3 per cent of GDP and limit net domestic borrowing to 1.9 per cent.

Mining

Mining remains the backbone of Zambia’s economy, serving as the country’s largest foreign exchange earner. The sector is expected to maintain its positive outlook, with government efforts addressing challenges faced by major mines, such as Konkola and Mopani Copper Mines. Significant investments include Barrick Lumwana’s $2 billion expansion project and the development of the Mingomba Mine by Kobold Metals and ZCCM Investments Holdings. Other notable developments, such as the revival of Shaft 28 in Luanshya, are expected to boost copper production and create jobs. These initiatives will support Zambia’s ambitious target of producing three million tonnes of copper annually by 2030.

Agriculture

Despite promising prospects in mining, the agriculture sector has been hit hard by the El Niño phenomenon, which has disrupted crops in seven out of ten provinces, including staples like maize, cassava, and groundnuts. The Comprehensive Agriculture Transformation Support Programme (CATS) was launched to address these challenges in July 2024. The programme seeks to increase food security, improve nutrition, create jobs, and promote agricultural exports. A key feature is the Farmer Input Support Programme (FISP) transition from Direct Input Support to an e-voucher system, which is expected to enhance flexibility and efficiency.

Energy

Power generation remains a critical issue for Zambia. The country’s reliance on hydropower, which accounts for 84 per cent of its energy production, has made it highly vulnerable to climate-related shocks. Ongoing droughts have reduced power generation capacity from 3,811 MW to only 1,225 MW. In response, Zambia is focusing on climate-resilient energy solutions, including a 300 MW power plant in Maamba and substantial investments in solar energy. Cost-reflective tariffs and diversifying the energy mix to include renewables aim to ensure a sustainable, climate-resilient energy future.

Transport

The transport sector is a priority for economic development, with numerous road construction, rehabilitation, and maintenance projects underway. Public-Private Partnerships (PPPs) are at the forefront of these efforts, including the Lusaka-Ndola Dual Carriageway, scheduled for completion ahead of 2026. An additional $460 million from the Millennium Challenge Corporation will be used for road rehabilitation. Furthermore, Zambia has signed a Memorandum of Understanding with China and Tanzania to modernise the TAZARA railway, increasing its capacity to 2.5 million metric tonnes annually and strengthening regional trade.

Tourism

Tourism is recovering from the impacts of the COVID-19 pandemic, supported by robust marketing campaigns, hosting international conferences, and favourable policies like visa fee waivers. Foreign direct investment (FDI) in tourism has averaged $969.7 million annually, with a growth rate of 3.2 per cent over the past decade. The $100 million Green, Resilient, and Transnational Tourism Development Project, starting in 2025, will enhance critical sites, including Kasaba Bay, Liuwa National Park, and the source of the Zambezi River. The tourism budget has increased by 41 per cent, from K769 million to K1.3 billion, reflecting the sector’s importance.

Manufacturing

The manufacturing sector contracted by 2.7 per cent in the second quarter of 2024 and is poised for recovery. Government initiatives include establishing special economic zones for beef production in the Kafue Flats and crop production in various districts, aiming to position Zambia as an export hub. Additionally, Zambia has become a net exporter of Compound D fertiliser, and the construction of a urea plant is expected to achieve self-sufficiency in fertiliser production by 2025, creating 2,000 new jobs.

Information Technology

Zambia’s technology and science sector has achieved significant milestones, particularly in expanding mobile telecommunications and digital services. Active mobile subscriptions rose from 20.1 million to 21.9 million in 2023. A new mobile network operator, Zed Mobile, began operations in August 2024 with a $400 million investment. Starlink’s low-earth-orbit satellite licence will expand internet access in underserved areas, driving digital transformation.

Water and Sanitation

Water and sanitation projects remain a priority, with plans to construct 12 new dams, rehabilitate 14 existing ones, and maintain 385 dams across the country. These initiatives aim to improve water access for domestic use, livestock, and irrigation, benefiting at least two million people.

Debt Restructuring

Zambia has made significant progress in debt restructuring, finalising agreements to restructure $6.3 billion owed to official creditors and $3.89 billion to bondholders. This development gives the government greater financial flexibility, enabling critical investments in key sectors. Zambia is paving the way for a more resilient economy by focusing on climate change and economic diversification. While challenges remain, the nation’s steadfast reforms inspire optimism for sustainable growth in 2025 and beyond.